HAWAII

Tough Questions and Straight Answers
About Hawaii Gasoline Prices

We realize that consumers have asked a lot of tough questions lately about gasoline prices. We offer the following information to foster a healthy public dialogue on these issues.

Why are gasoline prices in Hawaii generally higher than in other states?
For one thing, gasoline taxes here are the highest in the nation, nearly 55 cents per gallon. Hawaii consumers pay more than $210 million in gasoline related taxes each year: $70 million in federal gas taxes, $60 million in state gas taxes, $20 million in general excise taxes and $63 million in county gas taxes. Source: State Department of Business and Economic Development.

Among the other reasons cited by the State of Hawaii’s non-partisan consultants for generally higher prices are the higher cost of living and doing business in Hawaii, and the higher intrinsic costs of refining and distribution of gasoline.

Further, according to the Federal Trade Commission, anti-competitive laws passed by the Hawaii Legislature “tend to reduce retail supply and increase retail prices.” These laws include rent caps for stations operated by dealers and a ban on opening new company-operated stations near existing dealer-operated stations.

Are petroleum company profits excessive in Hawaii?
Not according to the state’s non-partisan consultants. They said: “Despite high margins in gasoline, and contrary to public perception, the petroleum industry overall does not realize excess profits.”

How do gasoline prices compare to the costs of other products?
According to the Tax Foundation of Hawaii, gasoline prices here have risen far less than for many other products we use every day, such as electricity, food, housing and medical care.

Price Comparisons 1991 to 2001. Source: Tax Foundation of Hawaii

What’s the impact of Hawaii’s gasoline price cap law?
According to local and national experts, Hawaii’s gasoline price cap law is fatally flawed because it will decrease competition, increase the likelihood of gasoline shortages and tend to increase gasoline prices.

According to the most recent report by the state’s consultants, “recent analysis suggests that [the price caps] would increase consumer costs.”

And everyone concerned is aware of the negative consequences. According to the non-partisan report: “All Stakeholders, including the legislators who sponsored the bill, consider the current price cap structure… seriously flawed and realize that implementation as is may result in higher prices for consumers, an even more restrictive competitive landscape at the supplier level and loss of consumer choices in the remote service areas.”

Western States Petroleum Association
Melissa Pavlicek 808 524-1800

9/17/03

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