June 9, 2008 — While senators contended that local residents may be getting "ripped off" on the price of gas and food in the territory, people who testified during Monday's meeting of the Government Operations and Consumer Protection Committee said they are finding it hard to balance their fuel costs with other expenses, such as taxes, insurance payments and shipping fees.
"In the past years of operation, we received price changes, increases and deals on a monthly basis," said Waheed Willie Hamad, general manager of St. Thomas' Plaza Extra Supermarket. "Within the past 18 months, however, there have been hundreds of price increases and fewer deals. We normally receive price increases on a weekly basis — recently, we have been receiving increases on a daily basis. We call our suppliers, we argue, we fight, we try to make deals … but we end up with the same results all the time."
Fighting off reported accusations of "price gouging" at Plaza Extra supermarkets throughout the territory, Hamad explained that the cost of doing business on St. Croix is cheaper than operating on St. Thomas. Still, the disparity between the price of products within the two stores is "not that great," considering that the supermarket's storage facility on St. Croix is much larger and the cost of living on the big island much less expensive, he said.
There are currently no laws on the books that prevent local grocery store chains from charging different prices for similar products, according to Licensing and Consumer Affairs Commissioner Kenrick Robertson.. Most recently, a DLCA food-basket survey revealed that a six pack of Ensure (a type of meal-replacement shake) cost $13.99 at the Pueblo Supermarket in Long Bay, while the same product cost $25.19 at the Pueblo Supermarket in Subbase. (See "Food Survey Points up Wide Disparity in Prices Across Territory.")
"As a result of this disastrous pricing situation, I summoned Pueblo's senior management to my office for an explanation of this outrageous and erratic pricing structure," Robertson said. "Their explanation is that their management-information system broke down. In transferring from Pueblo Puerto Rico to World Fresh Markets LLC, the aging system lost its mainframe capabilities and the entire system malfunctioned. However, they are working around the clock to fix that problem and are committed to offering standard pricing for the same product …."
Meanwhile, DLCA is doing what it can to regulate the gross profit margins of wholesalers and retailers doing business in the territory by keeping tabs on supermarket and gas prices. However, more current data is needed for the department to set a baseline — or a reasonable — gross-profit margin that local businesses could actually stick to, Robertson said.
"The last time the data was taken was in 2004 and it hasn't been done since," he said. "In order to effectively regulate the industry, we need to make sure that wholesalers and retailers do not make excessive profits. We are seeking to execute a contract with a form to update the reasonable gross-profit margins recommended in the 2004 study on gasoline prices in the Virgin Islands."
Wholesalers and retailers will also be required to provide their pricing and profit information to DLCA on a quarterly basis, he said.
In an effort to regulate gas prices, DLCA will also:
— conduct gas price surveys every two weeks. (The surveys will compare local gas prices to prices being charged at Hess fuel stations in New Jersey.);
— inspect and calibrate gas pumps at least once a year to make sure customers are getting the amount of gas they paid for. (The pump is sealed on the inside after the inspection, and a sticker placed on the outside to indicate whether the pump has been "approved" or "rejected."); and
— provide a series of consumer-education tips in conjunction with the V.I. Energy Office.
Present during Monday's meeting were Sens. Liston Davis, Juan Figueroa-Serville, Louis P. Hill, Norman Jn Baptiste, Shawn-Michael Malone, Terrence "Positive" Nelson, Basil Ottley Jr., Ronald E. Russell, Usie R. Richards and Alvin L. Williams.
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