Dear Source:
Your article on April 9, 2009 concerning a survey recently conducted by the DLCA on gasoline and diesel fuel prices stated: "St. John has suffered for much of the winter season with a shortage of fuel because Hovensa wouldn't supply enough." This statement suggests that HOVENSA is arbitrarily refusing to supply more fuel to St. John, which is not correct. In fact, the refinery cannot accommodate any more tank trucks in order to make additional sales to St. John or St. Thomas. Let me explain why.
There are two service stations on St. John, E-C Service Station in Cruz Bay and Domino Service Station in Coral Bay. E-C purchases its fuel from HOVENSA. Domino reportedly gets its fuel from a supplier in Puerto Rico but had been closed since March 4 due to a lack of fuel, according to a report in the Source on March 18, 2009.
E-C purchases its fuel from HOVENSA by truckloads. Unfortunately, the truck loading rack at the refinery cannot accommodate more tank-trucks to be able to make additional sales to E-C whenever the Domino Station in Coral Bay closes. The truck loading rack was designed to serve only customers on St. Croix because, until recent years, all service stations on St. Thomas and St. John had been supplied with fuel from wholesalers that operate storage terminals near the St. Thomas airport. Those storage terminals are supplied by fuel-barges or tankers.
The usage of fuels on St. Croix has increased due to an increase in the number of motor vehicles on the island, which resulted in an increase in sales at the truck loading rack. That increase in sales was expected and HOVENSA's truck loading rack was designed to accommodate that expected increase. What was not expected was that several station operators on St. Thomas and St. John would have switched from purchasing their fuel from two of the three wholesalers on St. Thomas to buying their fuel directly from HOVENSA. This unexpected increase in direct sales volume caused the truck loading rack to reach its capacity. HOVENSA has therefore ceased accepting new customers located on St. Thomas and St. John and limited the volume of fuel it sells to existing customers on those islands based on their purchases in 2008.
In order to increase the capacity of the truck loading rack, HOVENSA would have to replace several hundred feet of pipelines from its storage tanks to the truck loading facility with larger diameter pipelines and replace the existing pumps with pumps that have a faster discharge rate. This would require a major financial investment, which HOVENSA is unable to make particularly when refinery margins are under significant pressure in the current economic environment.
Whenever independent gas station operators on St. Thomas or St. John run out of fuel because of a Domino station being closed, they can buy fuel temporarily from existing St. Thomas wholesalers. While the price may be higher, this would eliminate the fuel shortage.
Alex A. Moorhead
Vice President – Government Affairs,
Community Relations and Secretary,
Hovensa L.L.C.
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