Hawaii Sets Caps on Wholesale Gas Prices - Dallas Dance Music - Dallas nightlife, music, tickets, and more

Joseph V · 08-26-05, 03:48 AM

we need a law similiar to this in texass...

HONOLULU - In an effort to gain some control over what motorists pay at the pump, Hawaii on Wednesday became the first state in the U.S. to set caps on the wholesale price of gasoline.

The 2004 law authorizing the caps was intended to force Hawaii's two refiners, Chevron Corp. and Tesoro Corp., to set their wholesale prices closer to mainland rates. Proponents of the law said the refiners were taking advantage of the small, isolated market to charge exorbitant prices.

But industry officials and analysts said Hawaii, whose average retail gasoline prices are the highest in the country, now runs the risk of becoming less attractive to suppliers, raising the possibility of supply problems down the road. However, some analysts gave the state credit for developing a pricing model that takes market forces into account.

The state's Public Utilities Commission said Wednesday that, beginning Sept. 1, wholesalers in Honolulu may not charge more than $2.1578 a gallon for regular unleaded, or about $2.74 a gallon when taxes are included. The commission set the caps, which will fluctuate from week to week, at different levels for other islands.

The law does not establish a cap at the retail level. But if retailers keep their usual 12-cent-per-gallon markup, prices for regular unleaded in Honolulu could in theory rise to about $2.86 per gallon.

On Wednesday, the average retail price of regular unleaded in Honolulu was at a record $2.761, some 15 cents above the nationwide average. Statewide, prices average $2.84, the highest in the nation, according to AAA's Web site.

Prices on Maui have already topped $3 a gallon this week.

Direct comparisons between the current gas caps and wholesale prices are not possible because the oil companies do not release wholesale price data. The ceilings will be in effect through Sept. 4, with the commission releasing a new set of caps next week.

The caps are based on an index calculated from the five-day average of spot rates from three mainland markets: Los Angeles, New York harbor and the U.S. Gulf Coast.

The commission then adds on allowances for the cost of shipping to the state and for transporting gasoline from Oahu to more remote and less populated islands.

"The purpose of the cap is so that we move with the rest of the country," said Frank Young, a member of Citizens Against Gasoline Price Gouging.

But John Felmy, chief economist of the American Petroleum Institute, the oil industry's main trade group, said Hawaii should be prepared for negative unintended consequences. "They are basically assigning different amounts of revenue to different areas of the supply chain," Felmy said, and that could have a "chilling effect" on attracting supplies or new investment in the market.

"It's a solution in search of a problem," he added.

Gov. Linda Lingle, who unsuccessfully sought repeal of the 2004 law passed by the state Legislature, has said she worries the cap will actually increase prices and create fuel shortages. The governor has the power to suspend the price caps if she determines they would cause a major adverse impact on the economy, public order, or the health, welfare or safety of the people of Hawaii.

Fereidun Fesharaki, an energy expert at the University of Hawaii's East-West Center in Honolulu, said the gas cap was "a stupid idea" that would be bad for competition and, ultimately, consumers.

"It may make one of the refineries shut down and leave Hawaii," Fesharaki said.

But state Sen. Ron Menor, the chief architect of the law, has said he is convinced it will lead to lower prices at the pump and should at least be given a chance.

Chevron and Tesoro did not return calls Wednesday seeking comment. Chevron owns a 54,000 barrel-a-day refinery in Hawaii and Tesoro has a 95,000 barrel-a-day refinery.

Chevron said in a statement, "We continue to believe that this law is flawed and not in the best interest of the state," The Wall Street Journal reported on its Web site Wednesday night. Tesoro said its Hawaii operation believes any cap "will only serve to distort market forces and will result in long-term negative impacts to the citizens and the economy of Hawaii."

The state Legislature first passed a gas price cap law in 2002 based on the average weekly price on the West Coast, but it was never implemented. Lawmakers in 2004 amended the law to peg the cap to an index of prices around the country.

"The fact that their pricing mechanism is market-related minimizes the risk that a physical shortage would arise," said Tim Evans, senior oil analyst at IFR Energy Services in New York.

"They are attempting to go about this in an intelligent fashion," he added.

But other analysts were less sanguine about the possible damage from interfering in the market.

"It's a slippery slope," said Tom Kloza, director of the Oil Price Information Service in Wall, N.J. "You run the risk of dissuading some folks from marketing in certain areas."

Only time will tell, Kloza added.

bfp · 08-26-05, 09:07 AM

No we don't. It's the last thing we need.

Look at what price controls did in the late 70's and early 80's.

Everytime something like this happens - politicians think that they have to solve some sort of 'crisis'.

Dionysos · 08-26-05, 11:14 AM

Quote:

The ceilings will be in effect through Sept. 4, with the commission releasing a new set of caps next week.

In other words, in 7 days the caps will be raised again. The caps are based on gas prices on the mainland. As long as mainland prices keep rising, these caps are meaningless.

bfp · 08-26-05, 12:14 PM

Quote:

Originally Posted by Dionysos

In other words, in 7 days the caps will be raised again. The caps are based on gas prices on the mainland. As long as mainland prices keep rising, these caps are meaningless.

Price controls will cause shortages, and will raise the prices even further.

Within four months of Reagans executive order doing away with what Hawaii implemented recently(price controls), the price of gas per gallon dropped from $1.41 to ¢.86.

Joseph V · 08-26-05, 04:35 PM

Quote:

Originally Posted by Dionysos

In other words, in 7 days the caps will be raised again. The caps are based on gas prices on the mainland. As long as mainland prices keep rising, these caps are meaningless.

well when gas prices were 2.37 on the mainland.. prices in hawaii were 3.00. hawaii just felt like it was unfair..

and with the current trend of price gouging, i think we need to do SOMETHING man, because the oil companies are making so much money off of us, its not even funny.

bfp · 08-26-05, 05:02 PM

Quote:

Originally Posted by Joseph V

well when gas prices were 2.37 on the mainland.. prices in hawaii were 3.00. hawaii just felt like it was unfair..

and with the current trend of price gouging, i think we need to do SOMETHING man, because the oil companies are making so much money off of us, its not even funny.

They need to realize that its more expensive due to shipping from the mainland to their state, and that politicians can't simply fix the problem by using price controls. Supply and demand.

I've fixed the problem on my end. Me and my wife car pool each day. We have also conserved on our electricity - saving over 100 a month.

That's how you hit their pocketbooks.

Dionysos · 08-26-05, 06:23 PM

Quote:

Originally Posted by bfp

I've fixed the problem on my end. Me and my wife car pool each day. We have also conserved on our electricity - saving over 100 a month.

That's how you hit their pocketbooks.

Yep. The only answer to this problem long-term is reduced consumption. Anything else is at best a band-aid.

Joseph V · 08-26-05, 06:36 PM

well with new drivers being introduced to the market EVERY SINGLE DAY, the whole "less consumption" idea is just another bandaid, imo.

Dionysos · 08-26-05, 06:41 PM

Quote:

Originally Posted by Joseph V

well with new drivers being introduced to the market EVERY SINGLE DAY, the whole "less consumption" idea is just another bandaid, imo.

There are old drivers dying EVERY SINGLE DAY too.

This is a very simple equation. The cost of a good meets at the intersection of supply & demand. Given that the supply is finite, the only true way to control the price is to control the demand. This is basic economics. So carpool to work, ride a bike, and don't buy so many plastics. In the meantime, the gov't should be exploring alternative fuels. If the country would adopt these practices, US demand - and consequently global demand - would drop tremendously.

08-26-05, 06:52 PM

I don't see what there is to argue about. Hawaii deserves it more than anyone else. It's one of the most expensive places in the US to live. I mean you heard him, $3 a gallon in Maui. FUCK THAT.

Good thing about Hawaii though is the public transportation. Nobody needs a car there. Owning a car in Hawaii is a luxury.

08-26-05, 03:48 AM	#1 (permalink)
Joseph V killakali Join Date: Feb 2002 Location: THE INLAND EMPIRE Posts: 9,953	Hawaii Sets Caps on Wholesale Gas Prices we need a law similiar to this in texass... HONOLULU - In an effort to gain some control over what motorists pay at the pump, Hawaii on Wednesday became the first state in the U.S. to set caps on the wholesale price of gasoline. The 2004 law authorizing the caps was intended to force Hawaii's two refiners, Chevron Corp. and Tesoro Corp., to set their wholesale prices closer to mainland rates. Proponents of the law said the refiners were taking advantage of the small, isolated market to charge exorbitant prices. But industry officials and analysts said Hawaii, whose average retail gasoline prices are the highest in the country, now runs the risk of becoming less attractive to suppliers, raising the possibility of supply problems down the road. However, some analysts gave the state credit for developing a pricing model that takes market forces into account. The state's Public Utilities Commission said Wednesday that, beginning Sept. 1, wholesalers in Honolulu may not charge more than $2.1578 a gallon for regular unleaded, or about $2.74 a gallon when taxes are included. The commission set the caps, which will fluctuate from week to week, at different levels for other islands. The law does not establish a cap at the retail level. But if retailers keep their usual 12-cent-per-gallon markup, prices for regular unleaded in Honolulu could in theory rise to about $2.86 per gallon. On Wednesday, the average retail price of regular unleaded in Honolulu was at a record $2.761, some 15 cents above the nationwide average. Statewide, prices average $2.84, the highest in the nation, according to AAA's Web site. Prices on Maui have already topped $3 a gallon this week. Direct comparisons between the current gas caps and wholesale prices are not possible because the oil companies do not release wholesale price data. The ceilings will be in effect through Sept. 4, with the commission releasing a new set of caps next week. The caps are based on an index calculated from the five-day average of spot rates from three mainland markets: Los Angeles, New York harbor and the U.S. Gulf Coast. The commission then adds on allowances for the cost of shipping to the state and for transporting gasoline from Oahu to more remote and less populated islands. "The purpose of the cap is so that we move with the rest of the country," said Frank Young, a member of Citizens Against Gasoline Price Gouging. But John Felmy, chief economist of the American Petroleum Institute, the oil industry's main trade group, said Hawaii should be prepared for negative unintended consequences. "They are basically assigning different amounts of revenue to different areas of the supply chain," Felmy said, and that could have a "chilling effect" on attracting supplies or new investment in the market. "It's a solution in search of a problem," he added. Gov. Linda Lingle, who unsuccessfully sought repeal of the 2004 law passed by the state Legislature, has said she worries the cap will actually increase prices and create fuel shortages. The governor has the power to suspend the price caps if she determines they would cause a major adverse impact on the economy, public order, or the health, welfare or safety of the people of Hawaii. Fereidun Fesharaki, an energy expert at the University of Hawaii's East-West Center in Honolulu, said the gas cap was "a stupid idea" that would be bad for competition and, ultimately, consumers. "It may make one of the refineries shut down and leave Hawaii," Fesharaki said. But state Sen. Ron Menor, the chief architect of the law, has said he is convinced it will lead to lower prices at the pump and should at least be given a chance. Chevron and Tesoro did not return calls Wednesday seeking comment. Chevron owns a 54,000 barrel-a-day refinery in Hawaii and Tesoro has a 95,000 barrel-a-day refinery. Chevron said in a statement, "We continue to believe that this law is flawed and not in the best interest of the state," The Wall Street Journal reported on its Web site Wednesday night. Tesoro said its Hawaii operation believes any cap "will only serve to distort market forces and will result in long-term negative impacts to the citizens and the economy of Hawaii." The state Legislature first passed a gas price cap law in 2002 based on the average weekly price on the West Coast, but it was never implemented. Lawmakers in 2004 amended the law to peg the cap to an index of prices around the country. "The fact that their pricing mechanism is market-related minimizes the risk that a physical shortage would arise," said Tim Evans, senior oil analyst at IFR Energy Services in New York. "They are attempting to go about this in an intelligent fashion," he added. But other analysts were less sanguine about the possible damage from interfering in the market. "It's a slippery slope," said Tom Kloza, director of the Oil Price Information Service in Wall, N.J. "You run the risk of dissuading some folks from marketing in certain areas." Only time will tell, Kloza added. __________________ I used to have a signature but it disappeared and I just couldn't be bothered writing another so please feel free to ignore this.

08-26-05, 06:36 PM	#8 (permalink)
Joseph V killakali Join Date: Feb 2002 Location: THE INLAND EMPIRE Posts: 9,953	well with new drivers being introduced to the market EVERY SINGLE DAY, the whole "less consumption" idea is just another bandaid, imo. __________________ I used to have a signature but it disappeared and I just couldn't be bothered writing another so please feel free to ignore this.

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08-26-05, 09:07 AM	#2 (permalink)
bfp Join Date: Nov 2001 Location: McKidney Posts: 4,278	No we don't. It's the last thing we need. Look at what price controls did in the late 70's and early 80's. Everytime something like this happens - politicians think that they have to solve some sort of 'crisis'.

08-26-05, 06:52 PM	#10 (permalink)
stinky dick licker Guest Posts: n/a	I don't see what there is to argue about. Hawaii deserves it more than anyone else. It's one of the most expensive places in the US to live. I mean you heard him, $3 a gallon in Maui. FUCK THAT. Good thing about Hawaii though is the public transportation. Nobody needs a car there. Owning a car in Hawaii is a luxury.