82.1 F
Charlotte Amalie
Saturday, July 20, 2024
HomeNewsArchivesAbout Oil, Middlemen and Costs

About Oil, Middlemen and Costs

Dear Source:

In partial answer to Sid Shahinian's questions I can offer the following few insights. Several years ago I worked on a tug, which periodically barged gasoline to St. Thomas. We brought gasoline from the Philips 66 refinery in Guayama PR, not Hovic as was (and is) popularly believed. I was given to understand that this was because of slight fluctuations in the rack rate at the time.
The price we charged the customer (through an agent) for the voyage amounted to approximately 5 cents per gallon on the 7000 barrels of our cargo. That cargo was then tanked by a distributor, who must apply a mark-up to the product to cover the many costs of tankage (including, one hopes, the cost of EPA compliance.) St. Thomas and St. John are at somewhat of a disadvantage in that they must pay this additional tankage cost, which is considerable on the relatively small volume of fuel that they consume. We were told that there was another "middleman" or distribution agent of some sort between the supply line and the pump. Each of these stages of distribution added their own cost and profit to the price per gallon.
Still, at the time (and it appears that little has changed) we could not with our best guesses account for more than about half of the cost-per-gallon disparity of gasoline between St Croix and her sister islands.

Rick Starr
St. Croix

Editor's note: We welcome and encourage readers to keep the dialogue going by responding to Source commentary. Letters should be e-mailed with name and place of residence to visource@gmail.com.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.

Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.