HONOLULU --Despite a unique and controversial law capping gasoline prices, Hawaii is the only state in the nation where the average gas station is charging more than $3 a gallon for regular, said the Associated Press. Meanwhile, sate lawmakers are debating the cap, and some have also proposed jail time for retailers caught price gouging, a report by The Hawaii Channel added.
Gas prices rose to an average of $3.09 per gallon Tuesday, according AAA's Fuel Gauge Report. Prices are expected to go up another 12 cents next week.
It's [image-nocss] hurting. It's always going up, said Tyler Beter-Larimore, who paid $3.08 a gallon to fill up his car on his way to work. They should try to find some way to deal with it.
So far, it is difficult to gauge the impact of the state's cap on wholesale gasoline prices. Before the gasoline cap, there were a few times when some mainland prices, particularly in California, surged ahead of those in Hawaii. But since the state's effort to regulate gasoline prices, which went into effect just as Hurricane Katrina disrupted domestic supplies from the Gulf of Mexico, Hawaii has consistently had the highest priced gasoline in the nation. Lawmakers are trying to decide whether they should revise or repeal the law.
No matter who you talk to, they look at the price of gasoline and say, We're getting cheated', said Paul Gonzales, spokesperson for AAA Hawaii. Everyone is paying a high price, and everyone thinks they're unique.
The debate over state-mandated price controls is muddied by underlying fuel prices, said Richard Miller, a member of the Citizens Against Gasoline Price Gouging and a University of Hawaii law professor. I'm not sure the gas cap has anything to do with the fact that everyone's gas prices are going up, said Miller, who believes the government regulation is helping. It's getting worse, and it has nothing to do with the gas cap.
The state's limit on gasoline prices is determined by a complicated formula that averages wholesale prices in New York, Los Angeles and the Gulf Coast. Then the Public Utilities Commission adds on allowances for what it costs wholesalers to ship to Hawaii and distribute gasoline to more remote islands. The caps are set weekly, but they are confusing to consumers because they do not include taxes or dealer markup, which varies widely.
Gasoline distributors and retailers said at a news conference Tuesday that the gasoline caps are squeezing their profits while doing little to restrain oil companies or help consumers. If you're trying to get at Big Oil, this isn't the way to do it, said Richard Parry, president of fuel distributor Mid Pac Petroleum, which owns 34 Union 76 gas stations and supplies 20 more in the state. The message is gas caps don't work and price controls don't work.
The net result of that, of course, is going to be that we're going to see gas stations closed down. We're going see the loss of a whole channel of trade in the Hawaii market, Parry told The Hawaii Channel. There are approximately 350 stations in the state.
One proposal being considered by state lawmakers would suspend the cap unless wholesale gasoline prices rise above a newly calculated cap for two weeks straight. Then, wholesalers would be forced to reduce the price they charge dealers by more than 16 cents a gallon.
There is not 17 cents a gallon to be taken out of the wholesale margins. It's just not there, Parry said.
The company is not credible and believable, State Senator Ron Menor (D) told the news outlet. Gasoline cap architect Menor chairs the Senate Consumer Protection Committee. He said the company is using the same scare tactics it used when the gap was originally debated. They said if we implemented our pricing regulation, there would be serious supply shortages, severe supply disruptions, gas station and refinery closures, and of course these have never materialized.
Mid Pac Petroleum could be one of the casualties of a badly thought through and misunderstood law, Parry said.
Menor said Mid Pac Petroleum is spreading misinformation in an attempt to continue making lots of money. The pricing regulation is forcing them to cut their prices and to reduce the massive profits that they've been earning. And so they're just looking after their bottom line, he said.
The gasoline cap changes are currently in conference, said the report. State House and Senate negotiators are trying to work out the differences in their proposals.
On Wednesday, Democrats in the state House proposed jail time for gasoline company executives who try to gouge consumers, the Hawaii Channel said.
The Senate is not proposing getting rid of the cap entirely. It would come back if prices went too high for a few weeks in a row. The House said that plan is too complicated. House members want the cap repealed for good, but threaten gasoline executive with up to five years in prison if they unfairly manipulate the free market. "Those instances would probably prompt a criminal or civil investigation and possibly prosecution," State Representative Marcus Oshiro (D) said.
"I don't think any of the actions I've seen in our markets approach anything near criminal; certainly not by our company," Aloha Petroleum President Bob Maynard said.
Lawmakers agreed to meet again Friday, said the report.
And further complicating these issues, on April 2, Hawaii began requiring all stations to pump a blend with 10% ethanol, an alcohol-based fuel made from sugar cane, reported KHON2-TV. The idea is to make Hawaii less dependent on imported oil, boost the local sugar cane growers and offer tax credits for local ethanol producers, the report said.
But the ethanol will not come from Hawaii, the report said. Maui and Oahu ethanol companies thought they would be turning cane to alcohol fuel by now, but problems with financing, land acquisition and engineering issues have pushed plans back to 2007. So ethanol will have to be imported.
Click here for official information on Hawaii's gasoline cap.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.