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COMMENTARY The case for getting rid of Hawai'i gas cap By Rep. Kirk Caldwell |
Over the past six months, Hawai'i consumers have experienced the extreme volatility of the experimental gas cap law. After much debate, the House recently took the bold step of moving legislation that would do away with this failed experiment. We should repeal the gas cap because it is the wrong approach to regulating the petroleum industry.
Gas cap law proponents, such as state Sen. Ron Menor, claim the law works because it results in immediate reductions in Hawai'i gas prices when the benchmark spot market prices go down. They say it prevents Hawai'i's "non-competitive" oil companies from skimming excess profits as prices gradually decrease. Even if we assume that the gas cap law has achieved a certain amount of success, as the proponents claim, it imposes wider and enduring costs that outweigh its single purported benefit.
There are several problems with the gas cap:
I believe that many of my colleagues in the Legislature have presented viable alternatives. The House took the first step of doing away with the gas cap. But repealing the gas cap is not enough.
We need to create standard ways of accessing petroleum industry information and then use this information to ensure there is fair competition. Reps. Marcus Oshiro and Hermina Morita introduced legislation to fund a petroleum monitoring, analysis and reporting system.
This important information then needs to be applied to ensure fair petroleum market business practices for the state. Greater success is possible if we beef up our enforcement provisions to combat anti-competitive practices. Two bills introduced by Rep. Oshiro and me would substantially strengthen our existing antitrust laws within the petroleum industry.
We also need to lower the barriers to competition. It is commonly known that the Neighbor Islands are burdened with higher gas prices than is O'ahu. Rep. Jon Karamatsu and I have introduced separate legislation to build adequate storage facilities on the Neighbor Islands that would enable the Neighbor Islands to buy gas at lower prices.
And we need to free ourselves from our dependence on fossil fuels. As demand for fuel in developing parts of the world grows while the finite supply of oil declines, prices will continue to escalate. Unless we are willing to pay exorbitantly high gas prices, alternatives need to be developed. As much as we would like to bury our heads in the sand, our job is to find those alternatives. If we fail, our state economy will be controlled not by businesses and people here in Hawai'i, but by oil suppliers in other countries.
Beyond the gas cap, our energy policy should focus on developing Hawai'i's vast and mostly untapped alternative energy resources. These include solar energy, wind energy, wave energy, ocean thermal energy, geothermal energy and biomass. No other state in our nation is blessed with so many alternative-energy resources.
The House is taking the wide-angle view of addressing the problems of Hawai'i's petroleum industry in a more constructive and meaningful manner. The petroleum market is incredibly complex and there is no simple solution, but steps can be taken so that we better understand how the price of gas is set and ensure that fair competition and reduced demand play a role in keeping prices down.
Rep. Kirk Caldwell is a Democrat representing the Manoa area. He wrote this commentary for The Advertiser.
