Posted on: Thursday, March 18, 2004
ISLAND VOICES
What high gasoline prices?
By Brian Barbata
Kaua'i petroleum distributor
Every so often, someone writes or is interviewed on TV about Hawai'i's gas prices, an especially hot topic this election year. The media are diligent about their "pump patrols." As do some legislators, they single-mindedly complain that Hawai'i's gas prices are too high and demand action.
To these people, it is deceptively simple: Use the power of government to force the evil oil companies to lower prices and stop gouging.
Unfortunately, life is never that simple. These same people, if asked how many small businesses they would be willing to see fail to hopefully get a few cents a gallon off, would surely reply, "None."
The petroleum industry is complex, like it or not. All gasoline does not pass directly from oil refineries to retail dealers. Thousands of small and large businesses depend on invisible distributors ("jobbers") who break gasoline, diesel fuel and lubricants down into small batches and deliver them. (Legislators have proposed that diesel fuel should be included in a gas price-control law).
Small rural dealers and small jobbers (like me) have pleaded over and over to legislators that the gas price-control law will put them out of business. Over 40 such businesses from all over the state submitted testimony in just one Senate hearing, many in person. These are little guys, not major oil companies, and they are very serious about the threat to their livelihoods.
As far as real gas prices go, remember that gas stations only collect gas taxes for the government, which are not really part of the "price" ... but they are included on the price sign. Total taxes in the United States are as low as 26 cents (Alaska) and as high as 60 cents (Maui) per gallon. What sense does it make to compare street price signs here with those on the Mainland, all of which include taxes? Do a search for "gas prices" on the Internet, subtract the associated taxes, and you will find Hawai'i is not out of line at all.
High prices in Hawai'i are a myth, perpetuated by the media to the level of urban legend. On Monday, March 8, the O'ahu average unleaded regular price, without taxes, was $1.48. On the same day, on the same basis, San Francisco was $1.76, San Diego was $1.70, Las Vegas was $1.64 and Anchorage was $1.44.
If the gas price-control law goes into effect, there is no assurance prices will go down. In fact, if you calculate the proposed "controlled" prices today, they would go up significantly.
But what is really worth considering is how you, the consumer, will know prices are relatively up or down a few months later. There will be nothing to compare with. Prices will have changed everywhere, and there won't be any "uncontrolled" prices in Hawai'i to compare against. There will still be lower apparent prices on the Mainland because of Hawai'i taxes. So, the effect of this law on prices will be invisible, but the damage to small businesses won't.
I sat in a Senate hearing the other day and heard a department official supporting a bill to provide new scholarships for civil engineering students. That seemed innocent enough, so I didn't pay much attention until one senator asked where the money would come from. The answer? "The Special Fund." The senator wisely probed where the funds for the Special Fund would come from. After a fair amount of fumbling and mumbling, the official admitted they would come from "gas taxes."
Do you have any idea how much money is siphoned off your gas taxes for stuff like this, when it is supposed to go to road maintenance? Gas taxes are "borrowed" for other government purposes, yet they are a major cause of what we all see on street signs as the "high price" of gasoline.
If you think trying to lower gas prices through legislation makes sense, consider the unintended damage to innocent and necessary small businesses. Think about the high prices of other things in our state; are we going to control them all? Of all things, make sure you understand the impact of our high taxes when you say gas prices in Hawai'i are high.
