HOME PAGE: News - January 27, 2015




Legislature Probes Uneven Regional Gasoline Prices

    By Mickey Smith

    MONTPELIER – A representative from Burlington is the lead sponsor on a proposed bill in Montpelier that would give the Vermont Attorney General's office a chance to look at gas prices around the region and watch for collusion, price fixing or other deceitful practices.
    A joint hearing of the House Transportation and House Commerce committees was held on Thursday, January 22, at the State House. The meeting was announced by House Speaker Shap Smith, who did not attend, and was described as a having “tri-partisan support for public hearings to investigate the cost of gasoline in Northwestern Vermont…”

Members of the House Transportation and Commerce committee listen to testimony, Thursday night, January 22.  The two committees held a joint hearing to look into gas prices especially in the northwestern part of the state.  - Smith photo

    “Folks who live or travel around Northwestern Vermont ask why filling up at the pump is so expensive,” stated Speaker Smith in announcing the hearing. “Although fuel prices have dropped nationally and across Vermont, the cost reduction has not kept pace in our Northwest communities.”
    While the meeting focused on gas prices in Chittenden and Franklin County, Lamoille County has felt the aggravation as well. The latest report from the website, www.gasbuddy.com – a site that tracks gas prices around the nation, stated the national average for gas prices was $2.02 as of the Monday morning, January 26 release. The Vermont average was $2.36 and a quick glance at gas prices in Lamoille County saw many places still hovering just over the $2.40 mark. The same website said Vermont is the only one of the contiguous 48 to not have a single station reporting gas under $2.00.
    The first person to testify at the hearing was Representative Chris Pearson, a Progressive from Burlington.  Pearson is the lead sponsor of House 30, the bill proposed to give the Vermont Attorney General's office access to more data about gas stations. The bill would require wholesalers to report annual sales, reporting when stations are being bought or sold and a whistleblower provision – that includes incentives for people who provide information that leads to successful prosecution. Those incentives include up to 25% of any fines collected.
    Committee members raised concerns about interfering with the free market system, but Rep. Loren Shaw, an Orleans Republican, added “if it's price fixing, that's a different ballgame.”
    Pearson and co-founder of the Oil Price Information Service, Ben Brockwell, who was speaking by phone, talked about the Northwestern corner of Vermont's gas prices compared to the rest of the Nation. Along with prices routinely 30-40 cents above the national average, this area of the state often is in the top 10 nationally for gross profit margin. During the past six weeks, it has been as high as number one.
    Brockwell also provided information about the wholesale costs of gas. He said the wholesale price out of the Burlington terminal is about $1.50, which runs about a nickel higher than the Albany, NY terminal. Based on the mileage and information from haulers relating to costs, Brockwell said this pricing seemed normal. When you add Vermont's 50 cent gas tax to the price, this leaves a wholesale cost of about $2.00 for gasoline. Gross profit margins are based on the cost of gas at the pump as compared to the wholesale cost. It does not take into account the costs of doing business.
    Joe Choquette, of the Vermont Petroleum Association, and Steve Pietryka, of Champlain Oil, offered the fuel dealers’ perspective.
    Choquette said there are very specific laws about gas pricing. He explained simply getting several dealers together to talk gas prices with a committee or Senator Bernie Sanders would be a violation of the law. 
    He said, by law, fuel dealers have to charge independent gas stations the same rate as they do their own stations. One thing not brought up is the common conception that gas prices are higher in small, rural communities because they have to pay a premium price for gas from distributors.
    Choquette said on the day of the hearing there was a 22 cent price discrepancy in Chittenden County.  He said if consumers were seeking out that cheapest gas station, it would drive prices down. He said today's customers take a lot of things into consideration when choosing a gas station, including: brand loyalty, discount cards and convenience. For this reason, he pointed out, he watched two stations across the street from each other with a seven cent difference in price – both remained busy.
    He and Pietryka agreed there is a strong fight for market share and if one greatly dropped their prices the others would follow suit, not out of price fixing, but price following.
    Pietryka admitted some gas retailers are probably making a bigger profit right now, but he added, a year ago they were losing money. He said the sudden drop in price caught everyone by surprise and created an opportunity for retailers to make some profit to help get through the winter.
    While a large part of the hearing was devoted to the proposed legislation, Speaker Smith also instructed the committee to report back with recommendations for future steps.
    Two years ago a joint Transportation and Commerce committee held a similar hearing, no local changes came out of that process. Since then, prices have dropped nationally over a dollar and Vermont has seen a proportional decline, but not a closing of the gap.


This Week's Photos

Morristown Rotarian Marcia Marble (left) and Morristown Centennial Children’s Librarian Rachel Booher lead a group of pre-schoolers through the song “The Wheels on the Bus” using rhythm sticks during Music and Movement time at the Library on Thursday mornings.  The sticks and other musical instruments were bought through a $1,000 grant from the Morristown Rotary Club.  The money was also used to get some books and CDs, as well as a parachute for kids to enjoy.  - Smith photo





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