Disappeared News

A Senate committee heard rather shocking testimony today on how the Lingle Administration has managed Hawaii's first-in-the-nation gasoline cap law. A representative of the Hawaii Public Utilities Commission testified this morning that the law has not been administered in a way that would lower prices as the law permits. Instead, prices have been set at the maximum values the law allows.

In response to questioning on SB2911 before Senator Ron Menor and Senator Rosalyn Baker, Chair and Vice Chair respectively of the Committee on Commerce, Consumer Protection and Housing, the Public Utilities Commission stated that it has not been administering the price cap law to reduce prices at all, but to only to maintain "stability in the market."

Testimony by the PUC at today's hearing revealed:

• Under the law, when gasoline prices spiked in the aftermath of Hurricane Katrina, the PUC could have removed high Gulf prices from the equation and substituted prices in Singapore, which shares similar sourcing to Hawaii--but it chose not to, thereby allowing Hawaii prices to rise although none of Hawaii's gasoline comes from refineries in the Gulf. Removing the Gulf would have insulated Hawaii prices from the effects of the hurricane.
• The PUC could have reduced the marketing margin from 18 cents to 1 cent, as recommended by their consultant, but did not.
• The PUC could have eliminated the 6.5 cent zone adjustment and accepted their consultant's recommendation of 2.5 cents, but did not.
• Staffing has not been put in place as required by the law until recently, and some is not yet in place

The PUC representative testified he did not understand that the purpose of the law was to reduce prices but understood it to require that the PUC provide "stability in the market" (the law begins:" SECTION 1. During the 2002 legislative session, the legislature found that affirmative action was necessary to address the high price of gasoline...").

Republican Governor Linda Lingle has consistently opposed the gasoline price cap law, which is the first in nation.

It appears now that her administration has used the law in a way that sets prices at the highest rates permitted rather than the lowest. No doubt this has influenced many of the public to conclude that the gas cap has not worked.

The Hawaii State Legislature is currently considering bills to both fine-tune and improve the gas cap law and to repeal it altogether. Some testimony has referred to the high prices following Katrina as proof that the law is not working. Other testimony points to the soaring price of diesel fuel, which is not regulated, as a demonstration that it is working (the price of gasoline and diesel often went up and down in tandem in the past).

During the period that the gas cap has been in place, oil companies have reported all-time record profits, indicating that the law has not harmed them as has been predicted by its critics.

At a time when taxes and prices are rising and putting pressure on those with limited incomes, failure to fully implement the gasoline cap has been a hardship for individuals on limited or fixed incomes and for small businesses struggling to meet expenses.

Today's hearing has demonstrated that the gas cap law has been rigged in such a way as to produce higher prices than it could have if the intent of the legislature were followed by the Lingle administration.

To administer the law in a way that maintains high prices rather than produces the maximum reductions is a disservice to everyone in Hawaii--except possibly the oil lobby.