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Hawaii's persistently high gasoline prices, and the failure of those prices to follow a sharp drop in crude oil costs, prompted this 1998 discussion. Economists David McClain, of the University of Hawaii, and Leroy Laney, chief economist at First Hawaiian Bank, attributed the pricing pattern to the state's duopolistic refinery market: with only two refiners controlling terminal space and retail distribution, prices exhibit the stability typical of industries with few competitors, and neither producer has an incentive to initiate a cut. Ted Klaus, Deputy Attorney General, confirmed that effective price competition was absent, identifying high market concentration, high barriers to entry, and incumbent control of distribution infrastructure as the structural causes. Joe Bob Riley, Chevron's marketing representative for Hawaii, defended his company's pricing as determined by market conditions and argued that crude oil prices were not the appropriate benchmark, since refineries produce multiple products with varying revenues. Whether Hawaii consumers and regulators can alter the structural conditions sustaining high pump prices is the question the programme placed before its audience.
Transcript
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Companion newspaper commentaries
Commentaries by the guests, published in The Honolulu Advertiser around the broadcast.
