REQUESTING THE LEGISLATIVE REFERENCE BUREAU TO CONDUCT A STUDY TO OBTAIN USEFUL DATA AND VIEWS OF PARTICIPANTS IN THE PETROLEUM INDUSTRY IN HAWAII TO ASSIST THE LEGISLATURE IN FORMULATING POLICIES THAT PROTECT THE SHORT-TERM AND LONG- TERM INTERESTS OF HAWAII'S GASOLINE CONSUMERS. WHEREAS, the Legislature finds that the distribution of motor vehicle fuel vitally affects the public health, safety, and welfare as well as the general welfare of the State; and WHEREAS, the continued viability of independent retailers and distributors is essential to the preservation of a fair and competitive motor vehicle fuel market; and WHEREAS, unfair wholesale pricing policies threaten the viability of independent retailers and distributors as competitors essential to a healthy motor vehicle fuel market; and WHEREAS, in an attempt to develop solutions with respect to the competitiveness of selling motor vehicle fuel in Hawaii, Act 295, Session Laws of Hawaii (SLH) 1991, was enacted; and WHEREAS, Act 295, SLH 1991, imposed a moratorium that prohibited refiners and distributors of petroleum products from opening any new direct operated service stations or retail motor fuel outlets; and WHEREAS, Act 295, SLH 1991, also required the Attorney General to gather and assess authoritative reports on the subject of the impact on motor fuel prices to consumers of a prohibition (also known as divorcement) on direct retailing of motor fuel by refiners and distributors in competition with franchised and independent service stations; and WHEREAS, in an attempt to further address and promote the competitiveness of selling motor vehicle fuel, Act 329, Session Laws of Hawaii (SLH) 1993, was enacted to extend the moratorium two additional years; and (Page 2) WHEREAS, the reason for the extension, as stated by the Conference Committee Report to S.B. No. 124, Regular Session of 1993 (which was enacted as Act 329, SLH 1993), was that "the effects of manufacturers and jobbers operating retail service stations is unclear, and this extension would allow the Attorney General to complete the Attorney General's investigation on the petroleum industry's practices"; and WHEREAS, although the Attorney General submitted reports in 1993 and 1994 to the Legislature regarding gasoline prices, these reports are not broad enough to provide the Legislature with comprehensive data necessary to formulate sound policies that protect the short-term and long-term interests of Hawaii's gasoline consumers; now, therefore, BE IT RESOLVED by the House of Representatives of the Eighteenth Legislature of the State of Hawaii, Regular Session of 1995, that the Legislative Reference Bureau is requested to conduct a study to report relevant data from and the views of participants in the petroleum industry in Hawaii. The data and views are intended to provide the Legislature with useful information and data that the Legislature may consider in formulating policies that protect the short-term and long-term interests of Hawaii's gasoline consumers by ensuring the: (1) Lowest possible gasoline prices; (2) Availability of automotive services; and (3) Convenient access to retail gasoline outlets; and BE IT FURTHER RESOLVED that the report shall consist of information obtained by the Legislative Reference Bureau from the Hawaii Retail Gasoline Dealers Association (representing lessee and open dealers), Chevron USA and BHP Hawaii Inc., the Hawaii Petroleum Marketers Association, the Western States Petroleum Association, the attorney general, the Department of Commerce and Consumer Affairs, the Department of Business, Economic Development, and Tourism, and the Public Utilities Commission (provided that any person or entity consulted by the Bureau may submit data, responses, arguments, or other statements prepared by appropriate experts or consultants hired by those individuals or entities) with respect to each of the following: (1) The effects of prohibiting franchise agreements from requiring franchisees to purchase all of their gasoline from the franchisor or restraining franchisees from (Page3) dealing with the franchisors' competitors; (2) The effects of limiting the amount of gasoline franchisors require franchisees to purchase from the franchisor; (3) The effects of prohibiting gasoline allotment under exchange agreements on the basis of historical market share; (4) Measures to ensure the lowest retail gasoline prices for the consumer in the short and long-term; (5) Whether price inversion has occurred or is currently occurring in the distribution of gasoline in Hawaii; (6) The effects of encouraging the establishment of a public bulk gasoline terminal facility, which could make the importation of gasoline cost effective and could also lead to a reduction in wholesale gasoline prices; (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 (Page 4) 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; (8) The effects of regulating retail gasoline prices of company-operated retail service stations; (9) The effects of requiring manufacturers, terminal operators, and jobbers of petroleum products to file with the State, a tariff listing all prices at which the manufacturer or jobber offers goods or services for sale or lease; (10) The effects of prohibiting any terminal operator having excess capacity from refusing to provide terminalling services to any person at the prices published in the tariff that the terminal operator filed with the State; (11) The effects of prohibiting manufacturers of petroleum products not only from directly operating retail service stations, but also from franchising them or owning and leasing them to branded dealers (divestiture); (12) The effects of establishing a public petroleum products storage authority with power to import, store, and market petroleum products; (13) The effects of active enforcement of the Petroleum Industry Information Reporting Act of 1991 and Act 291, Session Laws of Hawaii 1991 (codified as chapter 486I, Hawaii Revised Statutes); (14) Measures that could be initiated to reduce the cost of conducting business for independent dealers (i.e., lease rent and environmental regulations); (15) The effects of the provision contained in section 486H-10(a), Hawaii Revised Statutes, that allows manufacturers and jobbers to open one company operated retail service station for each dealer operated service station owned by that manufacturer or jobber, up to a maximum of two company owned retail service stations; (16) Whether laws in other states prohibit or limit the number of retail service stations that may be opened or operated by wholesalers, producers, or refiners of petroleum products, or their subsidiaries; and (17) Whether or not the existing moratorium has resulted in lower gasoline prices for consumers; and BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to submit the report to the Legislature no later than twenty days prior to the convening of the regular session of 1996. The Legislative Reference Bureau is requested to direct the various parties to submit all responses in a timely manner to ensure the ability of the Bureau to compile and print the report by the date requested; provided that while the Bureau may require portions of the responses to be submitted earlier, the Bureau is requested not to require the respondents to submit responses on all items prior to July 31, 1995; and BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Director of the Legislative Reference Bureau, the Attorney General, the Director of Commerce and Consumer Affairs, the Director of Business, Economic Development, and Tourism, the Public Utilities Commission, the Hawaii Retail Gasoline Dealers Association, Chevron USA, BHP Hawaii Inc., the Hawaii Petroleum Marketers Association, and the Western States Petroleum Association.
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