If the state gas-cap law goes into effect as scheduled July 1 in the law’s current state, many Kaua‘i gas retailers will go out of business.
If amendments headed for approval by the state Legislature change the law, wholesalers will go out of business.
Jeff Guest, vice-president of Princeville Service Station, predicted that his station, as well as stations in Kilauea and some in Kapa‘a, and all but one in Waimea, will be forced to close if the gas-cap law goes into effect early this summer.
That would be “a disaster” for business owners on the North Shore. Business owners, fishermen and other bulk users of gasoline would have to waste time and fuel to drive to Kapa‘a to get gas, he said.
Guest called the gas cap a “flawed law,” and one that’s “not going to work” and is “strongly opposed.”
He said legislators were “trying to tweak supply-and-demand laws” in enacting the gas cap, and that the plan wouldn’t work for his company because of the disparity between his higher costs due to operating in a resort area.
Guest said he has to pay employees more per hour due to the lack of workers on the North Shore, and pay higher rent due to his resort location compared to gas-station operators in urban areas like Honolulu.
“Are our gas prices in Hawai‘i that out of line?” He said the pre-county-tax cost of gasoline is central to the issue.
“We’re not so out of line (in comparing Hawai‘i gas costs to those on the Mainland),” he said.
We’re “paying 50 to 60 cents per gallon on gas taxes. If you take that away, the pump price is less than the Mainland.”
He said the pre-tax price of gasoline in California is now about $1.70 per gallon, and in Hawai‘i it’s about $1.46 to $1.50 per gallon.
“The truth is that taxes send us over the top,” he said of the pricing of gasoline in Hawai‘i. “If you cut our taxes in half, that would bring the price of fuel down to around $2 per gallon.”
“The number-one thing is to repeal the law. Don’t amend it, repeal it,” he said.
That’s why members of both groups are lobbying the state Legislature to repeal the law this session, and a pair of Big Island gas-station owners have filed a federal lawsuit to prevent the law from going into effect (please see the related story).
The law as written now would place a cap on retail gas prices, tied to Mainland West Coast average pump prices, something many legislators are pushing for especially this election year.
The amendments as proposed would cap wholesaler profits, but not retail prices, making it unprofitable for wholesalers to deliver gas to Kaua‘i’s small, family-run stations.
“We essentially are out of business” if the amendments pass, said Roger Cable, general manager of Senter Petroleum, a Chevron “jobber,” or wholesaler who delivers gas to some small Chevron stations on the island.
Baltazar L. “Balty” Manibog, general manager of Kauai Petroleum, a Union 76 jobber, agreed. “The way it’s enacted, it’s going to eliminate us. I won’t be able to supply my gas stations.”
Manibog said the price-cap amendments “don’t take into account all the middlemen like Kauai Petroleum.”
Cable explained that jobbers like Senter Petroleum and Kauai Petroleum buy gas from Hawai‘i’s two refiners, ChevronTexaco and Tesoro, at prices substantially lower than what retailers pay for gas delivered to their stations.
The current system works well for smaller Kaua‘i stations, which Baltazar says the oil companies don’t care to deliver to anyway. Along the way, the middlemen make a little bit of money, Cable said.
The amendment would cap the price of gas refiners sell to wholesalers, meaning retailers could buy gas from the refiners for the same price the wholesalers pay.
“Where am I going to get my money from to operate?” Manibog asked.
Hawaii Petroleum Marketers Association members including Manibog and County Councilmember Daryl Kaneshiro, who also works for Kauai Petroleum, are trying to encourage lawmakers and Gov. Linda Lingle to repeal gas-cap legislation, Manibog said.
“Price caps just don’t work,” said Cable. “It’s bad law. That is a flawed bill, and they (state legislators) all know it.”
Cable said he supports the lawsuit filed to prevent implementation of the retail gas-cap law, if that’s what it takes to stop implementation.
He and others are imploring state lawmakers to either delay implementation of the cap until further information is acquired, or repeal the law.
State Rep. Mina Morita, D-North Kaua‘i, understands the inadequacies of the current law, even though she worked for its passage as chair of the House Energy and Environmental Protection Committee, Cable said.
“She’s pushing for further study, and we support that,” said Cable.
Baltazar said Morita, state Rep. Ezra Kanoho, D-East and South Kaua‘i, and state Rep. Bertha Kawakami, D-West Kaua‘i-Ni‘ihau, all voted in favor of the amendments.
Baltazar envisions the following scenario on Kaua‘i if the amended gas-cap legislation becomes law:
Small stations will be forced to close, because if jobbers are out of the picture, who is going to supply those stations? he asked. “Oil companies don’t want to deal with small gas dealers. There’s a need for us.”
With smaller stations out of the picture, the remaining stations are “all going to be operated by Chevron,” and will be able to charge whatever price they want.
“How will Shell be able to supply its stations? Where’s the competition?” he asked. “They’re going to have a monopoly.”
Editor Chris Cook may be reached at 245-3681 (ext. 227) or mailto:ccook@pulitzer.net.
Associate Editor Paul C. Curtis may be reached at 245-3681 (ext. 224) or mailto:pcurtis@pulitzer.net.
