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PRESS RELEASES
For Immediate Release
Contact:
Melissa Pavlicek
808 441-6170
State’s
Experts Confirm Gas Cap Law Hurts Consumers
HONOLULU –
Melissa Pavlicek, representing the Western States Petroleum
Association, released the following statement today
in response to a report by experts hired by the Department
of Business, Economic Development and Tourism to assess
the impact of the state’s gasoline price cap law:
“The gas price cap report presented by the Department
of Business, Economic Development and Tourism today
recommended against implementing the gas price cap law
set to go into effect in July, 2004.
The major findings of the report, prepared for the
State by Stillwater Associates,
confirmed some previously published opinions of petroleum
experts such as the Federal Trade Commission as to consumer
impacts. According to Stillwater:
‘The price caps are not expected to have any
significant beneficial effect for Hawaii’s gasoline
consumers. In fact, recent analysis suggests that they
would increase consumer costs.’
The report dispels the notion that oil companies are
reaping unreasonable profits: ‘Despite high margins
in gasoline, and contrary to public perception, the
petroleum industry in Hawaii does not realize excessive
profits,” Stillwater concludes. Rather, according
to Stillwater:
‘…the overhead costs for each of the six
major refiners, the large number of retail outlets and
the small average throughput per dealer with stations
occupying high cost real estate, all contribute to the
high cost of gasoline.’
With respect to the State’s existing divorcement
law, Stillwater concludes:
‘The current divorcement legislation should
be repealed. Extensive studies in other gasoline markets
show that this type of regulation is anti-competitive
and have, over time, resulted in higher prices.’
The report also addresses the law’s negative
impact on the state’s business community, concluding:
‘The price caps project an anti-business image
for the State of Hawaii, which is detrimental to the
investment climate in general and to specific investments
in Hawaii’s energy infrastructure in particular.’
Finally, Stillwater observes that Hawaii’s gasoline
taxes are on average 12.5 cents per gallon higher than
the average of the U.S. as a whole. This is consistent
with a recent analysis by the American Petroleum Institute,
which reported that as of July, 2003, combined state
and federal taxes on gasoline in Hawaii were the highest
in the country – over 57 cents per gallon.”
Concluded Pavlicek: “If legislators want to help
make Hawaii’s retail gasoline market more competitive,
let’s start by lowering taxes on gasoline, ending
divorcement and repealing the gas cap.”
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