By Sean Hao
Advertiser Staff Writer
| |||
 |
|||
|
|||
|
|||
Gov. Linda Lingle said yesterday she will suspend the state's new gasoline price cap if it leads to shortages on any of the main islands.
Hawai'i will begin imposing the nation's only cap on wholesale gasoline prices on Sept. 1. The cap was adopted by the mostly Democratic Legislature to bring Hawai'i's traditionally high prices more in line with Mainland prices. But because the cap is based on Mainland gas prices, which have risen recently, it could actually lead to a rise in prices in Hawai'i when it takes effect.
Lingle, a Republican, has opposed the gas cap but said she has no option under the law than to let it take effect. The law does allow her to suspended the caps if they adversely affect the economy, public health, or the welfare and safety of the state.
A refinery shutdown was one of several scenarios Lingle outlined yesterday as possible reasons for her to void the price caps.
Lingle listed the following situations that could prompt her to enact emergency powers to suspend the gas price cap law:
While Lingle discussed ways to suspend the caps, key Democrats urged the Public Utilities Commission to lower its calculation of the price to avoid a situation where the gas cap would lead to an increase in prices.
The PUC said earlier this week that effective Sept. 1 through Sept. 4 wholesalers may not charge more than $2.1578, or about $2.769 including taxes, in Honolulu for a gallon of regular unleaded gasoline. That's just above an average retail price of $2.764 on Honolulu, according to yesterday's AAA Daily Fuel Gauge Report. The law does not cap retail prices.
Assuming wholesalers charge the maximum allowed by the cap and retailers add an estimated 12-cent-per-gallon markup, the price consumers pay at the pump will be higher under the gas cap.
Lingle and others have acknowledged that no one can predict what will happen once the caps take effect. Democratic lawmakers who created the caps maintain that price controls are the only effective way of dealing with Hawai'i's typically high prices, which do not always react to changes in Mainland gasoline prices. Critics of the law contend the caps could damage the state's image as a place to do business, result in shortages, lead to higher prices and cause one of the state's two refineries to close, which would result in hundreds of lost jobs.
While the caps are expected to make local gasoline prices more volatile, it's unclear whether any of those scenarios will occur. However, Lingle said she will monitor the impact and could resort to contingency plans that might address potential problems.
She would not discuss whether she would turn to emergency plans to deal with issues such as shortages, or whether she would seek to suspend the caps altogether. She said she won't try to hurt Democrats by allowing the state's economy or people to suffer.
"Let me be real clear about this," Lingle said. "I am not going to allow a serious, adverse impact just to make a point. I am not going to do that."
Meanwhile. Sen. Ron Menor, D-17th (Mililani, Waipi'o) and Rep. Hermina Morita, D-14th (Kapa'a, Hanalei) yesterday took issue with the price cap formula adopted by the PUC, which administers the caps. Under the current formula, O'ahu wholesalers can charge an additional 6.5 cents to cover the cost of delivering gasoline to remote areas.
Menor said that added margin should only be provided to Neighbor Island wholesalers. Lingle said the price cap law as written requires that O'ahu wholesalers be allowed to charge a markup because they also have distribution costs in O'ahu.
Reach Sean Hao at shao@honoluluadvertiser.com.
