Gasoline price caps not on Lingle list
By Sean Hao
Advertiser Staff Writer
Among the items missing from Gov. Linda Lingle's legislative wish list this week were bills repealing the pending gasoline price caps or using options proposed in a state-financed report that blasted price controls.
The lack of such legislation comes despite the governor's recent criticism of the law that would establish price caps for self-serve regular gasoline beginning this summer.
The law was rapped in a state-commissioned study conducted in part by Irvine, Calif.-based Stillwater Associates, which predicted that price caps would lead to higher prices and possible shortages.
Instead the report advocated increased competition by eliminating state laws that restrict where refiners can build gas stations and govern the rent that can be charged dealer-operated stations.
The report also recommended stepped-up monitoring of the state's oil industry and the launch of a consumer awareness campaign to persuade drivers to buy cheaper regular gasoline instead of more expensive premium fuel.
Those proposals, which Lingle backed, were expected to be included in the administration's legislative package, but none of the bills touched on gasoline price controls.
Ted Liu, director for the Department of Business, Economic Development and Tourism, said there was no need for the administration to introduce new legislation, because at least two bills that would repeal the price cap law were held over from last session.
He denied any suggestion that the administration took no action because new anti-gas cap bills could be viewed as supporting the oil industry.
"I don't think that's at all the concern," Liu said. The governor "has made her position on this very clear.
"It was felt there was no need to introduce a bill."
In addition, Liu said, DBEDT proposed a draft bill along with the Legislative Reference Bureau that included the Stillwater recommendations. The draft was provided to legislative leaders, he said.
"There's going to be a process (in the Legislature) and we're interested in working and being a part of that process," Liu said.
In 2002, the Legislature passed price caps tying Hawai'i prices to the West Coast after the state settled a price-fixing lawsuit with refiners for $22 million.
Had the caps been in effect last year, they would have led to higher prices on several occasions because of spikes in West Coast prices.
Stillwater's findings were largely backed by data from the Federal Trade Commission and the National Conference of State Legislators, which found that price controls were not effective when they were imposed during the fuel crisis of the 1970s.
Critics of the price caps also contend that they would result in higher prices as stations try to recoup profits during periods when prices were capped at a lower level.
Proponents argue that the alternatives mentioned in the Stillwater report would not meaningfully reduce Hawai'i's high gasoline prices.
Yesterday, the average price of a gallon of gasoline statewide was $2.067 — 45 cents higher than the national average, according to AAA travel club.
Bills to repeal the gas caps were introduced last year in the House by Joe Souki, D-8th (Wailuku, Waiehu) and in the Senate by Sam Slom, R-8th (Kahala, Hawai'i Kai).
Sen. Ron Menor, D-17th (Mililani, Waipi'o), chairman of the Senate Committee on Commerce, Consumer Protection and Housing, has said he plans to introduce a bill to modify the price cap formula and impose caps on all major grades of gasoline and diesel fuel.
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
