March 21, 2004 — As Virgin Islanders join the rest of U.S. consumers facing rising prices at the gas pump, the commissioner of the Department of Licensing and Consumer Affairs is pondering a new local gas tax set to go into effect this week.
Commissioner Andrew Rutnik said he was hoping the results of a gas-pricing survey would help him decide whether to tax motorists at the pump or tax gasoline wholesalers instead. But with several wholesalers withholding information from the department, the commissioner is left with less information than he had hoped for to help him make his decision.
"We've been very successful in getting about 50 percent of the information in a timely fashion, but the last 10 or 15 percent of these gas stations … have been very reluctant to give that [information] voluntarily," the commissioner said late last week.
Had the pricing information come into DLCA by the first of the month, Rutnik said he could have had a few days to analyze the data before a flexible petroleum tax (FPT) goes into effect March 23. The FPT is the second attempt by the V.I. government to augment its revenue stream from gas consumers since the early 1980s. However, because of the number of exemptions associated with the earlier flat tax at the pump, the government only realizes a fraction of the anticipated revenues.
"As it turns out, we've noticed there's a great deal of exemptions in that [tax]. My numbers show we're only getting about 30 percent of the fuel consumed in the Virgin Islands taxed. We don't know exactly why yet, but we're looking at the implications of that tax, as opposed to the flexible petroleum tax."
Rutnik says he thinks the FPT will prove a more reliable source of funds to the government, and to ensure its reliablility, he's thinking of applying the tax at the wholesale level. Rutnik says the study was needed to give officials a look at wholesalers' gross profit margins.
New local taxes are just one of the worries facing consumers today, with prices for gas climbing steadily. By summer, DLCA officials say motorists can expect a new round of price increases.
Hikes in world oil prices are putting the squeeze on Virgin Islanders from a number of sources. Within the past several days, Hovensa announced increases for its retail gasoline, representing the cheapest price at the pump in the territory. About a week later, the governing board at the Virgin Islands Water and Power Authority granted its executive director permission to recalculate its request to raise the levelized energy adjustment clause (LEAC) currently being considered by the Public Services Commission.
With prices spiraling ever higher, the commissioner said a long-standing question becomes more pressing in the minds of consumers: Is the price of gas in the Virgin Islands a fair market price, given the disparity between prices at the pump in St. Croix and St. Thomas? It's the kind of information Rutnik has been after since he first became the licensing commissioner.
"The price of fuel is certainly driving the consumer to question why we are paying so much when we have this refinery over here on St. Croix. When we look at all the information and analyze all the information in the study, we will have a better idea whether this is a fair market in the Virgin Islands or not," he said.
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