Abercrombie: Hawaii In The Hands of Singapore Oil Speculators
Gov. Neil Abercrombie went off script during his annual State of the State address on Monday.
Driving home his point that Hawaii’s dependency on foreign oil was jeopardizing “the very survival of our state,” he said that Hawaii’s energy prices were heavily controlled by Singapore.
Specifically, he said:
We are totally in the hands of oil speculators in Singapore.
The governor’s spokeswoman Donalyn Dela Cruz said that by oil speculators Abercrombie was referring to “the people who set the prices.”
“What he is saying is that the state government cannot control the price of electricity or gasoline. Those prices are set elsewhere and that is why we need to take creating our own power into our own hands,” she said.
Civil Beat contacted oil experts, Tesoro Hawaii, Hawaiian Electric Co. and the state energy office to verify the claim. HECO, the energy office and Tesoro declined to tackle the inquiry.
, an international oil consultant and a senior fellow at the East-West Center, emailed Civil Beat from Tokyo to say that contrary to Abercrombie’s statement there is no futures market in Singapore.
“There are no speculators in Singapore. There is no future’s market in Singapore,” he wrote. “There is a future’s market in the US: NYMEX, one in London ICE and one in Dubai just starting up called DME or Dubai Mercantile Exchange.”
He added that what the governor might have meant was that, “Asian prices are higher than US prices which is true but due to structural reasons not speculators.”
Richard Parry, CEO of Aloha Petroleum, concurred that there is no futures market in Singapore. But he pointed out that there are over-the-counter trades in Singapore that are similar to trading in futures — they’re just not regulated.
Over-the-counter trades refer to paper markets, he explained.
He did point out that there are people that are physically in Singapore who trade in the futures markets in New York and London.
Still, he said, “I wouldn’t exactly call Singapore a hotbed of oil speculation.”
And what happens in Singapore or the broader Asian market has little to do with gasoline prices, according to Parry.
While it impacts HECO, which provides electricity to Oahu, the Big Island and Maui County, Parry said that gasoline prices in Hawaii are mainly dependent upon Europe and U.S. markets.
Bottom line: Abercrombie’s statement is false. Any Singapore speculators who may be trading in oil have no effect on Hawaii, which certainly is not “totally in the hands” of Singapore oil speculators.
