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Gas Stations Challenge Fines for Price Hikes

August 3, 2004 – A gas retailer is challenging a fine imposed by the Department of Licensing and Consumer Affairs. The fine grew out of the agency's recent efforts to monitor gas prices in the territory.
Andrew Rutnik, Licensing and Consumer Affairs commissioner, said a hearing may soon be held to hear the complaint of Domino Oil, a chain of retailers doing business in the St. Thomas/St. John District.
A $15,000 fine was imposed against Domino gas stations at Contant, Barbel Plaza, Sugar Estate and Nadir. According to Frederick Norford, general counsel for the DLCA, the fines were levied about a month ago and reflect a daily assessment of $200 a day per station for a period of roughly two weeks.
Rutnik said the fines were imposed as part of a current gas price moratorium that has been in effect since April, during which retailers have been asked to seek permission from Licensing and Consumer Affairs before raising their prices.
"These price controls have been very effective in keeping the market controlled during these high prices of fuel that have been experienced around the country, in fact, around the world," the commissioner said late last week.
Norford said neither of the two Domino gas stations operating on St. John were assessed the daily fines, "because the Dominos on St. John followed the legal procedure to petition the department for an increase."
Samuel Benjamin, general manager for Domino Oil in the Virgin Islands, declined comment Monday. "I don't give interviews," he said.
Benjamin also said his immediate superior, Caesar Cortes, representing Domino Oil in Puerto Rico, had instructed him not to give out his phone number. The general counsel for the DLCA said Cortes appeared in the territory about ten days ago to file a complaint over the fine.
"Domino Oil contested the fact that, because of the way it's organized as a business, as one big retail unit, that it only needed approval on their price increase one time. We have indicated that, that it is per gas station because each gas station has its own overhead, its own cost, its own expense," Rutnik said.
However, the commissioner noted that since the fine was levied Domino managers have begun regular submission of documents requested by the DLCA in order to receive formal approval to raise their prices at the pump.
Since the agency began to closely monitor gas prices in April, Norford says almost every gas retailer has filed monthly applications requesting price increases. "Just about all of them. Every month from since we started in April there has been a petition. We usually approve it," the general counsel said Tuesday.
What price watchers at the DLCA said they found since those applications began coming in, was that in the past, retailers would get increases from wholesalers but would tack on an extra penny or two before the more expensive gas reached the pump.
"I think that is what they did. What they did in April, if the increase was six cents they would petition for nine cents. That's just an example," Norford said. "Now we allow them to pass on the increase. If they petition for five cents we allow them to pass on the five cents."
But he said there are cases where retailers may still ask permission to raise prices higher than the hike they received with their latest gas delivery. In those cases, Norford said officials look at the sector of the world oil market where the fuel came from and, after conferring with a consultant hired by the DLCA, the higher rate requests are sometimes granted.
Managers at Domino have 21 days from the day they filed their complaint to submit further documentation to bolster their argument that the $15,000 penalty was unfair. After that, Norford said, an administrative law judge will set a date to grant them a hearing.
If that happens, he said, a hearing could take place within the next six weeks.
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