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Virgin Islanders Paying Dearly for Gasoline

Sept. 21, 2004 — Even though it's home to the Western Hemisphere's second largest oil refinery, gas prices in the Virgin Islands are higher before taxes are added than they are in much of the world, said consumer affairs officials.
Motorists in the territory pay an average of $1.82 per gallon of regular and premium gasoline before a $.14 tax is added. In the mainland United States the average price is $1.55 per gallon before $.42 tax is added, Andrew Rutnik, commissioner of the Virgin Islands licensing and consumer affairs department, said.
"When you extract taxes, we pay the highest price in the world per gallon," Rutnik said.
Rutnik studied gas prices in Europe, the United States and the Caribbean, finding the Virgin Islands has the highest gas prices before taxes.
Gas supply trucks in St. Croix, where the Hovensa oil refinery is capable of producing 21 million gallons of fuel a day, pay $1.30 per gallon to fill up at the refinery, Alex Moorhead, Hovensa LLC's vice president of community relations, said.
That fuel retails for about $1.75.
Because there is no need for a shipping agent in St. Croix, prices are lower, encouraging competition among independent gas stations, Rutnik said. In the territory's other two islands, however, corporate chain stations like Domino and Esso set a confidential price with tanker ships that bring the gasoline from St. Croix, resulting in higher prices, he said.
"We see some fault at the wholesale level and we see the transportation cost being higher than our estimates, he said.
A plan to freeze gas prices and encourage independent wholesalers on St. Thomas and St. John will follow the release of a government study Friday, Rutnik said.
Rutnik froze the price in at $1.56 in May, but rising costs from Hovensa led to gas stations petitioning for higher pump prices.
Moorhead would not say how Hovensa sets its prices.
Part of the high cost has to do with consumer education, Rutnik said. There are 69,000 cars for just 110,000 people in the Virgin Islands. On St. Thomas, 75 percent of motorists use premium, higher octane, fuel, which costs about $.10 more than regular unleaded gas. Only about 25 percent of people in the rest of the United States choose premium.
The higher octane fuel is of no more value to cars, Rutnik said.
"It's absolutely unnecessary," he said. "It's a buying habit that costs St. Thomians $1 million a year."

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