End of gas cap didn't cause price spike
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The state's suspension of a gasoline price cap hasn't resulted in excessive or inexplicable increases at the pump, according to a report analyzing Hawai'i petroleum pricing data.
The new report also calls attention to the potential for one or both of refineries here to close because of their slim profits and deteriorating outlook.
The report produced for the Hawai'i Public Utilities Commission was mandated in 2006 as legislators moved away from a controversial eight-month-long gas price control program that resulted in pricing abnormalities and volatility.
In suspending the program, lawmakers instituted an oil industry monitoring program to track prices and profit margins locally. State consultant ICF International concluded wholesale gasoline prices have remained relatively close or below prices had the price cap stayed in place past its May 2006 suspension.
The monitoring system "still has some data and category issues to resolve, but it appears that the reporting and visibility of petroleum market information to the commission (PUC) has provided a transparency and watchdog role that was absent in the past," the report said.
"There do not appear to be any aberrant pricing activities by any of the reporting parties."
Under the reporting program, oil companies, suppliers and others must disclose crude oil and refined product prices along with some expenses to the PUC. The state's consultant analyzed the data to determine whether consumers are being overcharged.
Among the findings:
PUC Chairman Carl Caliboso said the commission is continuing to refine the oil industry monitoring program with more automation of data collection and reporting. He said the PUC was continuing to keep tabs on the market conditions for refiners.
"We've known for a while that sometimes the market is hard on some of these industries," Caliboso said.
The report said the refineries' poor financial results in past years should be a concern because demand for their production could shrink in coming years as the state attempts to move away from petroleum to renewable energy and because of possible federal government efforts to reduce greenhouse gas emissions and reduce carbon content in transportation fuels.
"The current profits of these refineries are poor, and in light of the regulatory issues noted, the question of whether or not one or both refiners will close may be a question of when, not if," the report said.
The study also recommended the unpopular gasoline cap program remain suspended and not eliminated. The legislation is a possible control mechanism if the monitoring process does not achieve desired results, it said.
