Posted on: Monday, April 15, 2002

EDITORIAL
Relief is needed now from high gas prices

A Senate committee has gone ahead and approved the creation of a joint legislative panel to study how gasoline prices are set in Hawai'i in light of a recently settled antitrust lawsuit against oil companies.

That's all very prudent. But what exactly are the lawmakers likely to learn that hasn't already been established in the state's four-year investigation into alleged gasoline price fixing?

Though the San Francisco law firm hired by the state to take on the oil companies couldn't directly prove a conspiracy, we now know there's no good reason why Hawai'i motorists should be paying among the highest gasoline prices in the nation.

We know there's an ample supply of gasoline in Hawai'i and that it costs the same if not less to produce gasoline in Hawai'i than on the Mainland. Yet Hawai'i's gasoline market is suspiciously sheltered from economic forces and blatantly uncompetitive.

And it will likely remain so unless some drastic changes are made soon.

So we're inclined to side with House members who want to move swiftly on setting a price cap on gasoline. While an immediate remedy is needed to bring down inflated gasoline prices, we also need to look at alternative pricing mechanisms for the future.

One immediate option is benchmarking, a process that could peg local wholesale oil prices to West Coast wholesale prices using the Oil Price Information Service. Of course, extra pennies per gallon would have to be added to the OPIS benchmark for transportation and other costs. But proponents say it would still lower the price.

Another intriguing alternative is gubernatorial hopeful D.G. "Andy" Anderson's proposal for the state to enter the fuel business, introducing homegrown competition that would force the oil companies to lower their wholesale prices. This would be achieved through a publicly owned, nonprofit "Hawai'i Fuel Authority." That authority, however, could take more than a year to set up. And only after a thorough discussion — most likely through the political campaign — on the pros and cons of putting the state into the oil business.

Of course, price capping or benchmarking could get mired in the courts for years if oil companies decide to sue the state. So swift action is not guaranteed no matter which approach we take.

By all means, let an investigative committee study the issue and come up with recommendations for the next legislative session. It might ask why a lengthy attorney general's investigation concluded that the high cost of doing business was primarily responsible for high prices while the lawsuit came up with a totally different conclusion.

But in the meantime, let's get some relief at the pump now. The economy needs the extra tens of millions of dollars that might be saved.