Big Isle dealers sue over gasoline price cap

By Sean Hao
Advertiser Staff Writer

Two dealers on the Big Island have filed suit to stop a state law capping prices on gasoline from taking effect, citing due-process issues in the measure. Advertiser library photo

Bob and Cynthia Dixson, owners of Dixson Service in Kailua, Kona, and Betty Tomori, owner of Ken's Service Station in Hilo, argue that the law, which was passed in 2002, is an unconstitutional taking of property without due process.

Bob Dixson said he decided to pursue the case out of concern the price-cap law would put him out of business. However, he would not disclose specific figures on how much price caps would cut into his profits.

"If this price cap goes into effect, it would just be a matter of time before I would have to shut my business down," he said.

Lawmakers already are considering changing the gas-cap law to make it apply only to wholesale prices and delaying its implementation.

Bridget Holthus, special assistant to the attorney general, said the office had no comment on the lawsuit. Gov. Linda Lingle opposes gasoline price controls.

The price caps tie Hawai'i prices to those on the West Coast. It was passed after the state settled a price-fixing lawsuit with refiners for $22 million. The law was created in part to artificially impose Mainland-type competition in the Islands.

On Saturday, the average price for a gallon of gasoline hit a new high of $2.146 statewide and a record $2.063 on O'ahu, according to AAA travel club.

Dixson and other dealers who have spoken out against price caps maintain that the retail margin allowed under the law may not be enough to offset the rising cost of doing business. Instead, Dixson said lawmakers should consider cutting the 58 cents per gallon in federal, state and local taxes that drivers pay — the highest in the country.

Sen. Ron Menor, D-17th (Mililani, Waipi'o), an architect of the price-cap law, said the lawsuit would only strengthen the resolve of lawmakers to keep the law, with amendments.

Among the changes being considered is basing the price-cap formula on a national average of gasoline prices rather than an average of West Coast prices. The bill also would tighten up a provision in the law that gives the governor discretion over whether to implement price caps.

Some legislators also are considering delaying price caps for another year.

"The dealers are misguided to the extent that their lawsuit is based on the provisions of the current law," Menor said.

Many of the proposed changes are a result of a state study that found that the current price-cap law would not lower gasoline prices and could lead to less competition.

Menor predicted the lawsuit would have no impact on whether price caps ultimately are implemented.

"I could think of better ways for them to spend their money than on this lawsuit," he said. "I'm just wondering to what extent the dealer opposition is being motivated by the oil companies."

Although the public-relations firm representing Dixson and Tomori, Communications Pacific, also represents refiner ChevronTexaco Corp., the Dixsons denied that the oil companies are behind the lawsuit.

Bob Dixson said he's footing $20,000 on the suit out of his own pocket.

"I have a red-hot credit card, but there comes a time when you have to stand up for what you believe in," he said.

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