COMMENTARY
Gas price cap would have backfired this year
By Bill Green
Former Gov. Ben Cayetano saved money at the gasoline pump this year — in spite of himself.
So did Cayetano's Attorney General Earl Anzai, state Senate Consumer Protection Committee Chairman Ron Menor and every motorist in Hawai'i. Drivers here saved $10.4 million, to be exact, thanks to the fact that Cayetano's heavily politicized and highly flawed gasoline price cap did not take effect.
Gasoline dealers have said from the beginning that capping the retail prices of regular, unleaded gasoline will not work. So have University of Hawai'i economists and industry analysts at the Lundberg Report.
State lawmakers were even told the gasoline cap was a bad idea by Stillwater Associates, the consulting firm they hired to prove otherwise. Still, lawmakers missed their chance to repeal the cap this session, leaving open the chance it will take effect in 2004.
Perhaps our fatter wallets will make the point inescapable.
Here's how we all saved money: The legislation passed at the State Capitol in 2002 illogically tied the retail price of regular, unleaded gasoline in Hawai'i to the spot gasoline prices paid on the West Coast, which are far more affected by seasonal fluctuations than Hawai'i.
If you compute what the retail price of regular, unleaded gasoline would have been each week over the last year if the gas price cap had been in effect and compared that to the actual prices on O'ahu, you would find that 75 percent of the time, prices under the gas cap would have been higher — by an average of 10.6 cents per gallon.
At its peak, in March, a capped gallon of regular, unleaded gasoline would have cost $2.24 — 25 cents more than what we actually paid at that time.
A quarter of the time, capped prices would have been lower, by an average 16 cents per gallon. The net result: Over the last year, Hawai'i motorists would have paid an average of 4 cents more for each gallon of regular, unleaded gasoline every time they filled their tanks.
Since Hawai'i motorists consume 260 million gallons of regular, unleaded gasoline a year, that amounts to an additional $10.4 million flowing out of drivers' pocketbooks. About $400,000 of that would have gone to the state as excise taxes, further solidifying Hawai'i's position as the state with the highest gas taxes in the country. And no one has calculated the amount it will cost taxpayers to support the mammoth bureaucracy needed to oversee and administer this law.
What does $10.4 million mean to Hawai'i's economy?
Ask the businesses that count on customers with some extra pocket cash; ask the hula and piano teachers, the toy store owners, the hairstylists and manicurists. Ask the proprietor at the dim-sum shop down the street or the vendor at the newsstand where you buy your favorite magazine.
Small-business people such as myself have a hard enough time existing in this difficult economy without having to endure the effects of "feel good" legislation concocted in a climate of emotion and prejudice.
In the heat of an election year, lawmakers claimed they were helping consumers by capping prices at the pump. The evidence shows us, clearly, that is not true. At least lawmakers still have a chance to redeem themselves. They can repeal this ill-conceived law before we all find our wallets walloped.
Let's hope they do it, for everyone's sake.
Bill Green is the owner of a Kahala gas station.
