Hawaii Sets Caps on Wholesale Gas Prices

[deminks]

ONOLULU - In an effort to gain some control over what motorists pay at the pump, Hawaii on Wednesday became the first state in the U.S. to set caps on the wholesale price of gasoline.

The 2004 law authorizing the caps was intended to force Hawaii's two refiners, Chevron Corp. and Tesoro Corp., to set their wholesale prices closer to mainland rates. Proponents of the law said the refiners were taking advantage of the small, isolated market to charge exorbitant prices.

But John Felmy, chief economist of the American Petroleum Institute, the oil industry's main trade group, said Hawaii should be prepared for negative unintended consequences. "They are basically assigning different amounts of revenue to different areas of the supply chain," Felmy said, and that could have a "chilling effect" on attracting supplies or new investment in the market.

Gov. Linda Lingle, who unsuccessfully sought repeal of the 2004 law passed by the state Legislature, has said she worries the cap will actually increase prices and create fuel shortages. The governor has the power to suspend the price caps if she determines they would cause a major adverse impact on the economy, public order, or the health, welfare or safety of the people of Hawaii.

http://news.yahoo.com/s/ap/20050825/ap_on_bi_ge/gas_prices_hawaii_caps

[TankLV]

1. Way to go Hawaii!

Maybe next time you won't be fooled into voting for a repuke again!

Glad to hear repuke lingle couldn't override and repeal the law.

[Cha]

2. I'm not sure I understand this

"capping" of gasoline prices? It would be a good thing?

I do hope lingle gets out in 2006 cause I'm moving back to Hawaii in 2007.

[HadItUpToHere]

3. This could end up being VERY bad.

if the oil companies can't make enough money on it, they'll stop sending boats full of oil to the islands...then what?

[Hekate]

4. Hawaii is unique: they are always at the end of the supply chain

Understand this: the population of Hawaii lives on islands. They are a completely captive market.

If a Mainlander doesn't like local goods and services s/he can always drive to another region. My Massachussetts sister and her in-laws drive to New Hampshire for some of their shopping.

This is not possible for the residents of Hawaii. The next regional market is 3,000 miles away, and you can't get there by car.

They have always paid a premium for shipping, and (as far as I know) the population long ago outstripped local sustainability for food. Food from the Mainland used to arrive very stale when I was a kid there. God only knows how long it had been in storage or under what conditions. When I grew up and everything started to come with an expiration date, the dates would be very close to the day I saw the items in the grocery store. I don't know how it is now that warehouses have been virtually eliminated in favor of "storing" goods on moving trains, trucks, and ships, but Hawaii is still a captive market because of its location.

A generation ago studies were done to determine exactly why goods ended up costing so much more than on the Mainland -- all I remember from the newspaper story is that everyone along the way added to the price, and the result was that we paid and paid and paid for everything, including gas for our cars.

Do I believe in protectionism? Under some circumstances, absolutely.

Hekate

[Candide]

5. I was just there last week

$3.09 for regular on Kauai , about $2.76 on Oahu

its about $2.59 right now in CT

[moose65]

6. Just had a thought....

Seems to me that Hawaii would be the ideal place to experiment with hybrid cars or other "new technology" for automobiles. I mean, you can't drive very far on any of the islands, so you wouldn't need a car that could go 400 miles on one tank of gas, plus there's really no need for jumbo-sized SUV's. When I was on Maui in 1999 we rented a tiny little car to get around in, and gas was a lot more expensive on the islands than the mainland. Hawaii could be an example for the rest of the world! Why oh why doesn't the damn administration try SOMETHING to reduce our dependence on oil?? Oh wait, nevermind.....