This is an official news release from the 26th Legislature published verbatim as received from the Office of Public Affairs, relative to recent Senate activity.
Feb. 24, 2005 — The Committee on Government Operations and Consumer Protection held its public hearing on Wednesday, in the Legislative Conference Room, Frederiksted to receive a status report on Virgin Islands fuel prices.
The committee wanted to especially hear from the Department of Consumer Affairs and from gasoline wholesalers and retailers. Several individuals who were directly affected were invited to testify including Commissioner Andrew Rutnik, of Licensing and Consumer Affairs and Alex Moorhead, Vice President, HOVENSA.
With approximately twenty-five individuals to include retailers and wholesalers, only two of such individuals showed up for the hearing. To the chagrin of the Chairman, Sen. Adlah Donastorg and committee members, Comm. Rutnik was a no-show.
In a correspondence sent by Comm. Rutnik, he explained that due to a current pending lawsuit against his department by Texaco Caribbean and ESSO Virgin Islands, it would not be prudent for him to appear at the hearing.
Rutnik added that the plaintiffs are asking for an injunctive relief and until the issue is resolved, he would be unable to discuss or provide documents
pertaining to the setting of Gross Profit Margins for all wholesalers and retailers.
Sen. Donastorg responded to the Commissioner's letter saying although he understood his concerns relative to the lawsuit, there were many other questions regarding fuel prices that he was certain the commissioner could answer.
"I am truly disappointed that Commissioner Rutnik was not at the hearing," said Sen. Donastorg.
The Chairman added that it might be necessary to remove the responsibility of handling gasoline prices from Consumer Affairs to that of the Public Service Commission, PSC.)
"This demonstrates the lack of respect they have for this institution," said Sen. Donastorg. He insisted that there was a list of issues with gasoline prices that needed to be addressed.
Not withstanding committee members' disappointments, following an impromptu performance by several children from the Estate Concordia Headstart Center in Frederiksted, the first testifier called was Mr. Moorhead from HOVENSA.
Moorhead presented to the committee a fourteen-page document stating that HOVENSA was neither a retailer nor a wholesaler of gasoline. Instead it is a manufacturer of petroleum products, including gasoline, which sells gasoline and diesel fuel on St. Croix to retailers and other bulk purchasers based on the company's posted prices for these fuels.
Additionally, he stated, HOVENSA sells fuels for local consumption to Esso Virgin Islands and Texaco Caribbean at the company's dock, pursuant to periodic sales contracts. He pointed out that these contracts are confidential
commercial agreements between private parties, which cannot be discussed in a public forum.
Most committee members expressed their concerns, respect to the price of gasoline being sold to Virgin Islands' consumers. However, Moorhead said HOVENSA's fuel price was not unreasonable. He said the Virgin Islands is purchasing gasoline below the cost to that of the mainland.
Regards to questions pertaining to HOVENSA creating an environmental and health problem in the Virgin Islands, Moorhead said HOVENSA is in compliance with all environmental requirements from the Environmental Protection Agency and the Department of Planning and Natural resources.
The only other testifier present was Myrtle Barry, manager of Enighed Contant Gas & Service Station in St. John. In her statement, she pointed out that she has no control over fuel price increases or decreases.
According to Barry, medical insurance, commercial insurance and security are increasing factors that affect the gross margin. She said despite increases in insurance and security her gross margin remained fixed.
Barry explained to committee members that under the DLCA price control order, gross receipt taxes increase when fuel prices increase, however, the markup remains constant absorbing the increased tax.
When asked by Sen. Ronald Russell if the DLCA order was fair, she said it was unfair because it put her in a position of becoming non-operable. It also put her at an economic disadvantage and does not address price fluctuations.
Sen. Russell said the 3rd Extension Agreement between HOVENSA and the Virgin Islands Government was poorly negotiated for the people of the Virgin Islands.
Sen. Donastorg said he is planning to offer legislation to correct certain factors as far as gasoline prices are concerned. However, he will have to look into the issue of violating the free enterprise system. He said the legislation is in the drafting stage.
The chairman concluded by saying if Comm. Rutnik did not show up to the next committee meeting planned for St. Thomas he will ask his colleagues
to subpoena him.
Committee members at Wednesday's hearing were: Senators Liston Davis, Terrence Nelson, Ronald Russell and Juan Figueroa-Serville.
