Legislators debate report on gas prices
By Sean Hao
Advertiser Staff Writer
Hawai'i Democrats and Republicans staked out opposite positions on the state's pending gasoline price caps, with Democrats defending the cost controls and the GOP saying the caps should be repealed.
The two sides sparred over the issue as they reacted yesterday to the findings of a state-commissioned report authored mainly by consultants Stillwater Associates LLC that concluded the price caps could lead to higher prices and should be repealed.
High gas prices, which hit another record in Honolulu yesterday, is shaping up to be among the biggest issues legislators will face in next year's session in advance of the 2004 elections.
The Legislature passed price caps last year to artificially limit local oil refinery profits in the absence of Mainland-type competition.
What local refiners charge not only affects gasoline prices, but how much consumers pay for services such as electricity and air fares.
While the Democrats said the price caps should take effect in July as scheduled, they said they would explore alternative formulas used in calculating the ceilings.
Changes in the law could tie the price caps to markets other than volatile California, for example, and direct the Public Utilities Commission to regulate the gasoline industry, the Democrats said.
Republican leaders backed the suggestions in the report, which advised the state to repeal price caps as well as other oil industry regulations and beef up monitoring of the industry to boost competition.
Democrats disagreed, stating that lower prices won't come without serious reform.
"Monitoring will only continue telling us what we already know — gas prices are just too high," said Sen. Ron Menor, D-17th (Mililani, Waipi'o), an architect of the price-cap law. "If the gas caps that are contained in Hawai'i law are too high, then the solution is to fix it, not repeal it."
At least one Republican said that Hawai'i gas prices aren't excessively high. When compared with housing and electricity, the cost of gas isn't out of line, said Sen. Fred Hemmings, R-25th (Kailua, Waimanalo, Hawai'i Kai).
"The truth is, because of the economic environment, the cost of everything is high in Hawai'i," he said. "Gas is not the most egregious cost in Hawai'i."
Republicans accused the Democrats of using gasoline prices to gain a political advantage. Democrats countered by saying that Republicans were caving into oil industry interests.
But both sides agreed to investigate gasoline taxes. Taking federal, state and county taxes into account, Hawai'i's gas taxes are the highest in the nation.
Excluding taxes, the price for regular gas would be $1.49 a gallon in Hawai'i, versus $1.32 a gallon on the Mainland, Hem-mings said. He said lower tax collections resulting from cutting gas taxes could be offset by reducing state spending.
The Stillwater report doesn't advocate cutting taxes. It suggests increasing competition by eliminating laws that restrict where refiners can build gas stations and govern the rent that can be charged dealer-operated stations. The report also recommended eliminating inspection and audits of the oil industry and suggests an awareness campaign to persuade drivers to buy cheaper regular gas instead of premium grades.
In a swing at GOP Gov. Linda Lingle's administration, state Rep. Ken Hiraki, D-28th (Iwilei, Downtown, Makiki), suggested the original report had been manipulated to suit Lingle's position, but he offered no proof of his charge.
Ted Liu, director of the Department of Business, Economic Development and Tourism that coordinated the report, denied any manipulation. "I can assure you that any allegation that DBEDT messed with, altered or tried to influence the findings of the report is off-base," he said.
Average prices for regular gasoline in Honolulu, meanwhile, hit a new high of $2.045 yesterday, according to AAA travel club. The statewide average was $2.10 a gallon. The average price nationwide dipped about 3 cents from a late August high of $1.737 a gallon.
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
