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    Aloha State's Gas Cap Comes to a Close

    Eight-month regulation accused of leading to higher prices because oil companies knew they could charge maximum price.

    HONOLULU--Hawaii's gasoline price controls have come to an end, reported the Associated Press.

    The island state whose drivers pay the highest pump prices in the nation has given up on price caps after an eight-month, first-in-the-nation experiment. Some complained that the restrictions actually led to higher prices, because oil companies knew they could charge up to the maximum allowed, according to the report.

    "In a lot of people's minds, they thought the gas cap wasn't working," Republican state Sen. Paul Whalen, a strong supporter of the price controls, told AP. "It was hard to generate lots of support for it because we're paying more than we ever were before."

    Gas is particularly expensive in Hawaii because of high state taxes and because of the costs of transporting oil across the Pacific. Last fall, Hawaii became the only state to cap the cost of fuel to try to give some relief to motorists.

    Under the price control legislation, Hawaii set weekly caps on wholesale gas prices. Those caps were based on the average of prices in Los Angeles and New York and on the Gulf Coast. Then allowances were added for what it costs wholesalers to ship to Hawaii and distribute gas to more remote islands, according to the report.

    But there was no cap on the markup added by gas stations.

    With regular gasoline climbing past an average of $3.38 per gallon in the past few weeks, lawmakers sent Republican Gov. Linda Lingle a bill last week to suspend the controls. She signed it on Friday, according to the report.

    Because the oil refiners keep their profit margins and costs private, it was difficult for even experts to say whether Hawaii drivers were paying more or less than they would without the gas cap, AP reported.

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