High Burlington-Area Gas Prices Mystify Lawmakers
It’s clear lawmakers have been hearing from constituents about the wide disparity in gas prices in Vermont – especially higher prices in the Burlington area – and the fact the average price of a gallon gas statewide is currently about 40 cents above the national mark.
Why and what can be done about it wasn’t so clear, as lawmakers heard from a testimony during a public hearing at the State House on Thursday.
Ben Brockwell, a petroleum price expert with the Oil Price Information Service, confirmed that Burlington area gasoline retailers have one of the highest profit margins in the country.
Brockwell says after examining the data he couldn’t find a reason for the higher prices.
"There was no cost structure that explained to me the difference between the higher prices in Burlington and ... some of the other markets." - Oil price expert Ben Brockwell
“There was no cost structure that explained to me the difference between the higher prices in Burlington and in Middlebury, Rutland and some of the other markets,” he told lawmakers.
There is nothing illegal about retailers in an area maintaining higher prices than those in another area – unless they agree among themselves to do so.
But there are concerns that if too many stations are run by too few owners, a lack of competition leads to artificially high prices.
For that reason legislators will consider a bill that would enable the Attorney General’s office to track wholesale gasoline sales to see how much each retailer is buying. It would also require advance notice when stations are bought and sold, and would provide incentives for whistle blowers.
Burlington Rep. Chris Pearson is the sponsor of the bill. He says the idea isn’t to regulate gasoline sales, but to give the state better tools to detect anti-competitive practices.
“Gasoline in our economy and our job market is an essential need for many people to get to work, so it is a little different from, let’s say, the price of stereos,” Pearson said.
Members of the two House committees holding the hearing also heard from representatives of the wholesale and retail gasoline industry.
They said the legislation is unnecessary and argued there’s plenty of competition.
"What had happened is, in my humble opinion, all of a sudden these dealers who were struggling collectively started thinking, 'You know what? This is once in a lifetime. Let me make a little money.'" - Gasoline wholesaler Steve Pietryka
Joe Choquette of the Petroleum Dealers Association says there are 61 independently owned gas station in the Burlington area and another 44 owned by a handful of gasoline wholesalers. Choquette says each operator determines a price based on a variety of factors.
“They consider their own business circumstances, the cost of the product sold, the cost of running the business and what competitors in the immediate area are doing,” he explained.
Choquette said as recently as Thursday morning there was a 22-cent per gallon price difference between retailers in Burlington.
Steve Pietryka of Champlain Oil Company, a gasoline wholesaler, acknowledged it’s a good time for some retailers who've struggled when prices were high in the past.
He said some see the sudden drop in prices as a rare opportunity.
“What had happened is, in my humble opinion is all of a sudden these dealers who were struggling collectively started thinking, ‘You know what? This is once in a lifetime. Let me make a little money,'" Pietryka told lawmakers.
One group missing from yesterday’s public hearing was the public. There was only one comment from someone not involved in the gasoline industry or state government.
As one committee member said, "Where are all those people that were calling me?"