April 6, 2005 Following a recent decision by the Licensing and Consumer Affairs Department to rescind its cap on gasoline prices, Esso Virgin Islands Inc. has canceled its eight-year contract to provide gasoline for the V.I. government's vehicle fleet.
At a Senate Government Operations and Consumer Affairs hearing Wednesday, Marc Biggs, Property and Procurement Department commissioner, told senators Esso canceled its 20 percent discount contract with the government in late March, immediately after the DLCA dropped all regulations on the company.
To combat the rising costs to the government, Biggs told the committee he is planning to propose policy initiatives concerning the utilization of government vehicles and the purchase of above ground storage tanks to store gasoline for government consumption.
On March 18, DLCA decided to rescind its October Gross Profit Margin Order that placed a profit cap of 30 cents per gallon of gasoline for wholesalers, and 35 cents on retailers. Both Esso and Texaco Caribbean Inc. had filed suits against the government when the order was implemented. They said it was an unfair regulation.
DLCA withdrew its order after District Judge Curtis Gomez advised the department to show it has the authority to place such a cap on the gasoline companies. (See "Consumer Department Removes Cap on Gas Profits").
Esso and Texaco did not immediately withdraw their separate suits against the government, however. And Texaco filed a motion in District Court Monday asking the court to not render its lawsuit moot because the order was rescinded.
Esso did not return calls from the Source Wednesday.
On Friday, Esso gas stations also stopped providing non-emergency government vehicles with gasoline because the government owed it $32,000 since the cancellation of the contract. Biggs said the government delivered the check to Esso Wednesday morning so the other vehicles were once again able to obtain gasoline at the Esso pumps.
"We are very displeased with the manner in which Esso has treated the government," Biggs said. "I honestly think we are being penalized for the cap order."
Biggs said Esso's actions did not take into account that the government has been in a good contractual relationship with the gasoline company for eight years. He said last year Property and Procurement, paid $1 million to Esso for gasoline. This year, with the cancellation of the discount program and increasing gas prices, that figure is expected to double.
"We really need to do something now," Committee Chairman Sen. Adlah "Foncie" Donastorg said. "We're suffering from a rising cost in gasoline."
Donastorg said Esso's and Texaco's lawsuits barred him from writing any legislation to regulate the companies.
Biggs said four years ago he had developed a plan to purchase gas from Hovensa and store it in tanks to supply government vehicles. However, Biggs said he received no funding for the initiative.
The Property and Procurement commissioner said he has recently updated the proposal and is preparing to submit it to the Office of Management and Budget.
"I have already been told there is no money," Biggs said.
He added, "We should explore every option."
States such as Georgia currently have government-owned gas stations to provide gasoline for government vehicles, Biggs told the committee. And with an oil refinery on St. Croix, Biggs said he doesn't understand why a similar program is not adopted in the territory.
Biggs said he would also meet with the V.I. Water and Power Authority next Wednesday to discuss whether the V.I. government could purchase diesel from the utility at its buying rate. He said he would also ask the utility whether Property and Procurement could utilize WAPA's unused storage tank in Sub Base to store gasoline.
"Very soon policies will have to be made about the use of government vehicles," Biggs told the committee, adding that the government has to go "a step further" in its current policy of fleet usage.
Biggs said his department has already reduced the use of its vehicles to Tuesdays and Thursdays for fieldwork.
Donastorg said he would move forward with legislation to obtain funding to purchase the above ground storage tanks and is hopeful that his colleagues will support his effort to get funding for this "very important issue to all the consumers of the Virgin Islands."
Lt. Gov. Vargrave Richards, in his capacity as acting governor, on Wednesday issued a press release calling all agency and department heads to implement immediate measures to curtail the consumption of electricity and gasoline. Richards cautioned against the excessive use of government vehicles.
"Agency heads must implement immediate measures to reduce consumption, thereby also reducing the hefty bills the V.I. government is presently paying," Richards said in the release.
Committee members attending Wednesday's hearing were: Sens. Liston Davis, Donastorg, Juan Figueroa-Serville, Louis P. Hill, Shawn-Michael Malone and Ronald Russell. Sen. Terrance "Positive" Nelson, who is currently in Denmark as a member of the delegation from the African-Caribbean Reparations and Resettlement Alliance, was excused.
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