What a Gas!

Malia Zimmerman wrote in OpinionJournal Several hundred families on the normally sleepy island of Molokai lined up in their cars for more than a mile on July 28, desperate to buy gasoline before the pumps shut down. There were still two more days before a barge would arrive with a month's supply of gas, and by nightfall the island's only three gas stations would be dry. Many of Molokai's 6,800 residents are too young to remember Richard Nixon as their president or the gas crises of the early 1970s. But they may soon be seeing more Nixon-era-like lines, gas shortages and even rationing. In a thoroughly misguided attempt to stem the rising price of gas, Hawaii is set to impose Nixon-style price caps on all the islands' pumps.

Price Control is definitely misguided. It will only result in shortages. If Hawaii wants to lower the price of gas, they would do better to see if there are any offshore areas nearby where they could encourage drilling, and possibly building a new refinery (since we have a major shortage of new refineries, which results in higher gas prices every year).

The law, set to take effect Sept. 1, ties the price of gas to the wholesale price of gasoline at three price points on the U.S. mainland. Charged with the unenviable job of implementing the gas-cap program, Hawaii's Public Utilities Commission says local industry expects the caps to increase prices by an estimated 30 cents a gallon, with costs on Oahu rising from the current price of $2.68 a gallon to more than $3. PUC says industry leaders also expect more shortages (especially in remote areas), the closure of one of two oil refineries, the halting of wholesale marketers' operations, and reduced investment in the state after the caps go into effect. Owners of gas stations on remote neighboring islands say prices will likely soar after Sept. 1, from just over $3 a gallon to more than $4.