Burlington area gas prices over the past three years have exceeded the U.S. average 86 percent of the time - sometimes by as much as 29 cents per gallon. During the same period, Burlington prices exceeded the statewide average 72 percent of time. Sen. Bernie Sanders chaired a Senate energy committee hearing today on why gasoline prices in northwestern Vermont have been among the highest in the nation. "Gasoline distributors have a right to make a profit," Sanders said. "They don't have a right to rip people off."
Sanders focused on how high gas prices affect ordinary Vermonters. One witness, Jim Coutts, testified about the impact on the Franklin County Senior Center he runs in St. Albans, Vt. Its Meals on Wheels program delivers hot food to 70 home-bound seniors five days a week. A typical 25-mile route requires two gallons of gas per delivery at a cost of about $7 a day. "Most of our drivers are on fixed income of less than $15,000 a year," Coutts said. "I am concerned that if estimates of higher gas prices this fall and winter come true we will face a critical shortage of drivers."
Concentrated ownership of distributors and service stations may be a key factor driving up prices, Sanders said. He raised the issue with Joseph L. Choquette III, who testified on behalf of the Vermont Petroleum Association. Sanders noted that four companies (S.B Collins, Champlain Oil, R.L Vallee and Wesco) own almost two-thirds of the filling stations in northwest Vermont. "I suspect that this lack of competition may be a significant reason why gasoline stations in northwest Vermont have been able to charge substantially higher prices than other regions of our state," Sanders said.
Ben Brockwell, a representative of the independent Oil Price Information Service, told the committee that he examined transportation expenses and other costs of doing business and was "unable to find a reasonable explanation for [why] Burlington gas prices are higher than neighboring areas." Brockwell's company works with gasoline dealers nationwide.
Rob Leuck, a vice president for Costco Wholesale, said his company has brought down prices in other markets around the country, but two major gas dealers in northwestern Vermont have for years blocked Costco from opening a gas station at its Colchester, Vt., store.
In addition to competition, greater public awareness may play a role in holding down prices. The gap between Burlington and national gas prices narrowed during the past month after Sanders called for a federal investigation and the cost of gasoline was the focus of extensive news media coverage. Today, gas prices in Burlington were about the same as the national average.
A Report on Retail Gasoline Prices in Northwest Vermont
Since Senator Sanders called for an investigation into unusually high gas prices in the Burlington area on July 2nd average gasoline prices in the Burlington area have gone down from $3.62 a gallon to about $3.527 a gallon on August 3rd.
While average gasoline prices in the Burlington area have gone down by more than 9 cents a gallon since July 2nd, the national average price for gasoline has gone up by more than 19 cents a gallon (from $3.38 on July 2nd to $3.574 on August 3rd), a dramatic 28 cent price swing in just one month.
Over the past three years, Burlington's average gasoline prices have been consistently higher than the national average.
As the two charts below show, gasoline profit margins for the Burlington area have almost always been higher than the national average, peaking at more than 38 cents a gallon more in June.