Endnotes | 
Chapter 10 
Table of Contents |
Question (7) of the Resolution requests the views of the
survey participants regarding the following:
(7) The effects of establishing a petroleum regulatory
commission having general supervision over all
petroleum manufacturers and jobbers in the State with
the authority to:
(A) Authorize new retail service stations and
determine whether they may be operated by a
petroleum manufacturer or jobber;
(B) Restrict price increases when prices rise above a
certain percentage over a benchmark market, as
determined by rules adopted by the commission
under chapter 91;
(C) Decide when a petroleum manufacturer or jobber may
convert a retail service station from one operated
by a gasoline dealer to one operated by a
petroleum manufacturer or jobber, and vice versa;
(D) Decide when a petroleum refiner may close a retail
service station, to prevent communities from being
underserved;
(E) Review management decisions of petroleum
manufacturers and jobbers regarding
infrastructure, strategic planning, and other
areas to ensure market compliance; and
(F) Review profits for reasonableness in light of the
need for petroleum utilities to promote a safe
workplace and ensure environmental protection.
State Government
AG: The Attorney General noted that to the extent question
(7) calls for public utility regulation, this proposal may have a
negative impact on consumers:
The Department reads question (7) as asking for
comments on the desirability of subjecting petroleum
product marketers in Hawaii to public utility
regulation. This is a political issue beyond the
competence of the Department. However, to the extent
that public utilities regulation increases the cost of
doing business and/or the cost of government, the
Department is of the view that such would tend to have
a negative impact on consumers that may or may not be
over-balanced by the benefits flowing from public
utility regulation.343
DBEDT: With respect to questions (7)(A) through (D), the
department stated that "[a]ny action to establish and enforce
price structures does not seem appropriate at this time. Also,
there is no proof that artificially determined pricing will
support increased competition, or protect the consumer."344
Citing the GAO's 1993 study, the Department noted that of
the five broad types of legislation proposed to address unfair
pricing concerns--divorcement, open-supply, anti-price-gouging,
below-cost sales, and minimum-markup statutes--discussions with
state officials found limited evidence that these laws had any
conclusive effect on gasoline prices, and that only five states
had enacted petroleum pricing legislation between 1990 and
1991.345 The department further noted that artificially
stabilized gasoline prices could have the opposite of its
intended effect in Hawaii, and would in addition require a
significant commitment of government resources:
Further, and perhaps most important, governmental
action to stabilize petroleum prices can actually
backfire by making it financially infeasible for a
petroleum company to sell its products at an
artificially low price in the regulated area when
market forces are causing prices to rise in the rest of
the world market. Consider that current world oil
consumption is approximately 67 to 68 million barrels
of oil per day (one barrel equals 42 U.S. gallons).
U.S. oil consumption is approximately 17.5 million
barrels a day. Hawaii's petroleum consumption is only
about 166,000 barrels per day. Hawaii represents only
0.009% of U.S. consumption and a mere 0.002% of the
world market. Accordingly, our small state can have
little influence on the global forces affecting
petroleum prices. Also, we would run the risk of
serious economic consequences in the event of price
spikes like those witnessed in previous oil crises, if
we attempted to artificially stabilize prices. The oil
companies would simply not find Hawaii's small market
with artificially low prices attractive when they can
sell their products at higher prices to the rest of the
world.
Notwithstanding the market rationale for recommending
against establishment of a petroleum regulatory
commission, there remains the issue of staffing and
providing other resources to such a commission during
these fiscally troubled times. For example, the
analytical skills and resources required to effectively
regulate and provide oversight over petroleum industry
management decisions would be enormous by comparison to
those required for the PUC to regulate the electric and
gas utilities. Skills in economics, chemistry,
petroleum logistics, international politics and so
forth would be required of a commission's staff. Even
the oil companies themselves must pay hundred of
thousands of dollars annually for consulting services
in these areas that go beyond their own staff
capabilities. At the risk of being redundant,
competition, not regulations, is what drives the world
oil market and the world oil market drives petroleum
prices in Hawaii.346
With respect to questions (7)(E) and (F), the department noted
its belief that the Public Utilities Commission has had the
authority to conduct this type of monitoring since 1991.347
Gasoline Dealers
HARGD: The Association generally found that the establishment
of such a commission would be beneficial by providing stability in
pricing and assuring consumers the lowest long-term prices of
gasoline:
(7)(A): This would inject a high degree of stability
at the retail level of petroleum marketing and could
provide a good balance based on the guidelines
established for such decisions.
(7)(B): It would provide stability in pricing based on
cost of production. It would also put the commission
in a strategic position under emergency situations.
(7)(C): This would provide a balance to any
divorcement law by allowing vertically integrated
locations where it was felt to be in the best interest
of the consumer. Generally speaking, the petroleum
supplier is interested in through-put only, and not in
other services that have normally been provided by the
franchise locations.... [P]lacing the control of
conversion within a government agency would provide an
alternative to allowing total vertical integration
which would result if supplier were competing against
supplier.
(7)(D): It would assure convenience to the consumer,
but may not address profitability.
(7)(E): [The Association noted that (7)(A) through (D)
accomplish (7)(E).]
(7)(F): Increasing environmental costs are having a
direct affect at all levels from a profitability point
of view. The assurance of reasonable profits at each
level in the petroleum industry would assure the
consumer the lowest long term price at the pump.348
Jobbers
HPMA: The Association stated that treating the petroleum
industry as a public utility would have a negative impact on
Hawaii's consumers:
This is nothing more than having the petroleum industry
be a regulated utility like electricity or water.
Adding a bureaucratic level of government in an
industry that is competitive makes no sense. The cost
of such a government agency would be high. There are
laws in place with regard to antitrust and price fixing
which should answer any current concerns. To regulate
further would be socialistic and detrimental to
competition and other market functions such as supply
and demand. For government to authorize new stations,
price increases, reasonable profits, or when a jobber
can convert to a retail, is contrary to free-market
[principles]. It is ... poor logic to think that this
will benefit the Hawaiian consumers.349
Moreover, the Association argued that existing regulations,
specifically, the moratorium prohibiting manufacturers and jobbers
from operating company stations pursuant to section 486H- 10,
Hawaii Revised Statutes, have had a detrimental effect on Hawaii's
consumers, while other similarly situated industries in Hawaii
remain unregulated:
The moratorium, restricting growth of new company-
operated facilities for the last four years, has not
benefited the consumer one iota. In fact, the
moratorium has created a status quo in the Hawaiian
market and has suppressed competition. The same logic
could also be applied to the Hawaii retail market. The
power marketers, K-Marts, Walmarts, and Sam's Clubs,
... have hurt the small retailers in Hawaii, but on the
other hand have delivered substantial benefits to the
consumers of Hawaii. Should the power retailer[s] be
restricted in their ability to open new facilities
because they threaten the survival of the smaller
retailer? We cannot use logic in one industry and not
the other one, when it benefits the consumer. The
moratorium for the past four years has been a creation
of special interests that has lobbied aggressively and
vociferously for their perceived benefit and has been
contrary to the consumers' benefit. Open competition
is what benefits our Hawaii consumers, not restricting
market growth.350
Aloha Petroleum: Aloha Petroleum noted that the establishment
of such a commission is unwarranted, since Hawaii's petroleum
industry is not a utility, and the incentive to do business in
Hawaii would decrease significantly:
The establishment of a petroleum regulatory commission
with the powers presented in this question would not be
beneficial to ... either Hawaii's petroleum industry or
the consumer. Hawaii's petroleum industry is not a
utility and should therefore not be treated as such.
Existing federal and state regulations significantly
restrict the petroleum market. The establishment of a
petroleum regulatory commission would unnecessarily
increase government cost, intervention and gasoline
prices. Furthermore, the powers that would be given to
the commission as described in the question would
clearly demonstrate an anti-business climate and would
significantly decrease the incentive for doing business
in Hawaii. If the legislature's objective is to
protect Hawaii's consumers by ensuring the lowest
gasoline price possible, then competition is the key
and further governmental regulations such as a
petroleum regulatory commission would not achieve that
objective. If the legislature's goal is to protect a
few large dealers, a petroleum regulatory commission
would not protect dealers from changes in the
marketplace or in consumer buying patterns.351
Oil Companies
Shell: Shell regarded public utility regulation as
inappropriate for the gasoline industry, which would impact
negatively on consumers:
Economic regulation--as distinguished from health,
safety and environmental regulation--benefits the
public only where a market for some reason cannot
sustain economic competition. For example, in some
markets, such as the local distribution of electricity,
the cost of operation can be minimized only by
production at such a large scale that a single firm can
satisfy the entire market demand. In such markets,
where prices are unconstrained by competitors, public
regulation may be necessary to protect the public from
exploitation. But gasoline refining, distribution and
retailing are markets in which competition works. In
gasoline markets, the regulators are the motorists who
choose from which supplier they will buy. The
imposition of unnecessary regulatory costs on suppliers
in a competitive market will result in either higher
prices, a reduced level of products and services
provided by market participants, or both.
(7)(A): This form of regulation would increase the
cost of entry for new competitors and new retail
franchises, which would in turn reduce the number of
new outlets and lead to higher prices. The costs and
delays of the administrative process would confront
anyone who wanted to open a new retail outlet.
Moreover, current market participants could increase
their potential competitors' costs and lengthen the
delays by participating in the administrative process.
This would deter some from opening new outlets at all,
and increase the costs of those who successfully
withstand the process, potentially placing them at a
competitive disadvantage in the market.
(7)(B): The use of governmental administrative
procedures to regulate prices could increase the cost
of operation and consequently increase prices; tend to
stabilize prices at higher levels than would otherwise
prevail, with the administratively-set ceiling serving
as a floor; or, if the regulated price were too low,
diminish suppliers' incentives to invest in service
stations, thus reducing the level of services available
to consumers. Shell is aware of no evidence that
public administrators are better suited than market
participants to the task of determining appropriate
prices for competitive markets, or quickly adjusting to
changing circumstances, so as to avoid these adverse
effects.
(7)(C) and (D): The federal Petroleum Marketing
Practices Act of 1978 preempts the states' ability to
regulate the termination or nonrenewal of retail
gasoline franchises. Regulation of the establishment
of such franchises would not be in the interest of
consumers, as discussed in response to Question 7(A).
(7)(E) and (F): Shell assumes the term "petroleum
utilities" was used advisedly here. Questions 7(E) and
7(F) clearly contemplate public utility regulation of
what is otherwise a competitive market. This would
have all of the adverse effects explained above with
reference to economic regulation in general. In
addition, such a scheme of cost-plus regulation of
profits would appear to create a perverse incentive for
suppliers to increase their costs, which would result
in higher prices.352
BHP: BHP similarly viewed regulation of the petroleum
industry as ill-advised and suggested the existence of an equal
protection problem in view of arbitrary discrimination against
manufacturers and jobbers in favor of others:353
(7)(A): Such authorization represents an unreasonable
restriction on the natural competitive forces present
in this State. Implicit within this statement is the
fact that although a manufacturer or jobber may be
prohibited from operating a retail service station,
"other" non-regulated entities can. Such a result
would have a negative impact on the very competitive
aspects of the marketplace which one assumes such
regulation is trying to protect. By prohibiting one
class of business from entering the marketplace it
establishes an unnatural market monopoly for
"others".... There is no rational basis for drawing
any type of distinction between manufacturers and
jobbers on the one hand and "others" on the other.
Such a two tiered distinction is arbitrary and
discriminatory.
The need for authorization also assumes that a
"commission" would be the best judge as to where a new
retail station would be needed. Again, this improperly
infringes upon the natural competitive market forces.
Such a decision should, rightfully, be left up to the
consumer. If a new retail service station opens and is
not patronized, then it will ultimately have to
close....
(7)(B): Such price restrictions, which apply only to
manufacturers and jobbers, would only exacerbate an
already skewed market structure which allows "other"
entities to function, unencumbered by any regulatory
framework. Unregulated entities could easily undercut
the regulated market, eventually eliminating
manufacturers and jobbers from the marketplace. If
manufacturers are no longer able to economically do
business in this State, then gasoline would have to be
imported and the cost to the consumer would invariably
go up. This does not even take into account the major
economic impact to the State if one of its major
industries were forced to withdraw. Causing a
petroleum manufacturer to discontinue to do business in
the State would negatively impact, among others, the
transportation industry, and power producers.
A barrel of crude oil, when refined, produces more than
just gasoline and product prices are, to a large
extent, dictated by the value of "all" the products
produced from that barrel of crude oil.... It must
take into account the other products produced from that
same barrel of crude oil, all of which are influenced
by global markets and not just this State.
(7)(C): [See responses to (7)(A) and (B).]
(7)(D): One of the basic principles of public utility
law is that the regulated utility is entitled to
collect a reasonable price for the service or product
which it supplies. If a petroleum refiner is forced to
continue to operate a non-profitable service station
[then] such loss would have to be made up at other
retail service stations. This means that one group of
consumers will have to subsidize the gasoline purchases
of another consumer group. It would also make those
other retail service stations less competitive where
they are forced to maintain a reasonable profit margin
for not only their operation but others as well.
Competition would be hurt, consumers would have to pay
higher prices, and if the burden became too great, one
competitor would be eliminated from the market.
There is also no [rational] basis to single out
petroleum refiners, as opposed to any other person or
entity who may own a retail service station. To make
such a distinction is arbitrary and discriminatory.
(7)(E): [Establishing] the necessary regulatory
infrastructure to adequately perform such a review
would be ... costly and unnecessary. The Attorney
General's ongoing pricing investigation has found no
improprieties which would warrant such an expenditure.
Further there are already various anti-trust laws in
existence which can be utilized to correct any illegal
monopolistic activities.
(7)(F): While a safe work place and protection of the
environment are important considerations in any
business they are not the only two components of any
determination of the reasonableness of profits. There
are numerous other considerations which must be taken
into account such as capital employed, risk, taxes,
regulatory expenses, and property costs. To define the
reasonableness of one's profits based solely on whether
a safe work place is provided or the environment
protected is illogical.354
Chevron: Chevron similarly regarded public utility
regulation of Hawaii's competitive gasoline market as "chaotic
and inefficient", and would ultimately lead to higher gasoline
prices:
We interpret this inquiry to ask whether the
public would be served by public utility regulation of
the gasoline business in Hawaii. We believe it is
rather clear that it would not. First, public utility
regulation is normally justified only where for one
reason or another one company has a natural monopoly-
-often granted to it by the State. In Hawaii, there
are at least five competitors at the wholesale level
and hundreds of competitors at the retail level.
Attached as Exhibit 3 is a graph showing the changing
market shares of the five main competitors in Hawaii
over the last 12 years. The fact that these market
share are constantly changing indicates a market
characterized by vigorous competition.
In this context, public utility regulation would
be chaotic and inefficient. It would inevitably raise
gasoline prices to Hawaii consumers and interfere with
the efficient distribution of gasoline in the state.
Our specific comments on each proposal are set
forth below. We note that most of the specific
proposals, on their face, are not designed to keep
prices down, but rather to protect vested interests
from competition in the marketplace. These proposals
are intended to prop up the inefficient and would
inevitably result in higher prices to Hawaii consumers.
(7)(A): If all new retail service stations must
be authorized, then it follows that there will be fewer
such stations than under free market conditions. Such
decisions will inevitably factor in the desirability of
protecting existing retailers from additional
competition. This must put upward pressure on prices.
(7)(B): Artificially restricting gasoline prices
invariably interferes with the ability of the
marketplace to allocate products where they are needed.
Artificial price ceilings inevitably result in
shortages of product where needed. Generally, the
government's response is to control not only prices but
also to allocate products among outlets. As
demonstrated by the experience in the U.S. government
in regulating prices and supplies during the 1970's,
this inevitably creates greater and greater
distortions--resulting in the long run in higher prices
to consumers. If consumers do not immediately pay
higher prices as a result of such controls, they pay in
other ways--such as waiting in line for the reduced-
price rationed product. Exhibit 2 shows that U.S.
consumers have never paid higher prices in real terms
than under the price in allocation controls imposed by
the federal government during the 1970's.
Although gasoline costs more in Hawaii than in
California, the difference is less on a percentage
basis than for most other products....
(7)(C): If a government agency is going to
determine who operates a facility owned by another, it
is obviously going to base its decision on
considerations other than efficiency. Further, the
relationship between oil companies and their jobbers
and dealers and between jobbers and their dealers is
pervasively regulated by the federal Petroleum
Marketing Practices Act, 15 U.S.C. 2801, et seq. (the
"PMPA"). Section 2802(b)(3)(A) of the PMPA prohibits
an oil company from terminating a dealer for the
purpose of converting the station to company-operation.
Section 2806(a) of the PMPA precludes any state from
adopting any law or regulation affecting the
termination or nonrenewal of such relationships unless
it is exactly the "same" as the federal statute.
Hence, in addition to the inadvisability of
substituting government judgments for those of the
marketplace, there may be constitutional limitations on
the state's ability to legislate in this area.
(7)(D): Again, if a refiner may not close an
inefficient service station, this is going to result in
higher prices throughout the system. We are not aware
of any complaints in Hawaii that individual communities
are under served. The marketplace responds very
quickly with the creation of new stations to
accommodate population shifts, new subdivisions, and
the like. Again, the question is whether there is any
public benefit in requiring the taxpayer subsidize
inefficient stations by paying higher prices.
(7)(E): We do not know what is meant by "market
compliance." If the government must review investment
decisions of oil companies before they are made, the
inevitable consequence is simply that (in the long run)
fewer investment will be made. Again, this will result
in inefficiencies and higher prices.
(7)(F): We read this to mean a requirement that
prices not be "too low." This in essence is a
government prohibition against vigorous competition.
Apparently, the justification would be that additional
profits are needed to promote a safe working place and
ensure environmental protection. Again, the real
effect would be to prop up the inefficient through
higher prices. Generally, the approach of the
government has been simply to mandate a safe workplace
and to mandate environmental protection, leaving the
market to seek the lowest possible level of prices
which will support these mandated governmental goals.
Chevron believes that consumers are best served if
the marketplace is allowed to determine prices and
profits....355
Discussion
As noted by several respondents, question (7) proposes
regulating Hawaii's petroleum products marketing industry in a
manner similar to that of a public utility. Public utilities are
those privately owned and operated businesses that regularly
supply the public with a commodity or service that is of public
need and consequence, including electricity, water, gas,
transportation, and telephone service. Generally, the business or
service of the public utility is deemed so essential to the
general public as to justify the grant of a special franchise for
the right of eminent domain or the use of public property, in
consideration of which the owners of the business must serve all
those who apply, without discrimination. Public utilities are
generally regulated as to rates and service as virtual
monopolies.356
In Hawaii, public utilities are regulated by the Public
Utilities Commission (PUC), which is placed within the Department
of Budget and Finance for administrative purposes.357 The PUC is
generally responsible for regulating all franchised and
certificated public service companies providing gas, telephone,
electricity, telecommunication, private water and sewage, and
motor and water carrier transportation services in Hawaii.358 The
three-member Commission's main objective in carrying out its
regulatory function is to ensure that customers of the regulated
companies receive efficient and adequate services at fair and
reasonable rates, while ensuring a fair return to the regulated
companies.359 While similar in some respects to the PUC, the
petroleum regulatory commission proposed in question (7) of the
Resolution would regulate only petroleum manufacturers and
jobbers, primarily in the operation of their downstream
facilities.
Although the Resolution proposes regulation of the oil
industry by an independent commission, it has also been proposed
that the oil industry be regulated by the PUC itself. Several
bills introduced in recent sessions of the Hawaii Legislature
would have required the PUC to assume some regulatory function
over oil companies and others involved in the distribution of
petroleum products.360 One recent bill, Senate Bill No. 1900
introduced during the 1995 Regular Session, specifically sought to
regulate oil companies as public utilities under the jurisdiction
of the PUC. In testifying before the Senate Committee on Consumer
Protection regarding that bill, neither the PUC nor the Department
of Commerce and Consumer Affairs took a position with respect to
that bill. Nevertheless, the PUC suggested a review of the need
for regulation and the appropriation of additional resources to
allow for the development of expertise in the substantive areas
required by the bill,361 and the Consumer Advocate also noted the
need for additional funding.362 The major oil companies also
responded negatively to Senate Bill No. 1900.363
Whether regulated by the PUC or an independent commission, the
classic economic justification for public utility regulation of an
industry lies where the characteristics of that industry are those
of a "natural monopoly".364 In a natural monopoly, economies of
scale--i.e., factors that cause the average cost of producing a
commodity to drop as output of the commodity increases365 --are
sufficiently high that prices would increase significantly if more
firms entered the market:
The most traditional and persistent rationale for
governmental regulation of a firm's prices and profits
is the existence of a "natural monopoly." Some
industries, it is claimed, cannot efficiently support
more than one firm. Electricity producers or local
telephone companies find it progressively cheaper (up
to a point) to supply extra units of electricity or
telephone service. These "economies of scale" are
sufficiently great so that unit costs of service would
rise significantly if more than one firm supplied
service in a particular area. Rather than have three
connecting phone companies laying separate cables where
one would do, it may be more efficient to grant one
firm a monopoly subject to governmental regulation of
its prices and profits.366
While public utility regulation has been the traditional
response where a monopoly results from "natural causes," antitrust
legislation is the typical response of policy makers when monopoly
results from the deliberate design of those engaged in
business.367
However, in those markets where competition is found to be
"workable", competition is generally considered to be superior to
economic regulation in that competition increases both economic
efficiency and consumer welfare:
Economic regulation has generally been limited to
a few industries that are either natural monopolies or
subject to other kinds of market failure. This
practice reflects a faith in the superiority of free,
unregulated, competitive markets wherever competition
is adjudged feasible and effective. This faith
receives support from the teachings of economics as
well as from practical experience with economic
regulation. Competitive markets are economically
efficient. Prices reflect economic costs and guide
buyers' choices so that resources are allocated to
maximize consumer welfare.368
Moreover, the rewards and punishments occurring in competition
but which are absent under regulation "lead to stronger incentives
for competitors to reduce costs, make correct decisions and
innovate"; competitive markets are "flexible and responsive to
changing conditions; the invisible hand of the marketplace leads
the market to adjust to minimize prolonged shortages or excesses":
Competition automatically regulates profits, preventing
monopoly returns, yet it rewards the efficient and
penalizes the inefficient. Thus, competition achieves
regulation's goal of preventing monopoly profits, but,
unlike regulation, competition provides a strong profit
incentive for efficiency and progress. Because of
these virtues, competition is widely viewed as superior
to economic regulation in those markets in which
competition is workable.369
Competition is deemed to be workable "if it provides
alternatives to the offerings of any one competitor and if these
alternative offerings act as a disciplinary force to prevent the
exercise of undue market power. That is, the alternatives must
provide effective constraints on the seller's ability to charge
supra- competitive prices or offer an inferior service."370
It may be argued that it is rational for voters to prefer a
regulatory process to a laissez-faire market system, even at the
cost of some loss of efficiency, since the former imposes due
process requirements on changes in the existing framework of
goods, prices, and market structures; "[t]he result is to give
individuals and firms some legal rights to the status quo."371 At
the same time, it may be questioned whether increased regulation
will improve the general social welfare. Regulatory commissions
often become identified with the industries they are required to
regulate, thereby appearing to protect those same industries from
competition. Moreover, a regulatory commission cannot compel an
industry to become more efficient. Regulation should be
considered a complement to, rather than a substitute for,
competition.372
The relative value of regulation has also undergone change in
the last few decades. Until the 1960s, the prevailing view of
regulation was that it sought to provide a degree of protection
for consumers from monopolists, or protected producers from the
harmful effects of unstable markets. After that time, however,
some economists felt that regulation was "ineffective in
restraining monopoly power, that regulatory agencies were often
captured by industry groups and used as cartel managers, and that
regulation introduced potentially serious distortions in the
resource allocation process...".373
While the oil industry is not currently being regulated as a
public utility by any state, the threat of dwindling supplies and
such other factors as the lack of close substitutes for
gasoline,374 suggest that the "public utility nature" of gasoline
and other petroleum products should be taken into consideration in
policy decisionmaking, and that the industry should be encouraged
to take measures consistent with that description. For example,
Gray (1975) noted that the oil industry should be encouraged "to
develop plans for distribution and marketing of fuel oil and
heating oil and gasoline in the U.S. when supply is
short--recognizing the public utility nature these products have
assumed; the need for assuring supply of fuel and home heating oil
at reasonable prices; and public demand for gasoline supplied
reliably and at reasonable prices."375
On the other hand, it is argued that gasoline marketing simply
does not fit the requirements of a natural monopoly.376 In
particular, opponents of government intervention cite the failure
of federally-imposed allocation and price controls in the 1970s as
an example of the negative consequences of regulation, namely,
inefficiency and gasoline shortages, until the decontrol of the
gasoline market in January of 1981. Yamaguchi and Isaak (1990)
also noted several practical problems associated with government
regulation of the price of gasoline. First, it is impossible to
regulate only gasoline prices without introducing serious market
distortions.377 Second, there are significant political
liabilities associated with the regulation of oil; lawmakers are
under constant pressure by various interest groups to subsidize
one type of fuel at the expense of another.378 Finally, they
maintain that existing state agencies are understaffed relative to
the complexity of the issues involved, and that there is
insufficient data necessary to monitor the oil industry in
Hawaii.379
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Endnotes |
Chapter 10
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