EDITORIAL
Politics of gasoline cost controls heats up
It's a measure of the political firepower of fuel prices in Hawai'i that at least two of the candidates for governor this year are pushing the somewhat drastic step of using state power to hold down the price of gasoline.
And the Legislature, after looking at the issue for years, appears newly energized to do something about Island prices, which traditionally have been among the highest in the nation.
Much of the action is fallout from the state's antitrust lawsuit against local suppliers, which produced an avalanche of information that suggests local consumers have been paying far more than necessary for their gasoline.
The state says it is convinced there is relatively little competition in Hawai'i and that the producers — led by market leader Chevron — are enjoying profit margins unknown in other jurisdictions.
Enter into this picture Democratic gubernatorial candidate D.G. "Andy" Anderson, who proposes setting up a publicly owned, nonprofit "Hawai'i Fuel Authority," which would get into the local gasoline and diesel fuel market.
Even allowing for all costs and reasonable profits, Anderson says, the authority could ship in, store, deliver and sell gasoline at $1.34 a gallon on O'ahu, considerably below the current market.
This would create potentially huge savings for local consumers and would undoubtedly drive down the wholesale prices charged by local refiners, he argues.
Anderson's plan is based on a somewhat similar nonprofit called the Hawaii Fueling Facilities Corp., which was created in 1990 to guarantee local supplies of jet airplane fuel and to give the airlines a way to import, store and use jet fuel when they find a bargain on the international "spot" market. This operation has had the effect of keeping jet fuel prices much closer to national averages than retail gasoline and diesel, he says.
There are a myriad of devilish details in Anderson's proposal, not the least of which is the difficulty of getting the necessary enabling legislation enacted and putting in place the necessary regulatory controls. There is also a philosophical argument to be joined: about whether the state should be getting into competition with private business, even on a commodity as crucial as fuel.
Still, the proposal ups the stakes for the debate about fuel prices and whether the political system can do anything about them.
At the Legislature, Demo-cratic Rep. (and gubernatorial candidate) Ed Case is moving in a different direction, toward some kind of indexing of gas prices pegged to market crude oil prices. Spencer Hosie, the lawyer who managed the state's case, has suggested a straightforward "benchmarking" of local prices against a standard already in use by the industry on the West Coast.
Ultimately, of course, it would be best if free-market competition would be enough to drive prices down. Experience suggests that isn't going to happen.
Anderson's proposal would take a year or two to put into place under the most optimistic scenario. As the Legislature and the political system debate the pros and cons of his ambitious plan, the state should look into a benchmarking system that could go into effect almost instantly. It would give local consumers and policy-makers the time and space to decide how much public control they wish to exert over the cost of fuel in the Islands.
