canspice.org

In 2004 Hawaii became the first state in the United States to institute a cap on wholesale gas prices that the two oil refiners, Chevron and Tesoro, can charge. Hawaii’s prices have typically been the highest in the nation, with recent highs of $2.93/gallon, and the law was passed in an attempt to bring the prices down, or at least keep them from skyrocketing.

Enter Hurricane Katrina. With a large percentage of the United States’ oil passing through the devastated region (or rather, not passing through), gas prices on the mainland have skyrocketed. Experts are saying that Americans could see $4 gallons of gas in the near future.

But hold on a second, Hawaii gets 80% of its oil from Asia and the other 20% from Alaska. Surely Hurricane Katrina won’t have an effect on Hawaii’s gas prices. Or at least, it’ll have a lesser effect than on the mainland, given that the supply of oil to Hawaii isn’t slowing down — the price of the oil will surely go up, but Hawaii won’t be hit with a shortage.

Ah, that’s not the case. See, the gas cap law was written such that the cap will be tied to the wholesale price in three markets on the mainland: New York Harbor, Los Angeles, and the Gulf Coast. And guess what’s happening to the wholesale price in those markets?

Skyrocketing!

Of course, the cap on wholesale prices only sets a maximum price that the refineries can charge, but they would be stupid to not sell at the maximum price. I mean, that’s almost pure profit.

As state Senator Ron Menor, the chief architect of the law, said, “Hawaii prices will better reflect the prices that are being charged on the mainland and the world market.” To which I think the gas-buying public in Hawaii says, “Thank you very much, Senator Menor, thank you very much.”