ISLAND VOICES
There's another way to cut gas prices
By Howard J.T. Lee
Howard J.T. Lee is a business consultant who lives in East Honolulu.
The concept of public utilities was to assure the public would not be gouged by the private sector for the basic needs of "survival": water, electricity, utility gas, sewer, transportation.
This happens when market conditions — supply, demand and competition — are out of kilter, which allows a monopoly or an oligopoly to prosper at the expense to the using public.
This is the exact situation in Hawai'i. Why should gasoline be 30 to 40 cents higher on the Neighbor Islands than Honolulu, when it costs less than 3 cents to transport it from Honolulu or only 5 cents from the West Coast and 8 cents from overseas suppliers?
It has been proposed that the state of Hawai'i establish a quasi-government entity to import gasoline from the likes of Singapore and South Korea and sell it in the open market through "mega" stations, as does Costco. The immediate reaction is: (1) We don't want the state competing with the private sector; (2) state operations are inefficient and they will eventually bungle it; (3) they have no experience in the field.
The proposal would establish a privately owned public utility whose upper-limit prices would be controlled by a commission or a gasoline fuel authority.
Aloha Petroleum imports gasoline, so why doesn't it lower prices to what "we" assume is reasonable? Because it is in the business to optimize profits.
How would the two refineries, Chevron and Tesoro, react? I suspect they would lower their prices to "move product," export or close their manufacturing operations. Back about 20 years ago, the price of jet fuel was approximately 15 cents higher per gallon here than on the West Coast. What happened? The major airlines — Japan, United, American, Continental, etc. — formed a company, Hawaii Fuel Facilities Corp., whose primary purpose was to import jet fuel for its members' use. Today the membership numbers over 40 and the price of jet fuel is less than 4 cents higher than on the West Coast — purchased from the two local refineries, which would prefer not to export the product.
Why not find a way to encourage the Wal-Marts and large shopping centers to provide gasoline at Costco prices?
