Green Wheels: Idiotic Gas Caps

PricesUpstream Oil and Gas ActivitiesDick ElliottAmerican PetroleumJames StewartRon Menor

Suppose you could wave a magic wand and “poof,” gas prices were suddenly low again? That's the magical thinking behind a bill introduced by a South Carolina state senator, who is so impressed by the awesome power of his office that he thinks he can cap fuel prices all by himself.

Sen. Dick Elliott's bill would cap the wholesale price of gas as it enters South Carolina, for a year. To draw even more attention to himself as the beleaguered driver's man of the hour, he wants to hold public hearings. And he expects to become a folk hero, with a Jimmy Stewart lookalike playing him on the silver screen.

I don't often agree with the oil lobby, but John Felmy, chief economist for the American Petroleum Institute, had it right when he declared, “If he passes this legislation, he had better start buying bicycles for people in South Carolina.” Plainly, oil companies would take Elliott's shot across their bows as a reason not to sell gas at all in the state, and the gas lines would start to grow.

Big Oil would tear the senator's playhouse down. They have every incentive to ensure the law results in chaos, basically to avoid exactly the scenario that Elliott, a Democrat who gained his vast knowledge of oil politics as a golf course and real estate developer, says he's after. “If South Carolina imposes this measure,” he said, “it would be a message to other states to follow suit — and certainly a message to our do-nothing Congress that they need to get off their duffs and look around at what's happening across the land and do all they can to curtail these prices.”

A state cap on gas prices was actually trotted out briefly in Hawaii, where the pain ($5 a gallon average on Maui) is pretty extreme. But the legislation was only in place for a few months before it was repealed. According to Hawaii News Now, it caused “chaos at the pumps,” with wild fluctuations in pricing, and not much relief for motorists. That hasn't stopped original sponsor State Sen. Ron Menor, now out of office, from wanting to grab the spotlight again and bring it back:

“I believe that there would be significant savings,” he said.

But Hawaii's cap was messy in the extreme, and saving 20 cents a gallon isn't really relief. According to Richard Borreca, a columnist for Honolulu's Star-Advertiser, the cap gave advance warning of imminent price increases, which led to some predictable behavior. “So you knew that the price was going to go up 20 cents tomorrow,” he said. “So everyone would be in line the night before to get gasoline. It was confusing, it wasn't popular, and at the end, it wasn't saving that much money one way or the other.”

The people's champion, Dick Elliott, says he's all for capitalism, “but in this case we don't believe the competitive free enterprise system is fully at work.” It is working, though. Of course, oil companies are gouging the public. But on a basic level gas prices are set on the international spot market, in response to world demand, as Felmy points out. If Elliott really wanted to lower gas prices, he'd work on lowering demand. In Hawaii, that would mean taking advantage of the islands' abundant solar and wind resources. But it's easier to just introduce a silly bill and hold public hearings that get you on television.

Jim Motavalli is the author of the book Forward Drive: The Race to Build "Clean" Cars for the Future. You can e-mail him at

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