Price cap fails in Hawaii

The law makers in Hawaii defied the laws of economics and lost. They decided to stop the oil companies from making too much profit on gasoline by capping the wholesale price last year. Why did they think they could rewrite the law of Supply and Demand? They caused a disruption in the supply that resulted in gasoline costing more, not less!! The Hawaii Department of Business, Economic Development and Tourism monitored the price of gasoline every week since the cap started in September, 2005. It made a report to the legislature (pdf) that found:

The analysis reveals that the gasoline price cap cost consumers as much as $54.9 million between September 1, through January 2006. (sic)

With their failure to control the price obvious, the Legislature passed a bill that ends the price caps immediately. The Seattle Times carries the Associated Press story.