Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Energy and Environmental Protection, Consumer Protection and Commerce, and Judiciary and Hawaiian Affairs, to which was referred H.B. No. 2198 entitled:

beg leave to report as follows:

The purpose of this bill is to:

Your Committees received testimony in support of this measure from a few concerned individuals. Testimony in opposition was submitted by DBEDT, the Western States Petroleum Association, and Tesoro Hawaii Corporation.

Your Committees find that it is of paramount importance to ensure the lowest fair gasoline prices for Hawaii's consumers. At the same time that mainland consumers have been enjoying the lowest gasoline prices in years, Hawaii consumers inexplicably continue to pay a large premium at the pump. Where the price of several types of crude oil used at oil refineries on Oahu has declined 50 percent since October 2000, and other types have also dropped by comparable amounts, wholesale prices that oil companies charge Oahu retail dealers have not similarly declined.

Your Committees find that one way to prevent this type of unfairly discriminatory pricing by oil wholesalers is to apply a benchmarking process to establish an upper limit, or cap, on the wholesale price of gasoline that large oil companies may charge to retailers in the State. This bill creates this benchmark process to prevent oil companies from unfairly increasing wholesale prices, and lowers Hawaii's artificially high wholesale gasoline prices. This bill also recognizes the possibility of an abrupt change in the world market, and in this event, allows manufacturers or jobbers to petition DBEDT to readjust the maximum wholesale price of gasoline. Your Committees further find that while this bill provides a benchmark for the wholesale price, it does not interfere with subsequent retail pricing by refiners.

Your Committees have amended this measure by:

As affirmed by the records of votes of the members of your Committees on Energy and Environmental Protection, Consumer Protection and Commerce, and Judiciary and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2198, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2198, H.D. 1, and be referred to the Committee on Finance.