State seeking legislation to cap price of gasoline
By Andrew Gomes
Advertiser Staff Writer
The state attorney general's office is proposing legislation that would cap retail gasoline prices at the pump to relieve Hawai'i consumers from paying some of the highest prices for gas in the nation.
The state yesterday submitted a proposed amendment to the last of several legislative initiatives that took aim at regulating Hawai'i gas prices.
Unlike others, this gas-price cap proposal is by far the most comprehensive, setting limits on prices at manufacturing, wholesale and retail levels, capping station rents, and providing price adjustments for marketing costs and Neighbor Island dealers.
Administration officials hope the multi-pronged effort will bolster chances for the bill's passage, but it still faces serious opposition.
The existing legislation, Senate Bill 2179, has been opposed by the Senate. And Senate lawmakers still could kill it, along with suggested amendments, by not submitting the legislation for a conference committee hearing by Friday.
The oil industry and the state Department of Business, Economic Development & Tourism have raised concerns about price regulation, which the Legislature took up after the state earlier this year reached a settlement of its a price-fixing lawsuit against several oil companies for $20 million.
Yesterday Tesoro Hawai'i spokesman Nathan Hokama said the company was reserving comment on the proposed amendment until it has more time to review the measure.
But he said Tesoro officials are disturbed that such a complex proposal would be introduced so late in the legislative session, limiting time for review and comment.
Key senators were in caucus yesterday and could not be reached for comment on the new proposal. But Senate Commerce, Consumer Protection and Housing Committee Chairman Ron Menor, D-18th (Mililani, Waipahu, Crestview), has said he doesn't think the Legislature has enough information this year to pass a bill regulating gas prices.
Last week, the Senate Ways and Means Committee approved a resolution to form a joint House-Senate committee to study gasoline prices in Hawai'i — a move criticized by House members.
House Consumer Protection and Commerce Committee Chairman Ken Hiraki, D-25th (Downtown, Ala Moana), said he is hopeful the input from the attorney general, as well as support from the governor, will give the bill, if amended, improved chances for passage.
The attorney general's office, which spent four years collecting information as part of its legal action against the oil companies, will discuss its proposed amendment with senators on Monday.
Under the proposal, the state Public Utilities Commission would regulate wholesale and retail gas prices on all Islands, and fine manufacturers, wholesalers and retailers who sell gas above set maximum prices.
Maximum prices would be established weekly by the commission, based on prices of regular unleaded gas during the previous five business days in Los Angeles, San Francisco and the Pacific Northwest.
There would be adjustments to the maximum price allowing for marketing costs and Neighbor Island station locations.
The bill amendment also would cap station-lease rent.
"It covers all the bases to ensure the prices will be capped," Hiraki said. "It almost guarantees there would be no way to pass on (additional) costs."
Penalties for overcharging would be the greater of $250,000 or three times the overcharges, plus costs of bringing a civil action to enforce the law.
The previous version of the bill regulated only wholesale prices, and based prices for specific octane-rated gas on a fraction of crude oil from Texas, Alaska, the Middle East and Europe. Penalties were set at the greater of $500,000 or three times overcharges, plus civil action fees.
Both methods of regulation allowed for sellers of gas to petition for maximum price adjustments.
Deputy Attorney General Rodney Kimura was unavailable for comment yesterday. But a letter from Attorney General Earl Anzai said the office concluded that the current version of SB2179 was incomplete and vulnerable to attack, and therefore would support an alternate proposal.
Spencer Hosie, the San Francisco-based antitrust attorney who agreed to sue the oil companies on behalf of the state, earlier this month told legislators that limiting gas prices could bring down the retail price by 20 cents a gallon or more.
He also has said regulating gas prices would allow oil companies to make decent profits instead of excessive returns on investment he said have been as high as 50 percent.
Albert Chee, a spokesman for Chevron, the state's gas market leader, said yesterday that he had not seen the attorney general's proposal but said in general that he has serious concerns about regulating gas prices.
"I would really question what are the consequences of these (price caps) being put in place," he said. "I don't think there has been enough time to think this through ... whether these proposals would serve consumers in the end."
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
