Companies, Consumers at Odds Over Hawaii Gas Law

HONOLULU – They may call it paradise, but Hawaii (search) is no heaven when it comes to gas prices.

"Oil companies have been able to earn super-competitive profits at the expense of Hawaii's consumers," said State Sen. Ron Menor (search), who helped pass the nation's first state cap on gas prices set to go into effect Sept. 1.

Click in the video box above to watch a report by FOX News’ William La Jeunesse.

The law mandates the state Public Utilities Commission (search) "impose a price ceiling on wholesale gasoline prices that reflects competitive market conditions" and to foster "the opportunity for prices to reflect and correlate with competitive market conditions," reads the statement by the Division of Consumer Advocacy, available on its Web site.

But oil industry lobbyist Melissa Pavlecik disagrees with the idea of capping prices.

"Every expert who has looked at the industry has concluded that the price is higher here because of taxes, the remote location and other market forces. No one has ever found price gouging in Hawaii," she says.

Economists also warn that, unless companies can make a profit, they won't send their gas to Hawaii. And even if it doesn't affect the main islands, critics say oil companies may stop sending gas to outer islands — where delivery costs are higher.

Gas station owners have their own objections. The new law is meant to control prices by putting a cap on what wholesalers can charge, but station owners fear they'll be squeezed as the oil giants raise rents to make up for lost profits.

"They're playing a shell game. They're lowering my price of gas, but then they've increased my cost of doing business. So I have to recover that cost somehow," gas station owner Barney Robinson said.

If that happens, Hawaii's revolutionary gas cap could result in even higher prices at the pump.