On Thursday, May 2, the Hawaii Legislature passed the Energy Resources, Gasoline Pricing, and Petroleum Industry Reporting Act, SB 2179, a bill that will set margins for wholesalers and retailers, making gasoline a regulated utility in Hawaii. The governor is expected to sign the bill into law. Hawaii is the first state to cap gasoline prices, a move critics describe as an election-year tactic that will drive gasoline stations out of business. The price caps are expected to go into effect in July 2004. The bill would allow the state Public Utilities Commission to set a maximum price on gasoline based on an average of prices in West Coast markets. Profit margins for dealers would be capped at 16 cents per gallon on regular unleaded gasoline. “It’s going to damage and hurt small business. It's going to hurt every dealer in the state,” said Bill Green, a dealer who operates a Shell station on Oahu and has been lobbying against the bill. “We’re the people that are out on the firing line,” he added. “They're aiming at the big oil companies, trying to figure they can do something about them, and all they're doing is hurting us.” Opponents of the legislation call the measure anti-competitive, saying it will prevent others from trying to enter the Hawaii market and will force small, independent stations out of business. During a hearing of the Permanent subcommittee on Investigations on April 30, Senator Daniel Akaka (D-HI) indicated that this state legislation might serve as a model for other states concerned about oligopoly or monopoly.

Originally posted on Fleet Financials