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Consumer Department Removes Cap on Gas Profits

March 21, 2005 – After several months of imposing a profit cap on the territory's gasoline wholesalers and retailers, and fining Texaco Caribbean Inc. $200 a day for noncompliance, the Licensing and Consumer Affairs Department has rescinded its Gross Profit Margin Order.
At a conference hearing before District Judge Curtis Gomez Friday, DLCA officials announced they would rescind October's Gross Profit Margin Order that placed a profit cap of 30 cents per gallon of gasoline for wholesalers, and 35 cents on retailers.
Texaco and Esso Virgin Islands Inc. had both filed suits against the Virgin Islands government contesting the order.
"The government moved to have the case for gross profit margin moot," DLCA Commissioner Andrew Rutnik said Monday, because Gomez had informed the department it would have to prove whether the local government has legal authority to issue the cap.
Rutnik said the decision to rescind the order was also based on the fact that the two gasoline companies provided updated financial data and economic analyses to the DLCA in February. Rutnik said the cap order was previously issued based on 2003 financial data because the 2004 data had not yet been completed. The department is currently reviewing the 2004 data received last month.
"I hope that during this period where there is no profit regulation, they won't raise the prices higher," Rutnik said.
Maria Pis-Dudot, Texaco's public affairs manager for the Caribbean and Latin America Region, said Gomez has called for a conference hearing of all parties at a yet-to-be-scheduled date. At that time, Texaco will determine if it will withdraw its lawsuit, Pis-Dudot said.
"In a deregulated market, the consumers are the ones who win," Pis-Dudot said. "We're glad to see that free enterprise has prevailed."
Pis-Dudot said free enterprise does not guarantee companies a profit. She said the withdrawal of the order, which includes all the previous fines against Texaco, does not mean that prices will automatically go up.
"Gasoline prices have decreased more than 79 cents since 1999 in Puerto Rico despite the rising oil prices," Pis-Dudot said, adding that this happened without the regulation of the Puerto Rican government.
Esso attorney Alan Teague was off-island and could not be reached for comment.
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