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PREMIUM, FULL-SERVE GAS NOW OVER $2 A GALLON

by Judi Shimel and Jean Etsinger March 9, 2000

Gasoline at upwards of $2 a gallon has come to the Virgin Islands -- on St. Thomas, for starters, but with St. John sure to follow in short order. Retail gas stations on St. Thomas posted pump prices as high as $2.07 a gallon for full- service premium fuel Tuesday, reflecting increases from suppliers of up to 12 cents a gallon passed on to consumers over the weekend . And that's not counting the additional 9/10 of a cent that shows up in the small type on price boards, meaning the actual cost for full-serve premium reached nearly $2.08. (All prices cited in this story exclude the 0.9 cent additional.)

It's the trickle-down effect of recent changes in the world's oil supply that have led service stations to raise their rates on St. Thomas, St. John and even St. Croix -- where supplies direct from the Hovensa refinery have traditionally kept fuel prices far lower than on the other two islands.

Gottlieb's Esso was selling full-service regular gas for $1.97 a gallon and premium for $2.07. Its self-serve rates were $1.87 for regular and $1.97 for premium. Prices varied at other St. Thomas Esso retailers. Tutu Esso, which offers only self-service, had regular for $1.85 and premium for $1.95. Nadir Esso, a full-service-only station, was selling regular for $1.79 and premium for $1.89 At the recently refurbished Tutu Texaco, the full-service prices Tuesday were $2.06 for premium and $1.96 for regular. The station had three prices posted on its big corner signboard -- $1.86 for regular, $1.96 for premium and $1.93 for diesel fuel. The prices were for "self-serve," although the sign did not specify this, and no prices were posted in plain view for full-service . Domino outlets appeared to have the best deals on both St. Thomas and St. John as the week began. At the St. Thomas Domino stations in Contant and Estate Thomas, the pump price to the general public Tuesday was $1.75 for regular and $1.85 for premium, with only full service offered. (Domino supplies discounted rates to taxi drivers.)

On St. John, where only full service is available, premium was selling for $1.99 and regular was $1.94 at O'Connor's Texaco. Office manager Sivilah Williams said the supplier had increased the price by 6 cents a gallon, but the station had not yet passed the cost on to consumers. Domino Gas on St. John didn't raise its rates over the weekend either, continuing to sell premium for $1.89 and regular for $1.84. Manager Lemuel Liburd said his price might seem cheap by comparison to his competition, but prices have been creeping up for eight months. Last summer, he said, he was selling regular gas for $1.54 a gallon.

At all stations contacted, operators predicted motorists will be seeing even higher prices at the pumps. "It depends on the world market," Gottlieb's assistant manager Mark Gottlieb said. Carl Boisson, vice president and manager of Esso Virgin Islands, said he can't remember the last time there has been a jump as dramatic as 12 cents a gallon at one time.

"Right now, it looks like it's as high as it could be," he said, "but essentially it's a case of supply and demand. . . Wholesalers on St. Thomas tend to follow the market and not change the price right away, hoping it's a short-term fluctuation."

But when supplier increases continue unabated, Boisson said, the retailer has no choice but to pass the price to the customer. "Unfortunately, we cannot absorb it forever, and that's what we saw last week," he said.

Several station managers said while customers have expressed shock at the higher prices, few have blamed the retailers or driven away in search of a better deal.

Licensing and Consumer Affairs Commissioner Andrew Rutnik undertook a study of gas prices in the territory last fall, shortly after the first signs of increases became apparent.

"They've been creeping up pretty steadily," he said of wholesale rates, and "as a result of that, the pump prices have been inching up."

Rutnik also said an unusually high demand for heating oil on the U.S. mainland this winter contributed to a reduction in the overall availability of petroleum products, forcing motor fuel prices higher.

Nationally, petroleum industry executives are predicting price hikes of up to 60 cents more a gallon by summer. Hovensa spokesman Alex Moorhead said even sheltered Crucian motorists will feel the impact.

"Consumers on St. Croix are enjoying a lower retail price because the product doesn't go through as many hands as the gas product that's sold on St. Thomas," he said. "There may be other factors, but I think that's undeniable."

But Moorhead said he noticed an increase on St. Croix while fueling his personal vehicle over the weekend.

Calls to four stations on St. Croix found regular gas, which until recently sold for $1.09 a gallon, now priced 8 to 10 cents higher. Premium gas Tuesday was going for $1.17 at Five Corners Service Station, $1.18 at Diamond Crest Esso, and $1.19 at LaReine Service Station and Remy Esso at Estate Glynn.

Moorhead said world oil markets affect all of Hovensa's suppliers, even its partner, Petroleos de Venezuela. Hess Oil of the Virgin Islands and Petroleos formed their partnership in 1998 with a stated goal of saving costs by importing cheaper Venezuelan crude oil.

But Moorhead said since the coker needed to process the heavier crude has not been built yet, the St. Croix refinery has to rely on lighter, more expensive Venezuelan crude for its petroleum products, along with oil from other markets.

Rutnik expressed a hope often voiced in the past by politicians -- that Hovensa could be persuaded to supply its product directly to St. Thomas and St. John too to contain retail fuel costs territorywide.

He noted that the periodic consumer-price surveys by his department are intended to encourage consumers to patronize businesses with the best prices. Other than that, he said, little can be done. Price controls can be imposed by executive order only in times of emergencies, such as hurricanes, he noted.

"It's a competitive market out there," Rutnik said. "Unfortunately, no one seems to be competing."

http://www.onepaper.com/stthomasvi/?v=d&i=&s=News%3ALocal&p=14535

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-- Dee (Dee360Degree@aol.com), March 09, 2000