Committees Probe Higher Gas Prices

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Lawmakers in Montpelier investigating gas prices heard testimony on Tuesday that stations in northwest Vermont charge more and earn more per gallon than elsewhere in the region.

But the owner of a chain of gas stations put the blame on the higher cost of doing business in Vermont – including the state minimum wage and property taxes. Industry analysts backed up what House Judiciary Committee Bill Lippert said he sees when he drives outside his home base of Chittenden County.

"Going south to Middlebury or south further on (Route) 22A I’d watch the prices drop and could only wonder what was going on," he said.

Lippert’s committee joined forces with the House Commerce and Transportation committees to look at why northwestern Vermont consistently pays higher prices than the rest of the state.

The lawmakers were picking up on a probe launched by U.S. Sen. Bernie Sanders last year. Sanders, testifying by phone from Washington, left no doubt about what he thinks is the reason.

"Bottom line for me is people are getting ripped off, including many working families who just can’t afford to pay 10-15-20 cents a gallon more than they should be paying," he said. "I think the answer is fairly simple: low numbers of owners control the market (and) have no incentive to go forward with vigorous price competition." 

Other witnesses were less direct, although they did point to the disparity in prices.

Gregg Laskoski is with, a web service that tracks retail prices. He says gas taxes are 6.3 cents higher in Massachusetts, yet prices there are consistently lower than in many areas of Vermont.

"When we get to June of 2012 Vermont’s average price is $3.66 per gallon to Massachusetts’ $3.49. A 17 cents difference. It’s quite puzzling to say the least," he said.

Fred Rozell is an analyst with the Oil Price Information Service, which tracks gas prices as well as the gross margins that stations make on the product. Rozell said stations in the Burlington area are among the top 15 out of 400 markets for the margins they earn on gas sales.

But industry representatives said competition is vigorous in the Burlington area, and that prices are simply driven by costs.

Skip Vallee owns a chain of convenience stores and gas stations. He’s also been a target of Senator Sanders. So when Vallee took the stand, he directed a few pointed comments at politicians who use a bully pulpit to fan concerns about high gas prices.

Vallee put the blame on the cost side of the equation: higher costs for crude oil reaching regional refineries, higher property taxes in Vermont, and even the state-mandated minimum wage.

"I figure that’s 2 cents a gallon. So we ask the question about why is Vermont higher? Two cents of the gallon I think is directly attributable to our higher minimum wage," he said.

Vallee is fighting a plan by the Costco retail chain to add gas pumps to its store in Colchester. But Attorney General Bill Sorrell told the committee that Costco has said it would charge about 15 cents a gallon less than its competition.

Sorrell also asked the committee for legislation to allow his office to review in advance the consolidation of gasoline wholesalers or retailers. He said that could allow the state to block a merger on anti-trust grounds.

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