Posted on: Saturday, March 5, 2005
Gas price-cap law faces new threat
By Sean Hao
Advertiser Staff Writer
A group of House Democrats this week advanced a bill that would effectively kill a gasoline price-cap law scheduled to take effect Sept. 1, although the legislation's chances of final passage appear slim.
House Bill 1705 passed unanimously by the Consumer Protection and Commerce Committee Thursday would give Gov. Linda Lingle, who opposes price controls, the option to not implement the law capping wholesale gasoline prices. The bill now goes to a potentially contentious floor vote next week. Even if the bill passes the House, it would likely face an even tougher time in the Senate.
The Democrat-controlled Legislature passed the price-control law last year by a wide majority. Nonetheless, significant last-minute maneuvering to keep House Bill 1705 alive ahead of a key deadline shows that some Democrats are divided over whether the law is a good idea.
"I'm not a big believer in gasoline caps," said Rep. Kirk Caldwell, D-24th (Manoa), who introduced the bill. "Anytime you start tinkering with the market system of supply and demand you run the risk of creating unintended consequences that you can't anticipate."
Caldwell said he voted in favor of the law last year in hopes of altering or repealing it this year. He acknowledged that House Bill 1705 may be a long shot, but added it addresses important issues.
"I didn't put this in to make a statement," he said. "I put this in because I think it has real merit. How far it gets in the Senate is another thing."
The bill would relieve the Legislature from some responsibility by giving Lingle the discretion not to implement price caps. However, if the caps aren't implemented she must report back to the Legislature on alternative solutions to high gasoline prices.
If Caldwell's bill makes it to the Senate, the measure would likely be referred to the Consumer Protection and Housing Committee. Committee Chairman Sen. Ron Menor, D-17th (Mililani, Waipi'o), said he has no intention of amending the price-cap law, which he helped engineer.
"If the House passes it, in my mind they're caving in to the oil industry lobbyists," he said. "It's highly unlikely that I would hold a hearing on it.
"Clearly passage of this bill would effectively kill the gasoline price cap. I think that would be unfortunate for consumers who are expecting fair and reasonable gasoline prices."
Hawai'i's high gasoline prices are blamed on the market's small size, geographic isolation, high taxes and lack of competition. The average price for regular gasoline statewide yesterday was $2.413 a gallon — the highest in the nation, according to AAA travel club.
Under the law, a complex formula will cap the wholesale price of gasoline on O'ahu and Neighbor Islands. The price-cap formula will be based on spot prices in several markets across the nation, but does not set a ceiling on what retailers can charge. The state Public Utilities Commission is investigating which benchmark and margins make sense in establishing ceilings on gasoline and diesel fuels.
A recent analysis by The Advertiser shows the price cap could have saved O'ahu drivers $11 million on regular gasoline last year assuming retailers maintained a 12-cent margin. However, there's no guarantee that consumers would save money under the law.
Meanwhile, economists and a state consultant warn the law could result in higher prices and shortages. Rather than cap prices Lingle favors deregulation and more oversight of Hawai'i's oil industry.
The committee hearing on House Bill 1705 came with little notice as lawmakers rushed to meet yesterday's deadline for legislation to pass out committee. The hearing was held without any advance notice. Normally, hearings are announced 48 hours in advance.
Six Democrats and a Republican voted in favor of the bill including: Caldwell; Rep. Ken Hiraki, D-28th (Iwilei, Downtown, Makiki); Rep. Ken Ito, D-48th (Kane'ohe); Rep. Scott Saiki, D-22nd (McCully, Pawa'a); Rep. Joe Souki, D-8th (Wailuku, Waiehu); Rep. Barbara Marumoto R-19th (Kaimuki, Kahala, Wai'alae Iki) and Rep. William "Bud" Stonebraker, R-17th (Hawai'i Kai, Kalama Valley).
"Basically they're trying to kill it," said Frank Young, a member of consumer advocacy group Citizens Against Gasoline Price Gouging and a price-cap proponent.
"We don't know where this came from. "This was a total sneak attack."
Reach Sean Hao at 525-8093 or shao@honoluluadvertiser.com.
