Oct. 8, 2004 – One day after announcing new limits on gasoline sales profits (See "Territory Limits Gasoline Profits", the V.I. government lifted a six-month ban on increasing gasoline prices until new regulations on gasoline sales profits take effect next week.
Since April, retailers had been prohibited from raising gasoline prices unless they could show their costs had also increased, Andrew Rutnik, V.I. Licensing and Consumer Affairs commissioner, said.
That ban was lifted until the new limits on profits take effect Oct. 15, Rutnik said.
Rutnik announced the ceiling on profits Thursday, citing a study showing that gasoline costs more in the U.S. Virgin Islands than anywhere else in the Americas before added taxes. The new rules limit wholesalers to a $.30 profit per gallon and retailers to $.35 per gallon.
"It is hoped that the wholesalers and retailers will not use this two-week period of no price controls to raise prices," Rutnik said.
At between $1.80 and $2.08 a gallon, gas costs about the same in the U.S. Virgin Islands as on the U.S. mainland. The price on the mainland, however, is after a $.42 tax is added to each gallon. The Virgin Islands tax is $.14 per gallon.
Prices are high even though the territory is home to the Western Hemisphere's second-largest oil refinery. The Hovensa refinery in St. Croix is capable of producing 21 million gallons of fuel a day, including gasoline, diesel, jet fuel and kerosene. The refinery does not always operate at capacity, however, Hovensa spokesman Alex Moorhead said..
The new profit limits won't affect Hovensa – when they go into effect – because the refinery has an agreement with the territorial government exempting it from most consumer affairs regulations, Rutnik said.
Because there is no need for a shipping agent on St. Croix, prices are lower, encouraging competition among independent gas stations. On St. Thomas and St. John, 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.
Since the new profit limits won't apply to Hovensa, only stations, or corporate chains, that can be identified as exceeding the new profit limit would be in violation of the new limits.
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