Gas cap proposal debated
By Bruce Dunford
Associated Press
It's time for Hawai'i motorists to call their lawmakers if they want to stop paying the nation's highest prices for gasoline, Attorney General Earl Anzai said yesterday.
"I would hope that the public would understand that gasoline costs less or the same to produce it on the West Coast so there's no reason for them to be paying these high prices other than high profits," he said. "I think if they understand that, they'll make themselves known to the people that need to know."
To spread the word about the administration's proposal, Anzai plans a series of news conferences on Maui and Kaua'i today, and in Hilo tomorrow.
"My job is to get the facts out, and I assume the public is going to do something about it," he said.
Motorists statewide will need to make their voices heard to offset the political power of the giant oil companies, Anzai said.
Anzai appeared before three Senate committees yesterday, outlining a new proposal to cap wholesale and retail gasoline prices in Hawai'i. The cap would be tied to prevailing gasoline prices along the West Coast, something Anzai said would save Hawai'i drivers an average of 16 cents per gallon.
He noted that someone using 20 gallons a week would save $166 in a year if Hawai'i's gasoline prices were tied to those on the West Coast, "and most people have more than one car."
Albert Chee, a spokesman for Chevron in Hawai'i, told lawmakers earlier this month that the state's experts indicated that factors such as high taxes, few suppliers at the wholesale level and the isolation of Hawai'i contribute to high prices.
"It's not about profits, it's about the structure of the market," Chee said.
Sen. Fred Hemmings, R-25th (Kailua, Waimanalo), called Anzai's plan "ludicrous."
"If you apply the formula, the present price on Oahu would be $1.64. I bought a tank of gas for $1.58 the last time at Aloha Petroleum," which would be put out of business if the retail price is regulated, Hemmings said.
Before Anzai's gas cap proposal this week, it appeared lawmakers were ready to bypass any price regulation this year and instead propose further study of the issue.
Sen. Ron Menor, D-18th (Mililani, Waipahu, Crestview), Commerce and Consumer Protection chairman, said Anzai's proposal is so different from earlier proposals he has scheduled a public hearing for 6 p.m. tomorrow.
House Speaker Calvin Say, D-18th (Palolo, St. Louis, Kaimuki), said he supports a compromise measure if it protects gasoline importers, "who are stuck in the middle" and have to buy from the local refineries when they run out.
Aloha Petroleum, Ltd. expressed concern yesterday that the state proposal for price caps would hurt the company.
"A wholesale price cap may at times lower the cost of buying gasoline for our competitors' retail dealers, but it wouldn't lower Aloha's costs because Aloha is not a refinery dealer and buys its gas differently," said Tom Malone, Aloha's President and CEO.
"We could be trying to compete with stations whose cost basis is totally different than ours, and by lowering our prices we could be selling gas for less than our costs," he said.
Aloha was not a defendant in the state's 1998 antitrust lawsuit charging several major Hawai'i oil companies of colluding to fix gasoline prices artificially high. Aloha was portrayed as a victim of the conspiracy by the state because Aloha competed on price against the other major gasoline companies.
Malone said the indexing mechanism Anzai is proposing has no bearing on the Hawai'i gas market. He said gasoline represents only about 15 percent of the products produced from a barrel of crude oil
"The refiners could recapture their losses by increasing the price of the other products they sell, such as jet fuel, diesel and ship fuel," Malone said.
Anzai said "any oil company would not want to see any price caps because right now they enjoy the highest margins in the country. So for Aloha, it's easy to compete. They have a huge margin which could cut back a little bit, so I can understand their objections to it. But I don't believe they would have to go out of business because of this."
Frank Young of the Hawaii Automotive Repair and Gasoline Dealers Association said it's important for motorists to call their lawmakers and support the bill "because it's coming right out of their pocket.
"You're talking about $80 million to $100 million in after-tax profit dollars leaving this state," he said.
Anzai's office in January settled its $2 billion antitrust lawsuit against five major oil companies in Hawai'i for $20 million, or 1 percent of the original claim.
The state lawsuit accused divisions of Chevron, Shell, Texaco, Unocal and Tosco of fixing gas prices and allocating market share among themselves as early as 1987. BHP Hawaii and Tesoro, named in the original suit, were dismissed from the case as part of a $15 million settlement in November 1999.
