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Hawaiian gas cap fails miserably
How do you commit political suicide? Why, institute a gas cap that costs your constituents $55 million more than it would have cost otherwise, of course. Hawaii governor Linda Lingle decided to sign a bill today that would stop the madness that is the Hawaii gas cap, which has put a limit on wholesale gasoline prices based on New York, the Gulf Coast and Los Angeles gas price averages, plus transport. Unfortunately for Lingle and the good citizens of Hawaii, the cap didn't regulate how much gas stations could mark up the wholesale costs, putting gas prices at a whopping $3.38 per gallon. The new law, which suspends the price cap, also computes what gas would be with the cap, as well as showing what wholesale costs are compared to what consumers are paying at the pump -- information that was previously kept confidential.
[Source: Associated Press]
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Reader Comments (Page 1 of 1)
Howard Kerr 9:07AM (5/09/2006)
I don't know about Hawaii, but that gas price in Ca. must be fairly old. We all would love to be paying ONLY $2.28 a gallon for regular. And since premium is usually 15 to 25 more a gallon than regular, does this mean a leg in Menlo Park is only worth about $2.50?
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GrowUp 9:40AM (5/09/2006)
OK, I'm feeling no sympathy. If I'm paying $3.09 in NY (I am) and they're only paying $3.38 AFTER transport and "high" markup...wah.
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Andrew 9:43AM (5/09/2006)
...$3.38 sounds about right where i live. :'( new york is silly.
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Toby 9:46AM (5/09/2006)
Just to put things in perspective: In Sweden we're up to something like $6 a gallon now, and have been for a while. $3.78...well that was 10-15 years ago.
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Braden McGrath 10:07AM (5/09/2006)
to #1 - that picture is old, it's been floating around the web for ages. When it came out, the east coast was still below $2 most of the time.
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Edsel 10:43AM (5/09/2006)
Instead of bludgeoning gasoline suppliers with Marxist price controls, how about reducing Hawaii's fuels tax. "Gas is particularly expensive in Hawaii because of high state taxes..."
I paid 3.22/gal Premium this morning in Massachusetts.
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Spytap 11:28AM (5/09/2006)
It was up to 3.69 here (Los Angeles, West Side) a few days ago. I have to use premium too. I wouldn't be surprised if it breaches 4 bucks a gallon this summer.
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John Smith 12:05PM (5/09/2006)
Well,well... Look at all those blue-staters whining. Your gas prices would plummet like a rock if those clowns you seem to like in your state houses didn't:
1. Tax gas into the sky.
2. Mandate 3,036 different "boutique" blends (each named after a politician's son).
Please spare us.
And go ahead, cap the price of gas. Let's see how long you have any left.
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L3 12:24PM (5/09/2006)
You've got it nailed John. Add 'Prevention of reasonable drilling' to your list. We could be realizing a million barrels a day out of the good old US of A right now in Alaska...
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Jason 12:36PM (5/09/2006)
Yes, let's blame everything on politicians and taxes. Because things would go so smoothly if there were no taxes, right? Especially road surfaces! You know, those things you drive on, with the vehicles you fill with the fuel you're taxed for...to maintain roads you drive on, among other things. Weird how it's circular like that. I know there's certainly no complaints to be heard with oil companies themselves, right? It's quite fine for them to make record profits in the billions of dollars, and yet prices keep going up...Hmm... I get the feeling prices could drop from their end quite a ways without harming their businesses one bit. I know, it'd be sad if they only made, say, $10 billion next quarter instead of $15 billion. I'd certainly cry myself to sleep over such a sad situation.
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Steve B. 1:05PM (5/09/2006)
"1. Tax gas into the sky."
Hmm... haven't seen that yet. Last I checked, taxes account for well under $1 of the cost of a gallon of gas. Compare this to the rest of the civilized world. Claiming excessively-high taxation where none exists can only be:
A) Hyperbolic speech used to push extreme laisser-fair politics by way of deliberate misrepresentation of facts.
B) Abject ignorance.
Which is it? Either you are malicious or ill-informed... my guess is that you'll either not respond, or retort with more hyperbolic ranting about socialism, marxism, dirty libruls, and the new world order, in which case the answer will be clear.
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Ayn Rand 2:47PM (5/09/2006)
OK, gas taxes do not account for a huge amount of the price, but they are not in line with sales tax, and are not disclosed at the pump. This is unethical and it is the governments fault, gas should be taxed at the regional sales tax rate.
Also... the current oil company oligopoly is the product of government intervention. Never has a monopoly or oligopoly existed without their help. If businesses were free to start new stations and find new sources for oil (including Alaska), there would be far more competition (especially here in NY where at least two major oil companies have been driven out due to increasing legislative action).
Not only that, I am all for biodiesel, hybrids and alcohol cars... just making an economic point or two. I just want the alternative fuels to not fall into the same trap.
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GrowUp 2:52PM (5/09/2006)
John, grow up. It's not a red/blue issue. It's an American issue, and a global issue.
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blurger293 3:47PM (5/09/2006)
The story is, IMO, a little midleading. A gas cap in and of itself would not cause prices to RISE any more than if there was not a cap. That makes no sense.
If I am reading the story correctly, wholesale prices were capped, but retailers were free to add whatever markup they wanted. The retailers could have done this anyway, with or without the price cap. But they used the cap as an excuse to move the price directly up to the ceiling, regardless of supply/demand? So apparently the retailers were the ones exploiting the situation, and thus exclusively swallowing whatever shared benefit was supposed to result?
Am I reading this right? It just doesn't seem clear from the reporting. If that's the case, why isn't anyone raising hell at the retailers? And why did they design the cap this way anyway? The result seems obvious.
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iQuack 4:06PM (5/09/2006)
You'd think that by now most people should know that price controls don't work.
But there are always a bunch of ninnies (not always, but usually Democrats) who continue to make the same mistakes over and over again.
I wonder if those people also bet on video tape replays believing that somehow, one of the playbacks will be different.
Lawmakers should be forced to earn at passing grade in Economics 101 because it's clear many have not.
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NEBTEK2002 5:09PM (5/09/2006)
The country is full of people like my neighbors who have to drive their precious kiddies 7 blocks to the same school all of my kids walked to. They also have to drive 6 blocks to Kwik Shop for a 6-pack, chips,and smokes instead of walking.
Yes, Big Oil is manipulative, but we,as a whole, are more than willing to be manipulated.
If the whole SUV, mega-crewcab truck craze coupled with the return of heavy cars with big V-8s hadn't happened Big Oil would have had a much tougher time raising prices.
The only reason we didn't see $2 gas in the '80s is that we all wised up and bought no more car than we really needed.
We also carpooled more.
Our collective dumbing-down brought about $3 gas less than a year after we got $2 gas.
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Karl Rove 9:25PM (5/09/2006)
"Hmm... haven't seen that yet. Last I checked, taxes account for well under $1 of the cost of a gallon of gas. Compare this to the rest of the civilized world. Claiming excessively-high taxation where none exists can only be:"
You should really calm down. Taxes take more than the refining profits so its entirely reasonable to suggest cutting the gas tax as opposed to blaming "big oil."
http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html
This can be seen by comparing gas prices across the nation:
http://www.gasbuddy.com/
"Hmm... I get the feeling prices could drop from their end quite a ways without harming their businesses one bit. I know, it'd be sad if they only made, say, $10 billion next quarter instead of $15 billion."
$5 billion would translate into about $16 for each person, or $4 per month of the quarter. So essentially everyone would get free gallon of gas every month.
Oil company profit margins are not that high compared to other industries. See for yourself:
http://www.conocophillips.com/newsroom/other_resources/energyanswers/oil_profits.htm
The underlying problem is that we are dependent on oil and we have no viable alternative. Blaming "big oil" or passing price controls does nothing to solve this problem.
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Mike 9:37AM (5/10/2006)
Most oil companies are multinational companies. Less than one third of their profits come from the US domestic market.
Herbert Kohl - D, WI, made his money from the department store of the same name.
Mark Dayton - D, MN, made his money from Target (formerly Dayton-Hudson) stores.
Both of those companies had similar, if not higher profit margins than 'big oil.' I will hold my breath until Congress investigates excess profits in the retail industry. gasp. gasp....
I was in Hawaii when the cap went into effect last labor day. The outcome is proof that pandering by public officials can not defy the laws of economics.
Fun Hawaii fact: There are interstate highways on Oahu (H1, H2, and H3).
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