EDITORIAL
Lawsuit didn't end high gas prices but may help

Hawai'i motorists have always felt in their gut that they were being ripped off at the gas pump. They heard for years the tired "price of paradise" argument for why they were sometimes paying 50 cents a gallon more than drivers on the West Coast.

They had a right to get their hopes up in October 1998, when the state launched, with great optimism, a $2 billion antitrust lawsuit against the major oil companies supplying Hawai'i with gasoline.

"This is the cleanest, strongest case I've ever seen," said Spencer Hosie, the San Francisco-based antitrust lawyer who carried the state's banner. He argued that the companies reaped huge profits of 50 to 60 cents a gallon compared to 10 cents on the West Coast and 2 to 3 cents in other parts of the country.

After four years and millions of dollars worth of legal work, it became clear the state had no choice but to settle the suit — for 1 percent of what it had sought.

In short, the state couldn't directly prove that the oil companies colluded to fix prices. One reason the wheels came off is that the state no longer had the "smoking gun" it believed it had when the lawsuit was launched — a witness who allegedly had been present at the "scene of the crime."

Another reason, said Hosie, was a change in legal climate, with some adverse rulings on anti-trust cases at the 9th Circuit Court of Appeals.

Hosie argues that a chain of conclusions one can draw from evidence obtained over those four years proves that the companies were conspiring to keep prices high.

By 1999, however, the 9th Circuit had made it clear, in effect, that such circumstantial reasoning might be good enough to convict a murderer, but not good enough to win an antitrust conspiracy case.

Consumers might use a similar chain of circumstantial reasoning to wonder if the promise of the lawsuit when it was filed might not have been overinflated, coming as it did a month before the 1998 election. Cayetano denied again yesterday that political considerations had anything to do with the decision to sue.

Meanwhile, the gas companies maintain that their profit margins result from their legal, independent actions rather than collusion.

"Just because you can't prove it doesn't mean it didn't happen," commented Rep. Ed Case this week in questioning Hosie at the Legislature.

But instead of worrying endlessly about whether the state failed to prove a conspiracy, we should accentuate the positive results of this lawsuit — even if they weren't anticipated at the time the suit was filed.

Here, claims Hosie, is what we know for sure as a result of the suit:

• It costs the same or even less to make gasoline in Hawai'i than on the Mainland.

• It's not high costs that cause high gasoline prices in Hawai'i, it's high profits.

• Gasoline isn't in short supply here; indeed it has been exported from Hawai'i and sold elsewhere for less than it would fetch here.

• The Hawai'i gasoline market is profoundly uncompetitive.

Armed with that knowledge, it is time for the Legislature to accomplish what no lawsuit could do: regulate the price of gasoline in Hawai'i.