A problem adequately stated is a problem well on its way to being solved. --R. Buckminster Fuller

art

“Court documents filed show that Chevron

sold only 3 percent of its national

gasoline in Hawai’i,

yet 23 percent of its U.S. profits

were generated here.” -- Star Bulletin Jan. 20, 2002

“I propose a business solution - The State of Hawai’i establish a publicly owned, non-profit entity known as The Hawai’i Fuel Authority. We must NOW, today, make a commitment to democratic government for the common good of our citizens. We must have a voice and we must demand involvement. We can no longer allow outside influences to dictate our future.”

--D.G. “Andy” Anderson

CALENDAR YEAR … 2001

HAWAI’I… 12 - Month “Overcharge” For Gasoline

410 ….million gallons gasoline sold

x $ 0.40 … per gallon “overcharge.” (Compared with the average mainland prices.)

$ 164 million dollars “overcharge / difference.”

Note: State anti-trust attorney, Spencer Hosie in presentation to the legislature reported, “that

the local oil companies reaped huge profits of 50 to 60 cents a gallon”. (4.04.2002)

$ 205,500,000…..@ 50 cents.

$ 246,600,000…..@ 60 cents.

Plus….

HAWAI’I… 12 - Month “Overcharge” For Diesel Fuel

Off - Highway and On - Highway

The sale of over-priced diesel fuel has been ignored to date. It is yet another example of over-

charging that comes directly from our pockets and contributes to our high cost of living.

213 …million gallons Diesel Fuel sold.

x $ .30 …per gallon “overcharge.” (Compared with the average mainland prices.)

$ 64 million dollars “overcharge / difference.”

Source for gallons sold: State DOT Comparison of Fuel Tax Collections & Allocation

TOTAL “Difference / Overcharge” to the People of Hawai’i in 2001.

$ 228 Million

taken out of Hawai’i last year (and every year)

Where do you live, Honolulu, Maui, Big Island or Kauai?

§ How many cars do you have ?

§ How much are you paying for gasoline a week, a month ?

§ Are you in construction ?

§ Do you operate a bus company ?

§ Do you own a fishing boat or pleasure craft ?

§ Maybe you drive a new car that uses diesel fuel ?

§ How much do you pay for your diesel fuel a week, a month ?

§ How much do you have to pay per gallon ?

§ Are you paying too much ?

TRUTH IS, ALL OF US ARE, AND HAVE BEEN PAYING TOO MUCH.

It’s simple mathematics. Take the number of gallons of gasoline or diesel fuel you buy and “deduct” 40 cents per gallon from the retail price.

Example: Just 20 gallons x .40 = $8.00 “over-charge.”

Here are examples of what we “CAN PAY” and/or “SHOULD HAVE PAID” (+/-) if we had/have our own publicly owned, non-profit Hawai’i Fuel Authority.

Unleaded regular gasoline:

OAHU……………………………………….……$ 1.34 a gallon.

HAWAI’I (Big Island) ………………………...$ 1.39 a gallon.

MAUI………………………………………………$ 1.43 a gallon.

KAUAI……………………………………………$ 1.39 a gallon.

All of the above prices include the “existing” Federal, State and County taxes.

All we have to do, is do it.

The Hawaii Fuel Authority

A publicly-owned, non-profit Authority.

Objectives:

To deliver gasoline and diesel fuel to Hawai’i’s residents at prices comparable to the rest of the country.

To keep at home in Hawai’i the estimated $225 million dollar “over charge” that flows out of the state every year.

To demonstrate and send a clear message once and for all that the people of

Hawai’i, while a tolerant people, will no longer accept unfair treatment by

national companies, or for that matter any abusive oligopolistic company.

Introduction and Overview:

An Ownership Strategy for Stability…………

A problem adequately stated is a problem well on its way to

being solved. --R. Buckminster Fuller

Court documents revealed that Chevron sold only 3 percent of its national gasoline in Hawai’i, yet 23 percent of its U.S. profits were generated here.

We have, more times than I can remember, gone down the road of trying to understand and control our runaway gasoline prices paid for so many years. We have, on more than one occasion, introduced legislation and/or threatened State action through the Attorney General’s office. Three years ago, the State actually filed its price-fixing suit against the oil companies in an effort to prove that they were conspiring, from 1991 to 1998, to fix gasoline prices and allocate market share amongst themselves, in violation of U.S. antitrust laws.

We had visions of winning some two billion dollars in settlements against the oil cartel. We settled for a pittance of some twenty-two million dollars, a mere penny on the dollar. Hawai’i has not been able to prevail in anti-trust law suits brought against the likes of Chevron and the other related oil cartel members. Although Hawai’i has a valid case, the cartel members are just too large an international conglomerate and far too complex in their multiple levels of corporate structure and business relations to prove the price-fixing allegation.

It is not my position to continue to accuse Chevron or the others in the cartel of operating illegally. I do not intend to bring further litigation on this issue. What is important, is that what is in place, is not functioning to the benefit of the people of Hawai’i, and I plan to change that.

I propose that we in Hawaii develop an independent source of fuel, which can compete with the oil companies now selling in the Hawai’i market. In the following sections I will present the details of my plan. In essence, it is an independent Authority to be established by statute that will import refined fuel (gasoline and diesel) from domestic and international sources and make them available through independent gas stations to serve the general public. We will show that the Authority’s price will be substantially lower than prices historically charged by the oil companies. In other words, we propose to squeeze the unconscionable profits now being made by the oil companies to a reasonable level and pass on the savings to the people of Hawai’i where they belong.

In the following pages I will present the facts and figures and the steps we need to take to stop the oil companies from milking the citizens of Hawaii out of $225 million annually, the money the oil companies are making from their price gouging; the money they are taking out of Hawai'i: the money they are taking out of our pockets. Don’t get me wrong. The oil companies are entitled to a fair profit, comparable to what they make in the rest of the country. Hawaii represents 3% of Chevron’s gasoline and diesel business nationwide; the profits made in Hawaii should be comparable, not 23% of the total profit Chevron earns nationwide for the same commodities and operations.

I am proposing a business concept that is not new and today is in operation in Hawai’i. A jet fuel consortium organized by the airline industry has long been successful in obtaining jet fuel in Hawai’i at prices comparable to mainland prices. It is in business today for the very same reason this proposal is being offered, to bring to an end the abuse and overcharging by the Chevron’s of the world.

This will be a new path for us, a daring one, but it can be exciting with rewards and benefits to our State like nothing we have ever attempted. This opportunity comes along once in a lifetime and we would be foolish to not use it to our best advantage and to our benefit. Our State is in an economic slump as never before. We cannot pay our bills today, and we have no idea how we will meet these obligations next year and thereafter. Can you imagine what $225 million a year would have done for our economy over the last 10 years of the business slowdown? Ladies and gentlemen, that is $2.25 BILLION dollars over the 10-year span.

A $225 million annual savings that never leaves a citizens’ wallet and instead is spent in the private economy would be a tremendous economic stimulus in itself. Couple this with a multiplier of 2.5/ 3.0 times for the money that stays in the State and circulates, and it would kick-start our economy without question, as well as go a long way in reducing our high cost of living. If we are successful, there is nothing in the next decade that would equal or give us an economic boost more quickly and certainly than this proposal. Our ability then to financially rebound and begin to fund our educational institutions and social programs would receive an almost immediate shot in the arm after the plan is implemented.

It is an opportunity for economic recovery like nothing I have ever seen in all of my years in government and/or private business. The savings proposed herein is a savings that is broad based and effect all segments of our community, enjoyed by both governments and the public alike. It is a savings that will be demonstrated and enjoyed daily in our lives versus the once in a year tax refund that we are used to.

We began work on this proposal months ago in anticipation of the State not prevailing in court. The outcome was not unexpected. While our approach differs in how to correct this historical inequity, we are in full agreement with the Cayetano administration that the oil companies have long abused the trust of the people of Hawai’i.

The cost of living is just too high in Hawai’i and it will never come down if we do not take the initiative to effect change. If we want our children to stop leaving Hawai’i for Las Vegas, Portland and other parts of the world, seeking a place they can afford to live, buying a home and raising their young: if we want our young to return home from school to new and exciting job opportunities, we have to make it happen. My proposal is only the first step to bring down the cost of living in Hawai’i, but is a positive step in the right direction.

Just hoping and waiting for it to happen is just not realistic. There are just too many “unfair situations” in Hawai’i that deny us a chance to enjoy the rewards for our hard work with many of us having to hold two and even sometimes three jobs to live in “paradise.” It is time to understand, plan, and participate in our own future and destiny. I believe this proposal will begin the long road back to economic recovery and self-determination.

I ask you to join with me to make this happen. It’s an exciting and once in a lifetime opportunity, we cannot let it elude us. We must take advantage of it now or forever lose it.

As a footnote I would like to make the reader aware that while most of the discussion to date has been centered on gasoline, the abuse and overcharging applies to our purchase of diesel fuel as well. This also impacts our high cost of living in almost every thing we do every day.

Aloha Ola,

andy

Hawai’i’s Problem ……

Jan. 20, 2002 Honolulu Star-Bulletin Editorial

http://starbulletin.com/

The Issue:

“The state government has settled for $20 million in their lawsuit alleging price-fixing by

oil companies that serve Hawai’i.

“The state’s effort could be counted as worthwhile if legislators and the administration examine the companies’ court filings for whatever information can be gleaned. They should press for continuing access to company records to prevent a recurrence of the rip-off. However, Attorney General Earl Anzai says the state will probably stop investigating and lawmakers have not suggested they will pick it up.

“With the settlement, the allegation of price-fixing by the oil companies may never be determined. What is clear is that Hawai’i has been a profitable market for gasoline producers.

“Court documents filed showed that:

“Chevron sold only 3 percent of its national gasoline volume

in Hawai’i, yet 23 percent of its U. S. profits

were generated here.

“Fair or not, producers will charge what the market will bear. No number of lawsuits will change the limitations geography places on a captive market. So electing to buy the cheapest gas they can find remains the consumers only choice.” (Emphasis added.)

I agree with this conclusion.

However, I do not have to agree, nor do I accept that Hawai’i and her people must remain captive to the continued abuse, be it a monopoly and/or an oligopolistic arrangement of the gasoline producers in Hawai’i. It is no wonder that Hawai’i’s cost of living is off the charts and our young are fleeing to the mainland to make ends meet.

Recognizing that Hawai’i is a unique state separated by 2,500 miles of ocean to the West coast, we are often exposed to unique and difficult problems as to our cost of living that today demand unique solutions.

Today, I am pleased to propose a unique business and creative solution, an alternative that will indeed offer our people a choice “to buy the cheapest gas they can find.”

The Andy 2002 Campaign Proposal:

The Hawai’i Fuel Authority (HFA)

A publicly-owned, non-profit Authority.

GOAL: TO KEEP IN HAWAI’I

An annual savings to Hawai’i’s people in the amount of an estimated $225 million dollars.

A $225 million dollar annual savings infused into the private economy would be a tremendous economic stimulus in itself. Couple this with an economic multiplier of 2.5 to 3.0 times, and it would kick- start our economy without question, AND go a long way in reducing our high cost of living.

Note: It is not the intention of the Hawai’i Fuel Authority (HFA) to capture the market 100%. We fully understand that this is not feasible and while we use a $225 million figure in our calculations, we are comfortable in that any thing less than 100% will still provide the savings to the consumer as the competition will drive down the “others” prices…thus the “overall” estimated savings will and can be calculated as projected.

Objectives:

To deliver gasoline and diesel fuel to Hawai’i’s residents at prices comparable to the rest of the country. The daily savings would be immediate as we buy our gasoline and diesel for our everyday use. This savings would be distributed and enjoyed across a wide spectrum of our state. The general consumer, businesses, the bus rider, the car rental business, the farmer, the fisherman and the state and county governments as well.

To keep at home in Hawai'i the reported and estimated $225 million dollars overcharge (see details in exhibits) for fuel that flows to the mainland corporate profit sheets. We must retain these Hawai’i dollars in Hawai’i to contribute to our sagging economy, assist in our economic recovery, and ultimately reduce our cost of living.

And finally to make a statement once and for all that the people of Hawai’i, while fair and tolerant, will no longer passively accept unfairness from the national companies, or for that matter any monopolistic and/or oligopolistic abusing companies. We will here and forever take back control of our lives and futures.

PROPOSAL:

Create a publicly owned non-profit company, The Hawai’i Fuel Authority (HFA) to:

§ First, enable the HFA to import, sell, store and utilize gasoline and diesel fuels bought

on the spot market, and;

§ Second, allow the state to sell gasoline and diesel fuels to the public directly and/or the

private sector for public consumption.

IMPLEMENTATION:

We must introduce a comprehensive package of legislation. I have outlined a business concept that will accomplish what I am planning to do. As we proceed, I would invite public and private input and ultimately that of the State Legislature.

ENABLING LEGISLATION:

Pass legislation to create the publicly owned non-profit Hawai’i Fuel Authority (HFA).

The law would allow the State to build/acquire storage and distribution facilities on all islands providing all governments, residents and businesses of Hawai’i the option to purchase assorted fuels (gasoline and diesel) at Hawai’i Fuel Authority (HFA) outlets and other various independent outlets who choose to purchase from the Authority AND;

· Authorize the Hawai’i Fuel Authority to build, own, and/or lease its own stations for the purpose of selling gasoline and diesel throughout the state when it determines the market does not adequately provide reasonably priced fuel for local citizens. These Authority owned stations/outlets, should they be developed, would sell fuel at prices that would allow a fair return for the independent operators. It is not intended to dominate the market but to bring stability to it.

· Authorize the Authority/State to acquire an existing fuel distribution company if available-and if a mutual arrangement can be worked out for both parties. This would allow the program an almost immediate start.

· Establish the Hawai’i Fuel Authority (HFA) as an independent body removed from government control and interference in its operations. Its employees would not be civil service. It is envisioned to be an independent, business-like non-profit Authority governed by its own board of directors. The Authority would be obligated to be financially self-sufficient and to meet any debt service requirements for revenue bonds issued by the State on its behalf. Note: In the long term, after the facilities are developed and the operation stabilized, it might be more advantageous to convert the Authority to a private not-for-profit corporation, if it is deemed to be in the best interest of the public.

SPECIAL REVENUE BOND AUTHORIZATION:

At the outset, we must determine the storage tank and distribution system requirements and distribution system costs on all islands. These Capital Improvement (CIP) costs will be financed by the sale of Special Revenue Bonds. The debt on these bonds will be paid for by the sale of gasoline and diesel fuel by the Authority. (The debt service dollars required for the pay down of the capital improvements are contained in the calculation example below.)(It is my understanding that the State of Hawai’i presently owns some storage facilities sitting empty on the waterfront. (TBD)

CREATE A LOAN GUARANTEE PROGRAM FOR THE CREATION OF INDEPENDENT PRIVATE (SERVICE) STATION OPERATORS:

It is equally important to include in the legislation authority for the Authority to create a loan program for independent (service) station operators enabling them to build, buy and own and operate their own stations. These loans would be processed, evaluated and approved based on their business plans as submitted. The Authority would guarantee the loans to the lender BUT the actual loan and collections and responsibility for the note (s) will be that of the lender. It is not my intention to further expand the states efforts into the loan business, as our record for collections to delinquencies is rather dismal.

REPEAL EXISTING LAW OF 1997, ACT 257:

Despite the passage of a 1997 state law that was intended to protect Hawai’i’s gasoline retail dealers from being replaced by stations owned and operated by oil companies, approximately 30 dealers have shut down since, according to the Hawai’i’ Automotive Repair and Gasoline Dealers Association. Repeal of this Act would

§ Allow the producers to buy back and/or build new stations thus allowing them to better

compete with the Hawai’i Fuel Authority (HFA) on a more even playing field.

§ Allow the lessees of the existing stations to exit their “locked in” positions and allow

them to apply for their own independently-owned station with the Authority.

(Note: Act 257 was “again” declared unconstitutional on March 28, 2002 by U.S. Judge Mollway.)

LEGISLATION PERTAINING TO NEW GOVERNMENT FUEL TAXES:

We would support legislation that would require a two-thirds majority vote by the State Legislature and all of the various County Councils to increase/impose any new future fuel taxes within their jurisdiction. As the prices would be lower by comparison to our historical past, the temptation of the politician to “edge it up” a few cents at a time would be most tempting to pay for pet projects. This would defeat the purpose and intent of the Hawai’i Fuel Authority, and it should be made difficult to increase these government taxes.