Proposed Barrel Tax Increase Will Hike Hawaii Gas Prices and Electricity Rates

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    The heads of Tesoro are considering whether to keep the Kapolei refinery open or cut back on operations and only import crude oil to Hawaii. Chevron, which manages the only other refinery in Hawaii, also is considering cutbacks. If either company eliminates or reduces its operations, economists say there would be immediate and noticeable cost increases at the gas pump and on Hawaii electricity bills. Hawaii consumers already pay the near highest gasoline taxes and highest cost for electricity in the nation.

    With this industry already teetering economically, House members introduced House Bill 2421, a “barrel tax” or “carbon tax bill”, which will increase the tax on unrefined petroleum by $1 per barrel. Their reasoning, they want to discourage Hawaii’s “dependence” on fossil fuels through taxation and encourage renewable energy use and creation. (Aviation fuel is exempted).

    The tax will go into the Environmental Response Revolving Fund, the Energy Security Special Fund, the Energy Systems Development Special Fund, and the Agricultural Development and Food Security Special Fund, rather than the state’s operating budget, but these funds are not protected, and could be raided at any time as is commonplace at the legislature when there is a budget shortfall as is the case this year with the $1.2 billion shortfall estimate.

    Bill co-sponsor, Rep. Cliff Tsuji (D- South Hilo, Panaewa, Puna, Keaau, Kurtistown), who chairs the House agricultural committee, says: “After the recent Tsunami alert, with ports shut down for hours, the reality of our energy dependence became all too clear. This bill is the first step towards self-sufficiency and sustainability.”
    A similar bill passed the House and Senate last year, but was vetoed by Gov. Linda Lingle, R-Hawaii.

    In a March 12 news conference on job creation, the economy and the state budget, Lingle said Hawaii cannot afford this bill, which she deemed a “job-killing piece of legislation

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