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Shell goes to court against cap

Pacific Business News: Shell goes to court against cap

“Shell filed court papers this week seeking independent review of Hawaii’s gas cap formula…”

Thursday 15 Sept 2005

Howard Dicus

Shell Oil Products US says the gas cap is “contentious and flawed” and is seeking reconsideration in the courts.

Shell filed court papers this week seeking independent review of Hawaii’s gas cap formula after unsuccessfully seeking reconsideration by the Public Utilities Commission.

“A true remedy be identified in order for consumers to get relief,” Shell spokesman Stanley Mays said Thursday. “Shell has complied with the law and will continue to do so. At the same time, the company is going to work within the law to get the price cap repealed.”

Mays said the pre-cap free market acted as a shock absorber when wholesale prices fluctuated sharply. Now those fluctuations are experienced directly by the consumer, something Mays called alarming.

Neighbor island jobber Brian Barbata makes the same point. “Under the gas cap, when there’s a petroleum event in the world, you’re going to feel it right at the pump the next week,” he said.

Jobbers are middlemen who buy from refiners and resell to retailers. Unless they are selling directly to businesses with fleets to fuel, they are regarded as wholesalers under the gas cap law. Barbata warned early on that the law allows refiners to charge as much of the cap as they want, leaving jobbers with whatever remains, even if it is not enough to make a profit.

Shell, which as no Hawaii refineries, must get its gasoline from the Tesoro refinery or the Chevron refinery or buy it elsewhere and have it shipped here. Its view of the situation is that the cap formula is legally questionable.

“The current situation is a result of the Hawaii legislature requiring the PUC to act upon legislation that is both contentious and flawed,” Mays said.

The Hawaii Legislature instructed the Public Utilities Commission to examine whether the formula in the gas cap law was appropriate and could serve as the basis of a final pricing formula. Shell’s position is that the PUC determined that it was not, yet is now using the formula anyway.

“The Hawaii consumer is now being subjected to a misguided economic experiment,” Mays said.

Reach Howard Dicus at [email protected]

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