Members of the state Public Utilities Commission (PUC) Wednesday set wholesale prices for the state’s gas-cap law, which goes into effect next Thursday, Sept. 1. But what happens to prices at the pump is another story. According to PUC members,
Members of the state Public Utilities Commission (PUC) Wednesday set wholesale prices for the state’s gas-cap law, which goes into effect next Thursday, Sept. 1.
But what happens to prices at the pump is another story.
According to PUC members, the price of a gallon of gasoline on Kaua‘i was set at $2.80 including tax, which industry analysts said can range from 55 to 60 cents.
The law caps only wholesale prices.
“What will happen now is that everybody knows what the prices are, they have to figure out what they are really going to do,” said David Hackett, president of Stillwater Associates, an energy-consulting company whose officials have worked with leaders in the state Department of Business, Economic Development and Tourism to study the issue.
Given an average 10-cent-to-12-cent dealer markup at the pump, Kaua‘i’s prices for regular unleaded should be about $2.92 a gallon, or about a penny less than the $2.93 reported last week by gasoline price surveyor Martin Rice, who monitors all 20 Kaua‘i gas stations.
The price of self-service, unleaded regular gasoline hovered just below $3 a gallon ($2.999) in Lihu‘e yesterday, Wednesday, Aug. 24.
Rice is also the chairman of the Kaua‘i Democratic Party.
The cheapest price for a gallon of unleaded regular gasoline yesterday on Kaua‘i was $2.95, according to HawaiiGasPrices.com.
By comparison, the PUC members set the wholesale price of a gallon of gas on O‘ahu at $2.74, while the price for Maui, excluding the rural Hana district, was $2.86.
The new gas-cap law could change consumer habits, according to Hackett.
“Our analysis is that it is a bad idea. Things like this have not worked in the past. It (likely) results in higher prices, not lower prices, and poor service,” Jacket said.
According to PUC officials, commission members will publish the maximum, pre-tax, wholesale prices every Wednesday, to be effective the following Monday through Sunday.
With prices set on Wednesday, Hackett said the challenge will be to see what day a majority of drivers will fill up, and whether there will be adequate supplies.
“The behavior of the consumer could change. Monday could be a high-demand day,” he said. Hackett said if fuel deliveries to Kaua‘i from Honolulu do not keep pace with days of high demand, Kaua‘i motorists could possibly be looking at lines for gas on Sunday or Monday, depending on the prices set.
These maximum, pretax, wholesale prices will be effective from Thursday, Sept. 1, through Sunday, Sept. 4.
The PUC members this week denied requests by officials from Tesoro Petroleum Corp., the Hawaiian Petroleum Marketers Association, Chevron Corp. and Shell Oil Co., that price-cap regulations be reconsidered or postponed, according to a published report.
PUC Chief Researcher Lisa Kikuta said the state gas-cap legislation calls for enacting eight different zones throughout the state, with three different gas-price caps (for different gas grades, regular, mid-grade, and premium) for each zone, for a total of 24 price caps.
According to PUC members, they will establish zone price adjustments to the maximum, pre-tax, wholesale regular unleaded, mid-grade, and premium gasoline prices, on a zone-by-zone basis.
The Hawai‘i price calculations are based on wholesale gasoline prices in New York, the Gulf Coast, and Los Angeles.
In addition, every manufacturer, wholesaler, or jobber, upon the request of members of the commission, shall furnish to commission members, in the form requested, all documents, data, and information the commission members may require to make their determination on zone-price adjustments.
Any person who refuses or fails to comply with a request for information by commission members shall be subject to a fine of up to $50,000 per day. Each day a violation continues shall constitute a separate offense, according to the law.
Gov. Linda Lingle allowed the bill to cap the price of gasoline sold in Hawai‘i to become law without her signature.
Lingle, a Republican who opposes gas-price caps, said she feared that members of the Democrat-controlled state Legislature would go back into session and override her veto, had she vetoed the gas-cap bill.
Lingle campaigned against the original price cap in 2002, saying it would only cause prices to go up, create gas shortages, and give the state even more of an anti-business image than it already has.
The law does give Lingle “emergency powers to suspend the cap, in whole or in part, if it is determined that there is a detriment to public health and safety,” said Russell Pang, Lingle’s government and media-relations officer.
“Because she would need to demonstrate the detriment, she can only make that determination after it is implemented,” Pang said in an earlier interview.
During public testimony on the matter in May, Roger Cable, general manager of Senter Petroleum Inc. in Lihu‘e, made it clear to PUC officials that the “jobbers,” or the service sector workers who are supplied by gasoline wholesalers who deliver to the rural market and the more “mom-and-pop”-type operations more prevalent on the outer islands than on O‘ahu, would be put in jeopardy by the law.
Cable said the law would actually have the opposite effect of its original intent. Rather than protecting the “little guy,” it will actually put the squeeze on them, he argued.
“It allows them (the large refiners) to reap all the (profit) margin, though it will impact their business as well,” he said.
One industry official pointed out that the retail-gasoline business is very competitive, with less profit margin than people would think.
Cable told The Garden Island earlier that if cap prices become too onerous for the refiners, “it might be more economical for them to send it offshore, which could lead to gas shortages.”
The law, enacted during the 2002 state legislative session during the administration of former Gov. Ben Cayetano, a Democrat, sought to cap prices from the wholesale distributors to gasoline-station operators.
Meantime, the price of crude oil remained high, at $66.50 per barrel early Wednesday. According to industry experts, oil accounts for about half the price of gasoline. According to the Automobile Association of America’s daily fuel reports, the statewide average for regular unleaded gasoline was $2.833. One year ago, it was $2.39.
