Saturday, May 06, 2006

Hawaiian Gas Cap Pops Off

Back in September just when the price of gas was starting to heat up, the state of Hawaii decided to head off the problem by taking control of prices by regulating with a price cap. After eight months with the government dictating how much to charge, what do you suppose happened?

With the average price for regular in Hawaii rising above $3.38 per gallon Friday, lawmakers have sent to Gov. Linda Lingle a law to suspend the cap that sought to keep the oil companies in check and give a fair price to customers.

Whoops, who would have thought that the government would end up costing the people more that if they had kept their hands off?

"It's ridiculous. Prices jumped up 20 cents in the last couple of days," said Calvin Reddick, who paid $15 for just over four gallons of gas for his Volkswagon Beetle. "Usually when you have a cap, it's supposed to freeze prices off. Obviously, their idea of a cap is different from mine."

Obviously, they have no idea how the market works.

One study by an economics professor showed the gas cap cost consumers 5 cents more per gallon.

An analysis by the state Department of Business, Economic Development and Tourism estimated that island motorists paid $54.9 million more than they otherwise would have in the first five months under the cap.

Hi. We're from the government and we're here to help. Is there any other group on the face of the earth that can take a bad situation and make it worse (well, yeah, the U.N.). Of course if they hadn't tried it in Hawaii, then how would we know how lucky we were it didn't happen to us?

But research by cap supporter Rep. Marcus Oshiro indicated the limits saved drivers $33 million.

You just have to know which numbers to use and which to ignore. Please note that these numbers are $87.9 million apart. Somebody's pulling numbers out of their ass, and being the people are screaming and the program was stopped, I think it might be Rep. Oshiro, who now has to defend his position on this.

Rather than forcing down gas prices with a lower price ceiling, the state's mostly Democratic Legislature suspended the cap and gave Republican Gov. Linda Lingle, who had opposed any regulation of gas prices, the power to bring it back if she decides fuel has gotten too expensive.

That way, legislators passed on responsibility for any price control to the governor.

They take the chicken's way out. They have just suspended the cap and dumped responsibility on the governor. They don't have to admit they were wrong, and if prices still stay high, they blame the governor for not reimpossing the cap.

At the same time, the law provides for computation of a hypothetical gas cap using a new formula expected to be about 16 cents a gallon lower than the current one. The revised calculation will include prices from low-cost Singapore, and it will disqualify the highest-priced market from the average of the four regions.

If at first you don't succeed....Just rewrite the rules and try again. Government always thinks they could run business better than the actual people who do, it never works, but they'll keep trying til they bankrupt us all.

No comments: