Citizens group attacks gas study

By Sean Hao
Advertiser Staff Writer

A citizens group yesterday criticized a state-financed report that advocates repealing gasoline price controls set to take effect next year.

The group, Citizens Against Gasoline Price Gouging, also called for an investigation into whether the Lingle administration, which is against gasoline price caps, influenced the findings of the $250,000 report by Stillwater Associates released last month.

The group said it doesn't have evidence to support the charge.

Irvine, Calif.-based Stillwater and the Department of Business, Economic Development and Tourism, which helped compile the report, have both denied the charge.

The citizens group said it is suspicious because of the administration's opposition to price caps and because the report's release was delayed for several months.

John Tantlinger, branch chief for DBEDT's strategic industries division, acknowledged that the department has historically taken a free-market position with regard to regulating the oil industry, but denied that it influenced the report, which he defended as the most comprehensive study of Hawai'i's gasoline market to date.

"We took this right down the middle," he said. "You'd have to live on Mars not to know that this would be and continues to be a controversial issue."

At issue is the report's conclusion that oil industry profits in Hawai'i are not excessive. It recommended alternatives to price caps such as stepped-up monitoring of the industry and initiating a consumer awareness campaign aimed at getting drivers to buy cheaper, lower-grade gasoline.

Critics of the report contend that such alternatives will do little to curb Hawai'i's high gasoline prices.

"They say that the gas cap is not the answer, but they didn't give us any answers either," said Frank Young, chairman for the group and president of the Hawaii Automotive Repair and Gasoline Dealers Association. "We want a legitimate report that is meaningful and accurate."

The Legislature passed price caps last year to artificially limit local oil refinery profits in the absence of Mainland-type competition. However, according to Stillwater, the price caps that would tie Hawai'i's prices to those in California could lead to higher prices and possible shortages.

Young said the report fails to investigate whether the price caps would work if they were tied to a market other than the volatile California area or explore other alternatives such as a tax on excess oil industry profits. The state also should consider building its own gasoline import terminal and gasoline station network to drive down gasoline prices, he said.

In its recommendations, Stillwater rejected the idea of the state's selling gasoline, out of concern that such a move could end up driving some oil companies away, which ultimately could decrease competition and cost jobs.

Young wants Stillwater to revise its report to more fully investigate such options. But Stillwater has said its work on the report is complete.

Tantlinger agreed that Stillwater's work is essentially finished and that its findings don't appear to warrant further study.

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.