March 12, 2004 – Hovensa increased motor fuel prices to its customers on St. Croix by 10 cents a gallon for regular gasoline and 9.5 cents a gallon for premium on Thursday.
It was the second price increase of the year instituted by the refinery for the retailers it supplies on island. On Feb. 11, it raised the cost of both regular and premium gas by 10 cents a gallon.
Alexander A. Moorhead, Hovensa vice president for government affairs and community relations, said in a release issued on Friday that the increases were in response to changes in market conditions, including increases in the price of crude oil.
The 2004 increases follow on similar hikes twice in early 2003. On Jan. 3 last year, the refinery raised prices 5.5 cents a gallon for regular gas, 6 cents for premium and 10 cents for diesel fuel. Just five weeks later, on Feb. 7, another dime was added to the cost of all three. At that time, both the impending U.S. war against Iraq and political and labor unrest in Venezuela were cited as reasons for the rise of crude oil prices on the world market.
Pump prices have been climbing steadily on the U.S. mainland in recent months, in some cases to all-time highs, with the cost of premium gas nearing, if not exceeding, $2 a gallon in many locales. The American Automobile Association reported that regular gas was selling for $2.18 earlier this month in California, where prices are typically the highest on the mainland due to environmental standards requiring a special formulation of fuel.
While motorists on St. Thomas and St. John have been seeing those kinds of prices for the last four years, they come as a shock in the states. According to the latest Lundberg survey of 8,000 filling stations nationwide, prices have risen nearly 25 cents a gallon since late December.
Accompanying the Hovensa release on Friday were three news articles from this week out of London, Washington, D.C., and Miami.
According to one report, the International Energy Agency said the price of crude oil rose by $4 a barrel in London and $3 a barrel in New York last month. It cited the Paris-based agency as saying that China's growing demand for oil imports, low inventories of crude at refineries and a new surge of political unrest in Venezuela could drive prices higher by summer.
Production and/or shipping problems in Venezuela would particularly impact Hovensa, which is a consortium of Hess Oil Virgin Islands Corp. and Petroleos de Venezuela S.A., the giant state-owned oil company in the South American nation. Hovensa gets most of its crude from Venezuela. In December 2002, the refinery temporarily went on a reduced production schedule because of the cutoff of shipments from Venezuela; that circumstance combined with the volatile Middle East situation led to layoffs of 300 contract workers at the end of January 2003.
Compounding the current market factors, the International Energy Agency said, some refiners plan to shut down operations for routine maintenance once the winter demand for home heating oil slackens in the Northern Hemisphere and before the peak summer drive season begins.
Another report cited an increase in the price of crude from about $28.30 per barrel last September to $36.57 last week. An analyst with the American Petroleum Institute said the Organization of Petroleum Exporting Countries — OPEC — has cut back on its overproduction in recent months and will reduce its quotas by another million barrels a day as of April 1.
The third report cited the U.S. Energy Department as saying last week's national average of $1.74 a gallon was just a penny less than the highest recorded level since the department began collecting data. According to the department's Energy Information Administration, nationwide gasoline inventories stood at 202 million barrels at the end of February, 9.9 million below the average of the last five years.
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