Gas prices shoot up 30 cents or more on St. Croix
Published: March 6, 2014
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ST. CROIX - Motorists on St. Croix may have gotten sticker shock on Monday when they rolled into their favorite gas stations to fill up.
The retail price of gasoline, which at most stations had stayed steady in the $3.97 to $3.99 per gallon range for some time, had skyrocketed at some stations by 30 cents or more in less than 24 hours.
By Monday evening, many - if not most - stations across the island had raised their retail prices to $4.29 per gallon for regular gasoline. The price for premium had also shot up.
"We've been getting increases from HOVENSA every week," Hamad Ali of Quickserve gas station said. "We can't take it no more."
HOVENSA sells gasoline at wholesale prices to local independent gas station operators at its truck loading station on St. Croix. Because of this, HOVENSA's wholesale prices, called the rack rates, influence retail prices. The company adjusts its rack rates every week based on market conditions.
The rack rates have been on the upswing, with a few minor variations, since late January.
Overall, compared with its Jan. 20 rack rates, HOVENSA's current rack rate for regular gasoline is up by 36 cents, its rack rate for premium gasoline has jumped by 19 cents, and its rack rate for diesel fuel has gone up by 14 cents.
On St. Thomas, gas prices have stayed relatively steady, in the approximate range between $4.58 and $4.68 per gallon for regular gasoline, for some time.
Although retail gasoline price increases at stations across St. Croix happened rapidly this week, V.I. Department of Licensing and Consumer Affairs Commissioner Wayne Biggs said that nothing appears to be amiss.
Instead, he said, it seems to be the way things worked out after retailers chose to absorb the rack rate increases until they couldn't any more.
"HOVENSA had a couple of increases, and they didn't pass any of those increases on," he said of retailers. "They kept it flat."
Eventually, though, retail prices went up, and the increases were passed on to the consumer, he said.
Gasoline retailers who want to raise their prices are required to submit a request to DLCA and provide documentation proving they've gotten new inventory before they can raise the price of gasoline. However, the retailer - not DLCA - sets the price.
A couple of weeks ago, when the rack rate for regular gasoline went up by 7 cents per gallon, on the heels of several increases from HOVENSA, the requests to raise prices started coming in to DLCA, according to Biggs.
However, most of those increases did not happen immediately.
"The requests for increases started coming in," he said. "But we didn't see them at the pump."
Eventually, though, someone raised prices, possibly starting on Sunday. Biggs noted that one retailer choosing to change the price of gasoline can prompt similar action from others.
"We often see that in the market," he said. "If one moves, the other moves."
Although the retail gas price increases happened rapidly, Biggs said there is no evidence of collusion among retailers.
"A lot of it is just competition," he said.
On Wednesday afternoon, the One Love gas stations were out of step with most of the other stations on the island, with prices for regular gasoline that were still at the $3.97 per gallon level.
Novelle Francis Jr., One Love owner, said that they were a bit behind in getting the request for a price increase and documentation in to DLCA.
"We try to be law-abiding," the retired V.I. Police commissioner said.
Meanwhile, word got around on Wednesday that One Love prices were still at the lower rate, and the stations were inundated with people waiting to get at the pumps.
In fact, the One Love station in La Grande Princesse actually ran out of regular gasoline Wednesday afternoon, with motorists still at the pumps, clasping and unclasping the handles on gas nozzles but getting nothing in return.
According to Francis, by the time the station gets a new load of regular gasoline delivered this morning, he likely will have raised the price to be more in line with other retailers on the island.
"We're out of regular right now, and by the time we get it, chances are we will increase the price," Francis said Wednesday night. "I haven't really decided on the cost that it will be. I think we want to be competitive in the market."
Biggs said that DLCA received proper requests from retailers for the increases, and the agency has not seen any violations.
Ironically, HOVENSA started adjusting its rack rates weekly, instead of monthly, in May 2011 "to protect consumers from large price swings," according to a short written statement the company released at the time, announcing the move.
At that time, HOVENSA had for years adjusted its rack rate every month based on the previous month's market conditions. Adjusting the rate to cover a full month of market activity had at times led to sharp fluctuations in rack rates, particularly at times of extreme volatility in the oil market. Such an adjustment in April 2011 had prompted retail gas price increases of more than 50 cents overnight at some stations on St. Croix.
The HOVENSA announcement at the time said that adjusting the rack rate weekly would "serve to moderate the effects on local consumers in times of rapidly changing prices."
Biggs noted Wednesday that gas prices are increasing all around, not just on St. Croix.
Average retail prices for regular gasoline nationwide have surged by about 19 cents per gallon over the past month, according to the American Automobile Association's Daily Fuel Gauge report. The national average price for premium gas has gone up by almost 18 cents per gallon over the past month, and the average price for diesel fuel has increase by more than 10 cents in the same time period, according to AAA.
- Contact Joy Blackburn at 714-9145 or email email@example.com.