Should gas prices be regulated?;

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Hawaii has decided to cap the wholesale price of gasoline. Other states have debated such a move.

The Kansas City Star

WASHINGTON, D.C. — The soaring price of gasoline has rekindled debate across America over whether prices for gas should be regulated as they are for electricity and

On Sept. 1, Hawaii will become the first state to cap the wholesale price of gasoline paid by retailers, who pass on price increases to consumers. Hawaii’s price ceiling will be set anew each Wednesday by taking the average of spot-market prices for gas in Los Angeles, New York and the U.S. Gulf Coast.

Hawaii’s effort is sure to get wide attention. Gasoline prices across the United States now average above $2.61 a gallon. Federal investigations have turned up no evidence of price fixing, and economists caution that regulating gas prices could result in less competition and even higher prices.

Michigan, Oregon, California, New York and Connecticut all have debated the merits of regulating the price of gasoline. The clamor spread across the northern border Sunday, when the head of Canada’s New Democratic Party called for it.

The call echoes broadly.

“It’s very clear to us that gas prices need to be regulated. We really need to step back and recognize that, like electricity, gasoline is too vital to the economy to be left in the hands of these corporations that have been gouging us,” said Doug Heller, the executive director of the Foundation for Taxpayer and Consumer Rights in Los Angeles, a consumer advocacy group.

The Service Station Dealers of America agree, saying wholesalers are limiting competition and thus pushing prices higher.

“Fuel is basically a commodity, almost something that should be regulated by the public services commissions, because there is no other product out there that so many consumers depend on,” said Paul Fiore, the group’s executive vice president.

The American Petroleum Institute, a trade group that represents the oil and natural gas industry, thinks regulating prices would bring disaster.

“That would be the stupidest thing on Earth we could do. It would throw us back into the 1970s,” said John Felmy, the institute’s chief economist.

President Nixon ordered price controls on oil and gasoline in 1973. They remained until 1981. The controls interfered with market forces governing supply and demand and were blamed for volatile prices, shortages and long lines at gas pumps.

Consumer Watchdog
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