By Kevin Joseph Ryan
Vermont Senator Bernie Sanders has made the price of gasoline a major focus of his commentary over the past year, no doubt a popular subject. Next to the weather, the price of gas is the thing that to paraphrase author Charles Warner, “The thing everyone complains about, but never does anything about.”
In a press conference held in his Burlington offices Monday, Sanders’ noted that he has been investigating why gasoline prices are higher in Vermont, and especially Northwestern Vermont than the national average. His findings? “The concentration of ownership of filling stations in that region results in limited competition and prevents prices at the pump from falling as wholesale gas prices decline.” Sanders noted that over half of the filling stations in Vermont are owned by just three companies, namely, S.B Collins, Champlain Oil and R.L. Vallee.
While an interesting point, the reality of gasoline distribution and sales in Vermont is a bit different than Sanders presents. His claim at the press event was, essentially, that auto fuel dealers were “ripping people off.” He noted in his press release that the sellers “are keeping gas prices artificially high simply because they can.” This is rather simplistic in light of the fact that while the Burlington, VT market is the number 10 most profitable gas market in the U.S., there are reasons for this. First of all, according to the Oil Price Information Service, a leading benchmark organization, the average retail price of gas in Burlington was $3.78 cents per gallon, a 12% markup over the price charged by the wholesale vendor, or $3.32 per gallon in bulk. In turn, the refinery gets a price of $3.01…not a whole lot of room to wiggle. Many retail goods are sold for a wholesale markup of nearly double, not 10%.
One of Senator Sanders’ chief complaints is that prices in Northwest Vermont, chiefly Chittenden County, are far higher than in other regions of the state. According to Gasbuddy.com, a website offering literally street by street comparisons of gas prices throughout the country, the average price per gallon of gas is $3.68 in Burlington, versus $3.48 in Middlebury and Rutland and about a dime more in Saint Johnsbury. Therefore, not only is it true that the Burlington area pays more for a tank of gas by about $4.00 than the rest of the state, but we are significantly higher in price in Vermont than the national average of about $3.34 per gallon. That does not tell the entire story, though.
The national average is just that, national. Regional differences, including the shut down of three Northeast oil refineries and the vast difference between the Texas crude oil used in the American South versus the Brent oil pulled from the North Sea area of the Atlantic. New England trends toward higher gasoline prices in general with Boston Gas average prices of $3.51 versus, say Phoenix, Arizona with an average price of $3.08 per gallon. Texas crude oil, or WTI sells at nearly thirty dollars per barrel less at $85 dollar per barrel versus North Sea oil.
Plus, Senator Sanders is aware that oil prices are falling, worldwide, due to the lower demand prompted by the recession. Many new sources have predicted a fall of oil to $50.00 per barrel by mid-summer, prompting a strong decline in gasoline prices. Naturally, Sanders would like to step in and predict this by demanding local area station owners like Skip Vallee, owner of the area’s Maplefield’s Mobil Franchise lower his pricing, then watch the success as the prices fall, as they would have anyway.
Local news sources the Burlington Free Press and WCAX reported Monday evening that Bernie Sanders “announced a new website to help consumers track gasoline prices in Vermont“, in accordance with a Sanders press release. This is somewhat misleading, as while Sanders did create a new gas price page on his website at http://www.sanders.senate.gov, it utilizes data available on the website Gasbuddy.com for many years. When asked if Gasbuddy had formed a alliance with Senator Sanders on the issue, Gasbuddy Analyst Patrick DeHaan told TNR that “GasBuddy.com has long been a website that can be utilized by anyone for data, charts, and gas price information, whether they be in office or simply a motorist. We have no “partnership” with the Senator or his office.”