July 19, 2003 – The wide disparity between the territory's gasoline prices at the pump was looked at Friday by the Senate Committee on Economic Development, Agriculture and Consumer Protection.
Because the Hovensa refinery is situated on St. Croix, that island pays about half what St. Thomas pays, and less than half of what St. John residents pay, at the pump. This disparity has long infuriated St. Thomas and St. John consumers. There has always been speculation that the large companies on St. Thomas and St. John are price gouging. The excuse always has been that the fuel is first shipped to Puerto Rico and then barged to St. Thomas and St. John.
A storage facility for the fuel does not exist on St. Thomas. Licensing and Consumer Affairs Commissioner Andrew Rutnik said Friday he did not think that direct shipment from Hovensa to St. Thomas would be difficult to achieve because Hovensa ships fuel directly to the Water and Power Authority on St. Thomas.
Rutnik said more independent stations are needed on St. Thomas and St. John to replace the large Esso and Texaco franchises. "That would mean no more of the large stations," Rutnik said, "so people would have to figure out if that loss means anything to them." Rutnik is a member of the WAPA board.
Testifying with Rutnik was Alli Paul, LCA director of consumer protection services and consumer affairs. Paul said, "On average, the disparity in prices usually is in the neighborhood of approximately 70 cents on St. Thomas and 90 cents on St. John."
Rutnik, a St. John resident, said, "Gas on St. John is $2.24 a gallon now, just about enough to drive from Cruz Bay to Coral Bay, and about half way back."
Paul said, "On St. Croix, Hovensa has gasoline racks where they sell fuel for the same wholesale price to wholesalers and retailers." Under questioning by Committee Chairman Luther Renee, Paul said a large storage facility must be constructed on St. Thomas and fuel must be purchased direct from Hovensa for gasoline prices to be reduced on St. Thomas and St. John.
Responding to Sen. Almando "Rocky" Liburd, Paul said Hovensa also sells gasoline to Puerto Rico, which in turn sells gas to stations on St. Thomas and St. John.
Also brought under the committee's eye was a recent sharp increase in propane fuel prices.
Antilles Gas St. Croix branch operations manager Jim Edwards said, "In January 2003 we adjusted our selling prices in order to cover the increased cost of product as well as operational increases since our last price adjustment in August 2002."
"Our costs continued to escalate in 2003 and our cost of product increased an additional 38 percent," he said, adding that costs of transporting propane to St. Thomas increased by 35 percent a trailer.
The senators weren't buying that, and they asked Edwards for documented proof of Antilles' cost. Edwards said he didn't have any paperwork with him, which provoked the committee to ask for his boss to appear at a future meeting.
Under questions by Sen. Lorraine Berry, Rutnik said his main concern relating to propane prices is the issue of price fixing. Renee asked Rutnik about conducting an independent investigation on possible price fixing. Rutnik said none have been conducted.
"You cannot know if companies are involved in price fixing unless there is an investigation," Renee said. Rutnik noted his office must rely on "informants," after which his office would have legal standing to conduct an investigation.
Saturday morning Antilles Gas said the cost of a cylinder is $58.50. That price represents an increase, but the former price wasn't immediately available. St. Thomas Gas said the price went from $58.50 in April to $61.
The committee lamented the absence of officials from the major gas companies who had failed to appear at the meeting. On a motion by Liburd, the committee voted to subpoena them for its next meeting, for which a date has not yet been set.
Committee members Berry, Liburd, Renee, Sen. Douglas Canton, Sen. Roosevelt David and Sen. Louis Hill attended the meeting. Sen. Celestino A. White Sr. was absent.
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