BURLINGTON ? The U.S. Senate Energy and Natural Resources Committee held a field hearing at Burlington City Hall that was spearheaded by Sen. Bernie Sanders (I-VT) to explore gasoline prices in the northwestern area of Vermont.
Sanders, a member of the Senate committee, began questioning in July what he believes are higher gasoline prices in the Burlington area than elsewhere in the region. He called for a federal investigation, and believes that there needs to be more transparency in the gasoline pricing market.
"What impact exists when you have a very small number, I think you have 3 owners who control a majority of the gas stations in the northwest part of the state, what does that mean?" Sanders told the Vermont Public Radio. "Is there the kind of vigorous price competition that we need?"
VPR also notes that Sanders questions whether some retailers are working together (i.e., colluding) to keep prices artificially high.
"They can charge whatever they want but I think what we want to make sure and what is supposed to be happening is that there's supposed to be price competition," he said, adding, "That's what the free market is about not everybody charging substantially higher prices than exist around the rest of the country or exist around the rest of the state. That is not appropriate."
Joe Choquette, general affairs manager at the Vermont Petroleum Association, testified on behalf of state motor fuels retailers and distributors.
?It is worth noting that Vermont?s annual gasoline sales of 329 million gallons is the lowest in the lower 48 United States and second only to Alaska among all of the states. In New England, even tiny Rhode Island beats us, selling 395 million gallons of gasoline in 2010. This is a small market served by as many as five terminals located in four states and two countries. It is a complex market with many challenges ? the distance to refineries, high real estate costs, strict environmental regulations and high taxes.
?You have questioned whether the Burlington market is competitive, citing a 20-cent per gallon difference between Burlington and Middlebury at one point. A search for prices on the publicly available gasbuddy.com consistently shows at least a 17-cent per gallon difference between the low price in the Burlington area and the high price in the Burlington area. Last week, as well as today, the difference was 24 cents. If consumers always shopped for the lowest price, all of the prices would eventually come down.?
Choquette noted that NACS data for 2011 showed that it cost on average 17 cents for a retailer to breakeven selling a gallon of gasoline and that companies need to be able to recover their costs. He then presented data concerning the competitive nature of the greater Burlington market.
?An analysis of the ownership and density of stores in the Chittenden Country area performed by NACS reveals a population-to-store density in the Burlington area and a diversity of store ownership that is more competitive than the national and regional average, and not less competitive. Of 105 stores in Chittenden County, 61 are operated by independent dealers and 44 are operated by eight chains with 4 or more stores. Chittenden County has 1,492 people per retail outlet. Across the northeast there are 2,877 persons per store and nationally, 2,576. Thus, there are more independent stations competing for your business here than elsewhere.?
The purpose of the hearing was to examine gasoline prices and margin dynamics within the state of Vermont.