Hawaii Poised to Cap Gasoline Prices

HONOLULU (AP) - Watching as the numbers on the gas pump climbed higher and higher, Van Nguyen said he absolutely agrees with Hawaii's effort to become the first state to cap gasoline prices.

The measure approved by lawmakers Thursday would cap prices beginning in July 2004. Gov. Ben Cayetano is expected to sign it.

"You have to regulate those guys," Nguyen, 27, said Friday as he filled up his Toyota with regular unleaded gas for $1.59 per gallon near Waikiki. "If you don't, you never know where they'll end it."

But some industry analysts say the Legislature has doomed Hawaii to a future of reduced competition, which could lead to even higher prices and long lines at the pump. They say the measure will drive some oil companies from the state completely, reducing competition.

John Felmy, chief economist for the American Petroleum Institute in Washington, D.C., said lawmakers need only look back at federal attempts to regulate gas prices in the 1970s.

"We all remember the gas lines," he said. "It was a perfect example of a failed energy policy."

The bill would allow the state Public Utilities Commission (news - web sites) to set a maximum price on gasoline based on an average of prices in West Coast markets. Profit margins for dealers would be capped at 16 cents per gallon on regular unleaded gasoline.

Critics call the move an election-year effort to keep consumers happy that will end up hurting businesses. "It's going to hurt every dealer in the state," said Bill Green, a dealer who operates a Shell station on Oahu.

Supporters, including state Attorney General Earl Anzai (news, bio, voting record), say evidence shows there is no economic reason for Hawaii's notoriously high pump prices.

"The fact that the so-called free market approach has consistently failed to deliver equitable gas prices in Hawaii justifies the action that were taking today," Democratic state Sen. Ron Menor (news, bio, voting record) said.

The nationwide average for regular unleaded gasoline is $1.40 per gallon, 23 cents cheaper than it was a year ago, according to the Energy Department. Average per-gallon prices in Hawaii ranged from $1.60 in Honolulu to $1.88 in Wailuku.

The oil industry says market factors such as high taxes and higher fixed costs due to Hawaii's remote location — the so-called "price of paradise" — all factor into prices.

"In Hawaii, as with many other things, the cost of doing business is higher than other places," said Fred Gorell, a spokesman for ChevronTexaco Corp. "Over time, that gets reflected in the service that you deliver to the customer."

Profit margins on a gallon of gas typically fall within a range of 6 cents to 15 cents, according to industry trade figures. The business is seasonal, though, with profit margins rising during the summer and falling in the winter.

Chevron's Gorell declined to speculate on what ripple effects Hawaii's law might have, but Felmy said he doesn't think other states will follow Hawaii's lead.

"I don't see it spreading to other states with the wisdom that we've learned from price controls in the past," he said.

Because the price cap doesn't take effect until 2004, the Legislature has ample time to study gas prices and repeal or revise the law if necessary.

Meanwhile, Hawaii consumers like Waylon Blair are left to wonder if they will ever pay prices comparable to the mainland.

"We're all part of the same country," he said. "Why pay different prices just because of where you live?"

"We're all part of the same country," he said. "Why pay different prices just because of where you live?"

And this from a State who taxes visitors more then others........

Visitors Pay More Hotel Taxes in Hawaii

Thus, Hawaii's hotel room tax in dollars was 36 percent higher than the national average in 1997. When Hawaii's higher room tax rate kicks in on January 1, 1999, the average hotel room tax in dollars for our state will jump to over $14 per night, probably more than 40 percent higher than the 1999 national average.

So everyone plan to go to Hawaii and spend the same you would for a local hotel stay and dinner.

The Man versus the State
by Herbert Spencer
1884

"And yet the mischiefs wrought by uninstructed law-making, enormous in their amount as compared with those caused by uninstructed medical treatment, are conspicuous to all who do but glance over its history. The reader must pardon me while I recall a few familiar instances.
Century after century, statesmen went on enacting usury laws which made worse the condition of the debtor -- raising the rate of interest "from five to six when intending to reduce it to four," as under Louis XV and indirectly producing undreamt of evils of many kinds, such as preventing the reproductive use of spare capital, and "burdening the small proprietors with a multitude of perpetual services."
Of kindred nature was the measure which, in 1315, to diminish the pressure of famine, prescribed the prices of foods, but which was hastily repealed after it had caused entire disappearance of various foods from the markets; and also such measures, more continuously operating, as those which settled by magisterial order "the reasonable gains" of victuallers.
Of like spirit and followed by allied mischiefs have been the many endeavours to fix wages, which began with the Statute of Labourers under Edward III, and ceased only sixty years ago; when, having long galvanized in Spitalfields a decaying industry, and fostered there a miserable population, Lords and Commons finally gave up fixing silk-weavers' earnings by the decisions of magistrates.
Here I imagine an impatient interruption. "We know all that; the story is stale. The mischiefs of interfering with trade have been dinned in our ears till we are weary; and no one needs to be taught the lesson afresh."
My first reply is that by the great majority the lesson was never properly learnt at all, and that many of those who did learn it have forgotten it. For just the same pleas which of old were put in for these dictations, are again put in. " In the statute 35 of Edward III, which aimed to keep down the price of herrings (but was soon repealed because it raised the price), it was complained that people "coming to the fair... do bargain for herring, and every of them, by malice and envy, increase upon other, and, if one proffer forty shillings, another will proffer ten shillings more, and the third sixty shillings, and so every one surmounteth other in the bargain."
And now the "higgling of the market," here condemned and ascribed to "malice and envy," is being again condemned.
The evils of competition have all along been the stock cry of the Socialists; and the council of the Democratic Federation denounces the carrying on of exchange under "the control of individual greed and profit."
My second reply is that interferences with the law of supply and demand, which a generation ago were admitted to be habitually mischievous, are now being daily made by Acts of Parliament in new fields; and that, as I shall presently show, they are in these fields increasing the evils to be cured and producing fresh ones, as of old they did in fields no longer intruded upon.
Returning from this parenthesis, I go on to explain that the above Acts are named to remind the reader that uninstructed legislators have in past times continually increased human suffering in their endeavours to mitigate it; and I have now to add that if these evils, shown to be legislatively intensified or produced, be multiplied by ten or more, a conception will be formed of the aggregate evils caused by law-making unguided by social science.

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