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The Honolulu Advertiser
Posted on: Wednesday, March 1, 2006

Lawmakers split on gasoline cap

By Tara Godvin
Associated Press

The tussle over Hawai'i's gas cap heated up yesterday as the Senate heard a bill to tweak it and the House began one of the last steps needed on a bill to repeal it.

The Senate bill sponsored by Sen. Ron Menor, D-17th (Mililani, Waipi'o), chief architect of the state's unique gas cap law, would change the way the caps for individual areas of the state are calculated. He contends the change could save Hawai'i drivers, who regularly pay the highest fuel prices in the nation, about 16 cents per gallon.

Hawai'i also has the nation's highest gasoline tax. Honolulu drivers pay about 65 cents a gallon in taxes, which is more than any other state.

Menor's bill to fine tune the gas cap was heard by the Senate committee he chairs: Commerce, Consumer Protection and Housing.

The House repeal bill, signed by 21 members including House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo, Wilhelmina Rise), calls for more industry transparency, an idea supported by Gov. Linda Lingle. But Menor has said that he doesn't intend to give the House's repeal bill a hearing before his committee a requirement for the bill to be passed in both houses.

The gas cap law, which went into effect Sept. 1, sets a weekly wholesale price cap based on a five-day average of prices in three Mainland markets Los Angeles, New York and the Gulf Coast.

That set up led to spikes in prices early on as fuel prices skyrocketed following hurricanes Katrina and Rita on the Gulf Coast.

The Senate bill is aimed at adding stability to the system and lowering costs by including prices in Singapore in the calculation and dropping the highest of the four prices when figuring the weekly base price.

The House bill went before the House Finance Committee yesterday, one of the last stops for a bill before going to a final House vote. A decision on the bill, however, was deferred until today.

Testimony and questions from lawmakers were relatively spare, with one of the signers of the bill, Rep. Glenn Wakai, D-31st (Salt Lake, Tripler), voicing concerns that it has "no hammer at the end" to punish those companies found guilty of wrongdoing.

The gas cap limits only what wholesalers can charge for gasoline. Retailers are free to set any price they want.

The state's historically high gasoline prices are a result of several factors including Hawai'i's small market size, lack of Mainland-type competition and high tax rates.