If you are reading this, you are probably interested in the Gas Cap debacle as it unfolds, so you should also be considering the sources of your information.

The law’s drafters and Cayetano are all lawyers and career politicians. If you think they have expertise in the petroleum industry, don’t bother reading further. I worked 8 years for the predecessor of Tesoro, and have been a jobber and a retail dealer for 17 years, with experience statewide.

In 25 years, there is no aspect of Hawaii’s petroleum industry I have not been directly involved in. We are a small business. I have never worked for Chevron, and I don’t own stock in Chevron, Tesoro, or any other oil company. They supply me just like they supply other jobbers and dealers. If you don’t think my experience is relevant, again, don’t bother reading further.

Cayetano clearly has an agenda with Chevron, or "the 800-pound gorilla" as he calls them for dramatic effect. I’m not going to defend Chevron, but defensiveness and vindictiveness are all over his remarks. This is not the basis for good law. His arguments are stale, and have been hashed out and superceded by new information long ago. The Chevron suit was settled, lawyers made a lot of money, and yet Democrats continue to call it "proof" of wrong doing. Subsequently, they ignored two State consultants’ reports, warning of the dangers or price controls, as well as experts from inside and outside Hawaii.

This was the genesis of the Gas Cap law, so it’s not surprising its few supporters are defensive as it now finally reaches the light of day. The point now is not whether Chevron should be punished for something no one can quite define, it is the law itself and how it is affecting everyone.

Cayetano is also unhappy with the news coverage of the law, claiming the media "act as passive observers," being controlled by Republican "spin artists." If you have been paying attention to the media on this subject for the last few years, you have noticed that they only started to question the law when reality hit recently. Consumers too. Gas Cap supporters have enjoyed years of media support, based on feel-good, unsubstantiated statements, conspiracy theories, and wild claims of industry collusion. Now here we are, and the media is just reflecting the reality of the situation. There is so much negative opinion against the Gas Cap (like the 5-to-1 email against it on Kauai), it just could not be created out of thin air.

The former governor is not a bad spinner himself. He says we had the highest priced gas in the nation before the Gas Cap (not true), and that only the Cap saved us from the evil oil companies during Katrina. He notes Hawaii after the Gas Cap was 35th in pricing in the nation, and 22nd in the AAA’s latest data last week. Probably true at some convenient moment. I don’t know where he gets his information, but you can go to the AAA Web site at http://www.fuelgaugereport.com and take a look for yourself. As of September 9th, Hawaii was third (if you exclude D.C.), not 35th or 22nd.

Cayetano would like you to believe that this law is all about Chevron, and that Chevron admitted its evil ways and should be punished. What ever. The reality of the law is that "those most likely to be hurt" (in the words of the state’s two most recent consultants) are jobbers and rural dealers. We just conveniently disappeared; a speed bump on the road to a bad idea. The latest twist is that suppliers should not charge the Gas Cap maximum when prices go up, kind of giving the impression of some demon preying on the villagers (I guess it’s that 800-pound gorilla again). "Oh, great god Chevron, we are at your mercy; please spare us." What champions of the little guy. Yes, they want Chevron and Tesoro (and presumably also jobbers and dealers) to just cover their costs and a "reasonable" profit (which would be?) when the Gas Cap price goes up.

Being fair minded, I suppose they would also agree to protect these same businesses against losses when the Cap goes down. Don’t hold your breath. Now that the Democrats have set up this law, forcing Hawaii gas prices to track mainland prices (news flash: not to lower them), they want it to be a one-way street. "Don’t go all the way up, but make sure you go all the way down." Come on. The Cap means you have to go down. But they don’t want you to go up? Geez. All the experts have said to expect prices to go to the Cap every week, since resellers have no way of knowing when the law is going to hand them losses.

Here’s one very specific example of what anyone with gasoline storage is going through now: Prices go up 50 cents over 2 weeks. Then the PUC’s Gas Cap calculation shows it is going down 40 cents the next week (this is kind of where we are right now). Every gallon that you have in your tank the night before the price goes down is going to be sold at a 40 cent loss…for sure…guaranteed. So, anyone with half a brain is going to do his damnedest to have as little as possible in his tanks on that last day. He is going to put off deliveries and hope he doesn’t run out, but if he does, it’s still better than getting stuck with thousands of gallons of high cost gas. Unfortunately, many small resellers don’t all have the ability to play this game very well, so it’s just going to mean losses.

Jobbers who buy gas by the barge load (like on Molokai) are in an even worse predicament. We pay a huge amount for that barge load when we order it, whatever the price is. We can’t do anything about timing, because the barge has to depart on schedule. How would you like to have just unloaded 200,000 gallons of gas into your tanks at a fixed cost for the next 4 weeks, then watch the Cap go down 10 cents a week? If that happens to us, we’re going to take a $20,000 loss just in the first week. Before the next barge, we could be out of business on Molokai. Not rhetoric; reality.

On the Chevron/Tesoro level, how would you like to bring in $20 million of crude oil in a ship, and refine it into gasoline, just in time to see the Gas Cap prices go down week after week? If it goes down 10 percent, they lose $2 million. Personally, I don’t see how those companies can continue to take such risk.

This is just some of the lunacy of Gas Cap. The fact of the matter has always been that Hawaii’s gas prices have been very reasonable if our taxes on gas were set at the national average. Hawaii taxes still rank first, at least 20 cents over the national average. Several governors seem to "get it," and are talking about implementing a gas tax reduction. What a concept. None of them is pushing a Gas Cap law.

The former governor says, "Time will tell if Hawaii’s Gas Cap law is effective…" Easy to say, since no one has a clue as to how to measure this. We will all be subject to unsubstantiated political rhetoric on this question for a long time. One thing is for certain: Hawaii drivers have now traded price stability for price volatility. Cayetano is dead wrong when he claims prices here would be even higher without the Cap. Historical data demonstrates clearly that Hawaii prices only react mildly to disruptions in mainland markets (because the refiners generally do not import or export gasoline). Both of the state’s consultants commented on this. Without the Cap, we would be merely reading about prices in the rest of the country and breathing easy. Instead, we get to go through part of the pain of Katrina with the Gulf states (one of the Cap formula markets ingeniously selected by the drafters of the law). But hey, who can prove anything? How convenient.

While politicians jockey for position and votes using the Gas Cap as rhetoric, small gasoline jobbers and dealers are going to do whatever we have to do to keep our customers supplied and stay in business. Hawaii consumers can expect the economic roller coaster ride of their lives until this law can be repealed.

Brian Barbata is a jobber for the islands of Kauai, Big Island & Molokai and can be reached via email at mailto:barbatab001@hawaii.rr.com

HawaiiReporter.com reports the real news, and prints all editorials submitted, even if they do not represent the viewpoint of the editors, as long as they are written clearly. Send editorials to mailto:Malia@HawaiiReporter.com

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