A state-mandated cap on the price of gasoline in Hawai‘i is approaching quickly. Some gas station owners on Kaua‘i fear they may be forced out of business by the cap. Members of the state Public Utilities Commission (PUC) earlier this
A state-mandated cap on the price of gasoline in Hawai‘i is approaching quickly.
Some gas station owners on Kaua‘i fear they may be forced out of business by the cap.
Members of the state Public Utilities Commission (PUC) earlier this week released the standards and procedures for setting the parameters and particulars of the Hawai‘i gas-cap law, which goes into effect Thursday, Sept. 1.
What they didn’t do was set the prices. That will happen Wednesday, Aug. 24, according to the PUC decision document.
Representatives of at least two Kaua‘i businesses directly impacted by the law are anxiously waiting to see what exactly will happen.
“It’s the most ridiculous law ever written,” said Jeff Guest, who has owned Princeville Service Station Inc. for 10 years. Though his business includes the Chevron name, Guest is among those in the “jobber” service sector who are supplied by gasoline wholesalers who deliver to the rural market, or the more “mom-and-pop”-type operations.
Hawai‘i has two refineries, operated by Tesoro and Chevron.
“I really don’t know what’s going to happen September 1,” he said.
Guest gets his gasoline from Senter Petroleum, a wholesale distributor on Kaua‘i.
Roger Cable, general manager of Senter Petroleum said, “September 1 is going to be an interesting day.”
“It (the gas-cap law) is going to affect our business substantially.” Cable said that, depending upon set gas-price standards, there would be no margin to deliver to smaller-volume, independent gas-station operators. He said that unlike the stations served by the large refiners, these smaller stations would likely not be served by the large oil companies.
Guest said he did not know if Chevron drivers would deliver gasoline to his station in the event Senter leaders could no longer afford to do so. He said it might not be worth their while.
During public testimony on the matter in May, Cable made it clear to PUC officials that the “jobbers,” more prevalent on the outer islands than 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.
“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 said 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, sought to cap prices from the wholesale distributors to state gasoline-station operators.
What the PUC members did not do was actually set the prices.
According to the PUC decision, the first maximum pre-tax wholesale price will be available on the PUC Web site on Wednesday, Aug. 24.
These maximum pre-tax wholesale prices will be effective from Thursday, Sept. 1, through Sunday, Sept. 4.
According to PUC officials, commission members will publish the maximum pre-tax wholesale prices every Wednesday, to be effective the following Monday through Sunday.
PUC chief researcher Lisa Kikuta said the 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 the law, the state will be divided into the following zones: Zone 1 is O‘ahu; Zone 2 is Kaua‘i; Zone 3 includes all of Maui, except for Hana, which was designated Zone 4; Zone’s five and six are Moloka‘i and Lana‘i; Zone seven includes the districts of Puna, South Hilo, North Hilo, and Hamakua on the island of Hawai‘i; and Zone 8 includes the districts of North Kohala, South Kohala, North Kona, South Kona, and Ka‘u on the island of Hawai‘i.
According to the PUC, the commission 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.
In addition, every manufacturer, wholesaler, or jobber, upon the request of the commission, shall furnish to the commission, in the form requested, all documents, data, and information the commission may require to make its determination on zone price adjustments. Any person who refuses or fails to comply with a request for information by the commission shall be subject to a fine of up to $50,000 per day. Each day a violation continues shall constitute a separate offense.
Guest said he was unsure how the particular zone regulations would be enforced.
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 an anti-business image.
“The law does not allow the governor to stop the price cap from going into effect on Sept. 1. The law does provide the governor with 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 Lingle’s government media relations officer Russell Pang.
“Because she would need to demonstrate the detriment, she can only make that determination after it is implemented.”
“It’s going to be a big test for government. Will they sit on the side of the big oil companies?” wondered Martin Rice, chair of the Kauai Democratic Party, who is a keen observer of gas prices on Kaua‘i. Rice said it was his guess Lingle would be “obstructionist” on the matter.
Rice said Hawai‘i’s two refineries made much larger profits proportionately in Hawai‘i than they did nationally.
Kikuta said enforcement of the gas cap did not fall under PUC members’ purview, though the law provides for a petitions and complaints section.
Cable said it was his under-standing that the law provided for heavy fines.
During public testimony, Guest said the gas cap “is going to affect the jobbers considerably. If I were in Senter Petroleum’s shoes, I would stop delivering fuels to us.”
Meantime, according to HawaiiGasPrices.com, the lowest regular unleaded gas price listed on Kaua‘i Friday was $2.75 per gallon at Union Service in Waimea. The highest was $2.85 at the Princeville Chevron station.
According to HawaiiGasPrices.com, statewide, the average price of a gallon of unleaded gasoline earlier this week was $2.819. The national average was $2.325. One year ago, the average cost of a gallon of unleaded gasoline in Hawai‘i was $2.51.
