EDITORIAL
Gas lawsuit documents raise major questions

Documents related to the state's lawsuit over high gasoline prices unsealed last week offer further evidence that there was little realistic hope of scoring a big win for Island consumers.

As reported by writer Frank Cho, those documents suggest that the state's lawyers (if not the state itself) knew almost from the beginning that their key weapon in the lawsuit was worthless. That weapon was supposed to be direct testimony from former Chevron executive Dave Young about meetings held to discuss price-fixing among the various oil companies. But lawyers knew then that Young had no such direct evidence of price-fixing or at least would be unable to testify to that effect.

So what was this lawsuit all about? It created what turned out to be false hope that the state was going to "do something" about the high cost of gasoline in Hawai'i. It created a political stir in the final days of a campaign for governor in which Ben Cayetano narrowly won re-election against challenger Linda Lingle.

But it didn't do anything about Hawai'i's gasoline prices, which are among the highest in the nation.

It's true that this lawsuit cost the state little or nothing, in the sense that the Mainland lawyers will get their fees and expenses paid out of relatively small settlement payments from the oil companies.

But the $20 million or so that will land in the state's treasury is a pittance compared with the hundreds of millions of dollars that the oil companies were alleged to have taken out of the state in excess profits.

One of the most disturbing facts discovered by Cho in his review of the court documents was evidence that a study conducted by University of Hawai'i economist Sumner LaCroix was largely ignored. That study suggested the cause of high prices may not be price-fixing but rather a simple lack of competition in a market where one or two big players are an oligopoly and effectively set prices through market dominance.

There are things that the state can do about such situations. In fact, the oligopoly argument was the core of the state's successful effort to break up the big landholding estates through the Land Reform Act.

So what can be done? Lawmakers are looking at bills that would set caps on gasoline prices or, alternatively, regulate the industry much like a public utility. Both ideas imply government controls over what is now private industry.

A third idea worth at least discussing is a form of market intervention. This would use the settlement money to facilitate the availability of reasonably priced gasoline, either by shipping it in or supporting distribution facilities.

It is clear that just because gasoline can be sold at high prices in Hawai'i does not mean it has to be sold at that level. Now that this lawsuit has come and gone, it is time for the state to become creative about facilitating competition that, in the end, is the best way to ensure fair and reasonable prices of this important commodity.