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The Honolulu Advertiser
Posted on: Thursday, February 7, 2002

Oil price bill wins backing

By Frank Cho
Advertiser Staff Writer

House lawmakers yesterday gave initial approval to legislation that would cap how much oil companies in the state can charge dealers for the gasoline they supply, but deferred decision-making on nine other measures aimed at increasing oversight.

"What we are trying to do here is lower gas prices," said Rep. Cynthia Thielen, R-49th (Kailua, Kane'ohe Bay Drive), who voted to pass the price-cap bill along to the House Finance Committee. "We have hard-headed business people running the oil industry over here, and our consumers have been paying the price."

The joint hearing yesterday of the House committees on energy and environmental protection, consumer protection and commerce, and judiciary and Hawaiian affairs comes amid a backlash against Hawai'i's oil industry after the announcement last month that the state had settled its $2 billion antitrust lawsuit against the oil companies.

Some legislators have expressed concern that more oversight is needed. Still, others yesterday expressed reluctance at the possibility of increasing regulation.

"Some of us are not very happy with these bills. This is probably one of the worst examples of government overbearance," said Rep. Barbara Marumoto, R-17th (Kahala, Wai'alae Iki).

The bill to institute a wholesale price cap is perhaps the most significant of the nearly dozen pieces of legislation the committees considered yesterday and was the only one to come up for a vote. Decisions on nine other bills were deferred.

Former Chevron dealer Frank Young, a frequent critic of the oil industry in Hawai'i, told the committees that he supports the wholesale price cap because it doesn't interfere with other operations in the state's petroleum industry.

"Based on the state's antitrust suit, it is very evident that we have problems in our oligopolistic state in regard to gasoline prices," Young said.

Oil company officials declined to comment about yesterday's vote. None of the oil companies testified against the bill, after more than five hours of hearings yesterday, because of the pending state antitrust settlement.

But in much of the other testimony by oil industry experts, state officials and others, both oil company and state officials opposed any increased regulation.

Linda Rosehill, representing the Western States Petroleum Association, said her organization opposed the bill, saying Hawai'i's petroleum industry is not a monopoly.

"Hawai'i's petroleum industry, similar to the banking, interisland and shipping industries, is competitive," said Rosehill, whose association represents Chevron, Shell, Arco and Unocal, which represent more than 50 percent of the market.

Maurice Kaya, administrator for the state Department of Business, Economic Development and Tourism's energy branch, said the department is concerned about attempts to regulate pricing.

"We have strong reservations regarding attempts to control prices of any commodity such as gasoline," Kaya said. "One concern is that past attempts to control it by the federal government actually resulted in distortions and inefficiencies in the market."

Among the other bills House lawmakers are considering: requiring wholesalers to report profits and losses quarterly to the state attorney general's office; requiring oil companies come under the oversight of the state Public Utilities Commission; requiring wholesalers to report earnings to the state and cap their return on capital at 15 percent, putting anything above that into a special fund; requiring the state Department of Business, Economic Development and Tourism to provide information on supply and pricing of petroleum in the state; increasing civil penalties for oil companies that fail to provide timely reports.