So far this year, Chittenden, Grand Isle and Franklin Counties are ranked as the tenth most lucrative market to sell gasoline in the United States. That’s according to the Oil Price Information Service, which tracks prices and profit margins nationally.
For most of November, for example, filling stations in northwestern Vermont sold a gallon of gas for at least 30 cents more than the national average. That translates to roughly $5 more for every fill-up. At that rate, over one year, families living in northwestern Vermont would be forced to shell out hundreds of dollars more a year in gas money than the typical American family.
As we speak, there is a wide range of prices throughout Vermont. Over the weekend, gas sold for $3.39 in Ludlow. In White River Junction, Springfield and Middlebury, gas sold for $3.43. In Barre, Montpelier and Rutland, people paid $3.46 for one a gallon of regular unleaded.
Meanwhile, in northwestern Vermont, people paid 20 to 30 cents more a gallon, as gas prices continue to hover near $3.70 a gallon. In St. Albans, gas prices ranged from $3.63 to $3.68; in South Burlington, gas cost just shy of $3.70 and, in Richmond, people paid as much as $3.75 a gallon.
Are people in northwestern Vermont being ripped off? Or is there a reasonable explanation: increased fuel hauling costs, different types of fuel, or a different tax structure? I held a Senate field hearing in Burlington in August on exactly this issue. We learned there is no rational, economic reason to explain this price discrepancy. None.
What became clear is that in northwestern Vermont – where three distributors control more than half (at least 54 percent) of the filling stations – prices do not fall as quickly as other parts of the state or country.
The dramatic difference in gas prices throughout Vermont is evident to anyone who travels from one county to the next. Middlebury, for example, is less than 40 miles from here, but the three major fuel dealers in this region (RL Vallee, Champlain Oil Co., and SB Collins) frequently charge roughly 25 cents a gallon more in northwestern Vermont than stations they own in Middlebury, Vt.
I called each of these companies to speak about this issue and to make a simple and a direct request: make your filling stations in northwestern Vermont more competitive. None of these three were interested in discussing the matter seriously.
As you know, we have examined this issue closely and have found that these companies can be quite competitive when they want to be. After our investigation into the unusually high gas prices this summer, low-and-behold, the gasoline market here become more competitive and prices fell back in line with the national average. In fact, a few days before my hearing, Burlington prices fell about 5 cents below the national average. It’s clear that when a spotlight is shined on this issue, filling stations become more competitive – at least temporarily.
Starting again in September, the gas distributors were back to their old habits. For seven consecutive weeks from early September through October, northwestern Vermont was one of the 10 most lucrative markets to sell gas in the 13-state northeastern region of the United States, as tracked by OPIS.
The huge profits in northwestern Vermont have, once again, made Vermont one of the most profitable states to sell gas in the country. According to OPIS’ most recent weekly averages, Vermont had the fourth highest profit margin east of the Rocky Mountain states.
We are in the midst of a terrible recession and many working families who drive long distances to and from work are hurting. Gas station owners have a right to make a profit, but they don't have a right to rip people off.
The reason why the price at the pump is higher in northwestern Vermont is explained most simply by profit margin. For the most recent week we have data, the gross profit margin in northwestern Vermont (32.2 cents per gallon) was 63 percent more than the national average (19.8 cents a gallon.) This summer, profit margins were nearly 60 cents a gallon in Burlington, St. Albans and Waterbury.
To help bring transparency to Vermont’s gasoline market, my office has created an extensive online resource that highlights the most competitive pockets in Vermont to buy gas, explains how prices at the pump are set by outlining state and federal tax levels, detailing transportation costs for fuel haulers, and tracking wholesale gas prices and profit margins. People also have an opportunity to sign up for e-mail updates on this important issue.
Further, I am in the process of speaking with members of the state Legislature to explore holding hearings and drafting state legislation to counter the unusually high gas prices in northwestern Vermont. There may also be potential for legislation at the federal level.
Lastly, I have written to the District Environmental Commission requesting an expeditious review of the Costco application. The Act 250 process regarding Costco’s request for a land-use permit to build a gas station, has been opposed by local gas station owners for years and has now dragged on for about five years. I appreciate the need for a thorough review and I am certainly not weighing in on the merits of the case but five years does seem to be a very long time for a decision.
Clearly, a vigorous level of competition is missing from the gas market in northwestern Vermont. Through the combination of efforts I have outlined, I am hoping to generate a newfound competitive spirit that will lower prices at the pump and save Vermonters money.