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The Honolulu Advertiser
Posted on: Thursday, April 13, 2006

COMMENTARY
Repeal of gas cap law is no repeal at all

By Melissa Pavlicek

Amid rising evidence that the gasoline price cap has failed to provide consumers with any meaningful benefits, and in fact may have cost them millions of dollars, the House recently voted overwhelmingly to suspend and ultimately repeal the law. And former cap supporters in the Senate appeared to be heading in the same direction.

Now, however, a purported compromise bill has been introduced in the Senate.

This measure starts out by saying that it will suspend the gas cap, but then immediately replace it with a new gas cap formula that would be calculated by the Public Utilities Commission and imposed on gasoline wholesalers in the event actual prices charged exceed what that cap would have been.

Further complicating the proposed law are new reporting requirements, the potential burdens and benefits of which appear to require more study and thought than has been applied thus far.

If you're confused, you're not alone.

The fact is, some seem to be trying to have it both ways — give the appearance of having repealed the gas cap but actually keep an even more complicated version in effect.

Let's not forget why repeal has gathered such momentum in the first place.

Prior to its implementation, the state solicited input from its own independent energy consultants, Stillwater Associates, as well as experts such as the U.S. Federal Trade Commission. Stillwater determined that the gasoline market here is not broken and attributed the price differential between Hawai'i and the Mainland to factors such as higher taxes, as well as the overall higher cost of living and doing business here, which impact the prices not only of gasoline but other essential products as well.

Both Stillwater and the FTC also cited as contributing to the cost of gasoline in Hawai'i existing state-mandated market controls governing gas station rents and limitation of who could open new stations. They and other experts warned that the gas cap was the type of legislation that could actually harm consumers, potentially driving prices even higher and suppressing competition.

That appears to be precisely what has happened since the gas cap was formally implemented last September.

According to an analysis released in February by the state's Department of Business, Economic Development and Tourism, the cap has cost consumers as much as $54.9 million during its first five months of existence.

Thus, the move toward suspension/repeal of the cap seemed to make perfect sense. The direction should be clear.

If, as it appears, the gas cap is a failure, the answer is not to pretend to repeal it and then replace it with an even more complicated formula that could continue to harm consumers and competition.

If enhanced oil industry reporting is an option, it should not be tacked on to a bogus "repeal" bill as a last-minute attempt to "do something" without thoroughly examining the logistics, legalities and potential consequences.

House Bill 3115, the repeal-that-isn't-a-repeal, fails to address the real reason gas prices are higher here than on the Mainland — higher gasoline taxes, the higher overall cost of living and doing business, and anti-competitive government-imposed regulations.

It's time to say "no" to this convoluted measure and move on to the much harder challenge of tackling the true economic conditions that make Hawai'i such an expensive place to live.

Melissa Pavlicek is the Hawai'i advocate for the Western States Petroleum Association, a nonprofit trade organization representing petroleum companies in the western United States.