STAND. COM. REP. 2860

Honolulu, Hawaii

, 2004

RE: S.B. No. 3193

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 3193, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CONSUMERS,"

begs leave to report as follows:

The purpose of this measure is to amend certain provisions contained in Act 77, Session Laws of Hawaii 2002, relating to the imposition of limits on the pre-tax wholesale and retail prices of regular unleaded gasoline in the State.

Your Committee notes that in 2002, the Legislature found that Hawaii's gasoline consumers were paying high prices at the pumps because the gasoline market was dominated by an uncompetitive oligopoly. Act 77 imposed price limits on the pre-tax wholesale and retail prices of unleaded gasoline sold in the State. The price limits were to be determined by a baseline price equal to the average spot pipeline price for regular unleaded gasoline for Los Angeles, San Francisco, and the Pacific Northwest.

Due to the volatile nature of the West Coast spot pipeline prices, this measure changed the baseline to be determined by the national, not West Coast, average spot price for regular unleaded gasoline published by the Oil Price Information Service. This measure also extended the pre-tax maximum wholesale and retail price limits to mid-grade and premium gasoline and diesel fuel. Finally, due to the small size and unusual character of the gasoline markets on the islands of Molokai and Lanai, the limits are repealed for those islands.

Your Committee finds that the problem of high gasoline prices is principally due to a lack of vigorous competition at the wholesale level. In contrast, there is far greater competition at the retail level. Your Committee further finds that small and mid-sized jobbers serving the smaller and more remote retail markets on the Neighbor Islands lack the economies of scale that the refiners and larger jobbers enjoy.

Accordingly, your Committee has amended this measure by:

(1) Repealing the maximum pre-tax retail gasoline price limit;

(2) Providing a Neighbor Island wholesale adjustment factor to certain qualified jobber servicing the islands of Kauai, Maui, and Hawaii; and

(3) Making technical nonsubstantive changes for clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3193, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 3193, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair