EDITORIAL
Gasoline price spike isn't from competition

We're startled to learn that U.S. Energy Secretary Spencer Abraham is worried the recent national gasoline price spike isn't sufficiently explained by market forces and might therefore be the result of market manipulation.

Startled for two reasons: First, that we hadn't thought concern for consumers was exactly a hallmark of the Bush administration; and second, it rings a bell: The likelihood that gasoline prices are artificially high in Hawai'i — and what to do about it — has been the subject of intense debate here for a long time.

When gasoline prices hit a national average of $1.75 last week, Secretary Abraham became concerned that the oil industry might have taken advantage of the Northeast power blackout, the war in Iraq and other factors.

Being outraged at $1.75 gasoline prices seems like a luxury problem to us, of course, as the O'ahu average climbs above $2.03. The price gap between gasoline here and the national average has not been explained to our satisfaction.

But there's no doubt at all that the Hawai'i "market" alone is not enough to set reasonable prices, as conclusively demonstrated by testimony emerging from the 2002 settlement of an antitrust lawsuit by the state against Hawai'i wholesalers. Hawai'i wholesalers set prices high enough to make themselves the highest profits in the nation because there's nothing to impede them.

That should change next summer, when gasoline price caps for Hawai'i passed by the Legislature last year go into effect. It is quite clear, however, that this legislation needs some serious tweaking between now and then if it is to be effective.

For starters, the law bases the cap on West Coast fuel prices, which are even higher than they are here. (It should come as no surprise that at least one candidate in California's gubernatorial race, front-runner Cruz Bustamente, is advocating gasoline price controls there.) The law as presently written would thus "limit" the price of regular here to about $2.43, a lot higher than it is now.

But price controls are neither rocket science nor are they newfangled concepts. They worked very well during World War II and during a period of hyperinflation during the Nixon administration. They can work here, too, if the willingness is present to make it happen.

The major difficulty is that Gov. Linda Lingle is on record as opposing the gasoline price caps. We can understand her concern that price controls would seem to intensify Hawai'i's reputation as being "anti-business." But Hawai'i's artificially high gasoline prices have done more than almost anything we can think of to hurt business here — all businesses, that is, except the gasoline wholesaling business.

It's Lingle's duty to enforce the law, of course, but it's difficult to see how it can be appropriately fine-tuned if there's little enthusiasm in her office. We hope she decides that Hawai'i consumers — and businesses — have been paying far too much for too long for gasoline.