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By MARK NIESSE, AP
HONOLULU (May 6) - Gas prices keep going up everywhere, and Hawaii's unique attempt to control them is running on fumes.
The isolated island state whose drivers consistently pay the highest pump prices in the nation has given up on its government-regulated price controls after an eight-month experiment.
With the average price for regular in Hawaii rising above $3.38 per gallon Friday, Gov. Linda Lingle signed into law a suspension of the cap that sought to keep the oil companies in check and give a fair price to customers.
Bad timing with rising oil prices, outrage among island motorists, industry lobbying and public pressure in an election year combined to scuttle the nation's only state attempt to cap the cost of fuel.
"In a lot of people's minds, they thought the gas cap wasn't working," said Sen. Paul Whalen, a strong supporter of the law. "It was hard to generate lots of support for it because ... we're paying more than we ever were before."
Hawaii first imposed weekly limits on wholesale gas prices Sept. 1 based on the average of prices in Los Angeles, New York and the Gulf Coast. Then allowances were added for what it costs wholesalers to ship to Hawaii and distribute gas to more remote islands.
Price caps differed for each island. There was no cap on the markup added by gas stations.
Some opponents argued that the state's limit on gas prices actually helped the oil companies boost profits because they knew they could charge up to the maximum allowed.
Another problem was that it was hard to tell whether the law did any good.
"It's ridiculous. Prices jumped up 20 cents in the last couple of days," said Calvin Reddick, who paid $15 for just over four gallons of gas for his Volkswagon Beetle. "Usually when you have a cap, it's supposed to freeze prices off. Obviously, their idea of a cap is different from mine."
Because the oil refiners keep their profit margins and costs private, it was difficult for even experts to determine whether residents were paying more or less than they would without the gas cap.
One study by an economics professor showed the gas cap cost consumers 5 cents more per gallon.
An analysis by the state Department of Business, Economic Development and Tourism estimated that island motorists paid $54.9 million more than they otherwise would have in the first five months under the cap.
But research by cap supporter Rep. Marcus Oshiro indicated the limits saved drivers $33 million.
"It was a failure, and other experts that have looked at it have said the same thing," said Anita Mangels, a spokeswoman for the Western States Petroleum Association, which represents ChevronTexaco and Shell Oil. "It was well-intended, but apparently according to the state's own agency has not served consumers well."
With customer unrest mounting and aggressive oil company lobbying, lawmakers felt they had to do something before the November election and before prices went up further.
Rather than forcing down gas prices with a lower price ceiling, the state's mostly Democratic Legislature suspended the cap and gave Republican Gov. Linda Lingle, who had opposed any regulation of gas prices, the power to bring it back if she decides fuel has gotten too expensive.
That way, legislators passed on responsibility for any price control to the governor.
"Going into an election year, they weren't willing to support gas pricing regulations, given the concerns of many people in the public, and I think the oil companies did a good job of blaming the pricing regulations for the high prices," said Sen. Ron Menor, chief advocate of the gas cap.
At the same time, the law provides for computation of a hypothetical gas cap using a new formula expected to be about 16 cents a gallon lower than the current one. The revised calculation will include prices from low-cost Singapore, and it will disqualify the highest-priced market from the average of the four regions.
"It will remain as a flashing sign that will remind Hawaii's consumers what the price would have been under the gas cap," said Scott Foster, a spokesman for Hawaii Advocates for Consumer Rights. "The more information we get, the more we can understand about how the industry has been gouging us."
Other parts of the law lifting the controls require the oil companies to make their wholesale pricing information public so that customers could compare pump prices with actual costs. Currently, that information is kept confidential by the companies.
"We understand that people desire to know what the situation is," said Albert Chee, a spokesman for Chevron. "No one can claim exactly what the effect has been. I don't know if following of mainland prices has better served our customers."
Even though the gas cap has been suspended, it isn't going away.
Lawmakers said it has inspired interest from other states that want to try to hold down soaring gas prices.
"We're going to be talking about gas prices for a long time. The president is looking into it, Congress is looking into it," said Sen. Will Espero, a steady backer of regulating the oil industry. "This issue is a complicated and complex matter that doesn't have an easy, simple solution."
HONOLULU (May 6) - Gas prices keep going up everywhere, and Hawaii's unique attempt to control them is running on fumes.
The isolated island state whose drivers consistently pay the highest pump prices in the nation has given up on its government-regulated price controls after an eight-month experiment.
With the average price for regular in Hawaii rising above $3.38 per gallon Friday, Gov. Linda Lingle signed into law a suspension of the cap that sought to keep the oil companies in check and give a fair price to customers.
Bad timing with rising oil prices, outrage among island motorists, industry lobbying and public pressure in an election year combined to scuttle the nation's only state attempt to cap the cost of fuel.
"In a lot of people's minds, they thought the gas cap wasn't working," said Sen. Paul Whalen, a strong supporter of the law. "It was hard to generate lots of support for it because ... we're paying more than we ever were before."
Hawaii first imposed weekly limits on wholesale gas prices Sept. 1 based on the average of prices in Los Angeles, New York and the Gulf Coast. Then allowances were added for what it costs wholesalers to ship to Hawaii and distribute gas to more remote islands.
Price caps differed for each island. There was no cap on the markup added by gas stations.
Some opponents argued that the state's limit on gas prices actually helped the oil companies boost profits because they knew they could charge up to the maximum allowed.
Another problem was that it was hard to tell whether the law did any good.
"It's ridiculous. Prices jumped up 20 cents in the last couple of days," said Calvin Reddick, who paid $15 for just over four gallons of gas for his Volkswagon Beetle. "Usually when you have a cap, it's supposed to freeze prices off. Obviously, their idea of a cap is different from mine."
Because the oil refiners keep their profit margins and costs private, it was difficult for even experts to determine whether residents were paying more or less than they would without the gas cap.
One study by an economics professor showed the gas cap cost consumers 5 cents more per gallon.
An analysis by the state Department of Business, Economic Development and Tourism estimated that island motorists paid $54.9 million more than they otherwise would have in the first five months under the cap.
But research by cap supporter Rep. Marcus Oshiro indicated the limits saved drivers $33 million.
"It was a failure, and other experts that have looked at it have said the same thing," said Anita Mangels, a spokeswoman for the Western States Petroleum Association, which represents ChevronTexaco and Shell Oil. "It was well-intended, but apparently according to the state's own agency has not served consumers well."
With customer unrest mounting and aggressive oil company lobbying, lawmakers felt they had to do something before the November election and before prices went up further.
Rather than forcing down gas prices with a lower price ceiling, the state's mostly Democratic Legislature suspended the cap and gave Republican Gov. Linda Lingle, who had opposed any regulation of gas prices, the power to bring it back if she decides fuel has gotten too expensive.
That way, legislators passed on responsibility for any price control to the governor.
"Going into an election year, they weren't willing to support gas pricing regulations, given the concerns of many people in the public, and I think the oil companies did a good job of blaming the pricing regulations for the high prices," said Sen. Ron Menor, chief advocate of the gas cap.
At the same time, the law provides for computation of a hypothetical gas cap using a new formula expected to be about 16 cents a gallon lower than the current one. The revised calculation will include prices from low-cost Singapore, and it will disqualify the highest-priced market from the average of the four regions.
"It will remain as a flashing sign that will remind Hawaii's consumers what the price would have been under the gas cap," said Scott Foster, a spokesman for Hawaii Advocates for Consumer Rights. "The more information we get, the more we can understand about how the industry has been gouging us."
Other parts of the law lifting the controls require the oil companies to make their wholesale pricing information public so that customers could compare pump prices with actual costs. Currently, that information is kept confidential by the companies.
"We understand that people desire to know what the situation is," said Albert Chee, a spokesman for Chevron. "No one can claim exactly what the effect has been. I don't know if following of mainland prices has better served our customers."
Even though the gas cap has been suspended, it isn't going away.
Lawmakers said it has inspired interest from other states that want to try to hold down soaring gas prices.
"We're going to be talking about gas prices for a long time. The president is looking into it, Congress is looking into it," said Sen. Will Espero, a steady backer of regulating the oil industry. "This issue is a complicated and complex matter that doesn't have an easy, simple solution."
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