April 1, 2004 – Gasoline prices at the pump and at the wholesale level in the territory have been frozen for 30 days, Licensing and Consumer Affairs Commissioner Andrew Rutnik announced on Thursday.
The freeze applies to regular, premium and diesel fuels, according to a release from the Licensing and Consumer Affairs Department.
Rutnik said that he took the action "because of the need to control the prices of fuel in the territory during the implementation of the flexible petroleum tax."
The tax officially took effect on March 23, but Rutnik said no effort was made to begin collecting it, because of the failure of some companies to return the surveys aimed at determining why gasoline in the territory sells for anywhere from 38 cents more to 39 cents less a gallon than the national average. On March 23, with the national average for regular gas pegged at $1.73, pump prices were around $1.34 on St. Croix and about $2.11 on St. Thomas and St. John. (See "New fuel tax in effect but not being collected".)
In mid-February, Rutnik announced that DLCA had issued subpoenas to a number of gas stations and oil companies that had failed to comply voluntarily with requests for pricing information sought by the department via the field study. (See "Subpoenas to compel release of gas-pricing data.".)
On Thursday, Rutnik said one wholesaler, Domino Oil, and several retailers have failed to cooperate in the survey. He said the information from the study is "is critical to the implementation of the flexible petroleum tax and to understanding why there is such a disparate difference in the price of fuel between St. Croix [and] St. Thomas and St. John."
Thursday's release stated: "Wholesalers and retailers of fuel were notified today by order that prices will remain unchanged for 30 days. This time period will allow the Bureau of Internal Revenue and the Department of Licensing and Consumer Affairs to implement the new tax and negotiate with the wholesalers on the particulars of how it will be collected. It will also allow DLCA more time to complete the fuel study authorized by the governor and his financial team."
Rutnik said in February that the department wanted to complete the study by the end of that month, then analyze the data in March as part of the process of determining a flexible petroleum tax to be imposed at the wholesale level. The move was "intended to achieve a reduction in prices at the pump in both districts," he said then.
The FPT is aimed at lessening the impact on consumers by fluctuating with changes in gas prices, Rutnik has said. As prices rise, the tax rate will decline; when prices drop, the tax rate will go up.
Since the early 1980s, the territory has imposed a flat tax of 14 cents a gallon on motor fuel at the pump. However, because of the number of exemptions from that tax, the government has realized only a fraction of the anticipated revenues. Because of the various exemptions, "my numbers show we're only getting about 30 percent of the fuel consumed in the Virgin Islands taxed," Rutnik said in March.
While the price freeze is in effect, fuel retailers and wholesalers can petition Rutnik for permission to modify their prices, "submitting evidence that such modification is justified," the DLCA release stated.
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