Hawaii suspends its gasoline price cap, adds Singapore quotes

Hawaii suspends its gasoline price cap, adds Singapore quotes

Honolulu (Platts)--1May2006

Hawaii's controversial gasoline price cap was suspended by the
Legislature late Friday, but will continue to be calculated regularly using a
revised formula that includes Singapore spot prices.

A compromise plan was approved on a 9-0 vote by the House and Senate
leadership Friday night that puts the cap on the shelf and authorizes the
governor to reinstate it if it is deemed that prices are hurting the islands'
economy.

The deal came at the Legislature's deadline for voting on new laws, and
it ended a standoff between those lawmakers who wanted to continue the cap or
scrap it altogether this summer.

The plan also requires the Public Utilities Commission to continue
calculating the now-hypothetical cap using a formula of New York Harbor, US
West Coast, US Gulf Coast and Singapore spot values. The original cap plan was
based on the weekly 5-day averages of New York Harbor, USGC and USWC spot
prices. Singapore was added because it was considered the most likely source
of imports other than from the U.S. Mainland.

Despite the recent surge in pump prices in Hawaii and on the Mainland, it
is unlikely that Republican Gov. Linda Lingle, a vocal critic of the price
controls, will place the cap on wholesale gasoline prices back into effect any
time soon.

"This is not a perfect bill, but it is an improvement over what we have
now," Rep. Joe Souki said. "We understand the need to move on."

Hawaii last August imposed a cap on wholesale spot prices under a law
passed in 2004. Prices here historically run significantly higher than the
Mainland.

The plan, which was opposed by the oil industry, appeared to fizzle when
the PUC's weekly calculations routinely produced capped prices that were
little different than the estimated non-capped prices. Critics pointed to the
slight variances as proof that the cap was an exercise in futility that would
only serve to discourage spot gasoline imports.

Hawaii has two refineries: Chevron's 54,000 b/d plant and Tesoro's 95,000
b/d refinery.

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