Nov. 8, 2003 The persistent disparity in gasoline prices between the St. Thomas-St. John and St. Croix districts has moved one government official to consider conducting a study into the matter.
Department of Licensing and Consumer Affairs Commissioner Andrew Rutnik said Friday he has proposed to the legislature and governor the idea of conducting a gasoline-price study to determine the causes for the wide disparity. Currently, gasoline costs almost a dollar more in St. Thomas-St. John than in St. Croix. The average price per gallon is $1.40 in St. Croix, $2.10 in St. Thomas and $2.30 in St. John, Rutnik said.
"In St. Thomas-St. John, we have wholesalers in the middle, but that still does not justify the high cost," Rutnik said.
The wholesalers Esso, Texaco and Domino purchase gas from Hovensa and from sources in Puerto Rico and then retail it to the consumer. Wholesalers have claimed that the cost of barging the gas to the islands is one main reason for the higher price at the pump.
Recently, the Senate Economic Development, Agriculture and Consumer Protection Committee held a hearing addressing the situation at which Esso, Texaco and Domino were invited to testify. Only Esso and Texaco showed up, Rutnik said.
At that hearing, Rutnik told the senators that he had spoken with Puerto Rico Management & Economic Consultants Inc., a firm that has done work for Rutnik's department before, and it would cost about $50,000 to conduct the study.
Some of the senators agreed to include the allotted sum in the yet-to-be-finalized fiscal year 2004 budget. Rutnik said that without that appropriation, the study could not be done.
Calls to Sens. Adlah "Foncie" Donastorg and Louis Hill, chair and member of the Senate Finance Committee respectively, were not returned Friday.
In 1997-1998, the same Puerto Rican consultants looked into the profit margins of gasoline companies on the wholesale level. Esso and Texaco participated in that study, but Domino refused to cooperate.
"This study is going to go further," Rutnik said, adding that he would subpoena individuals and documents if necessary. "We have that authority under law," he said. "If we see that there is excessive rates of return, we might consider price caps."
Hovensa vice president Alexander A. Moorhead said Friday that his company would cooperate in the study.
"It would be useful to bring to an end the mystery behind the disparity between gasoline pump prices on St. Thomas-St. John and St. Croix," Moorhead said.
Officials from Texaco, Esso and Domino were not available for comment Friday.
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