If asked to name the states where gas prices are highest many of us could easily name Hawaii, New York, California and Connecticut, where notoriously steep taxes keep gas prices extremely high, but most of us would probably overlook Vermont, which has the sixth highest average price of gasoline in the U.S.
Frankly, it's puzzling because Vermont's combined gasoline tax (44.5 cents per gallon) puts it among the lowest tax rates of the states populating the list of the 10 highest gas price averages. So why are Vermont's retail prices so high?
That's what Senator Bernie Sanders, a member of the U.S. Senate Energy Committee, wants to know. He's especially interested in learning why some distributor-owned-retail operations in northwestern Vermont sell gasoline for 30 cents per gallon more than the stores they own in other parts of Vermont. He notes that the three largest gasoline distributors in northwestern Vermont own more than 50 percent of the c-stores and gas stations there. Senator Sanders is investigating further. He gave GasBuddy an exclusive interview yesterday to discuss the problem in Vermont.
"This issue interests me because we're in the middle of a recession; I live in a rural state and a lot of our people travel long distances to work and if they're getting ripped off at the gas pump it's simply is money coming out of their pay check and in many cases that's money they can ill afford," Sen. Sanders said.
"So we want to make sure, from a national level down to the local level, that people do not get ripped off on what is for many people a basic necessity; you have to get to work -- you need gas in your gas tank and for many people you don't have a lot of choice about it.
We're working on this issue on three levels: We're working with the oil giants, ExxonMobil and so forth, trying to do away with some of the tax breaks and subsidies that they have gotten.
We work on it in terms of the energy futures market, understanding that the energy futures market is dominated today not by end-users such as airlines or trucking companies but in fact it's dominated by Wall Street; Morgan Stanley and others who control about 80 percent of the oil futures market and basically use that market for quick profits and a desire to drive prices up.
We're working on those issues, but, back home here in Vermont, the question we're asking is two-fold; why prices here are higher than the national average and secondly, why prices in northern Vermont are much higher than the rest of he state of Vermont... What kind of interested me... we got in our car and 40 minutes south of Burlington is Middlebury, Vermont and the same folks who own stations in Burlington and Middlebury are charging people in Burlington 25 cents a gallon more and there's no rational economic reason why that should be so.
The reality is that we have three major distributors who own the majority of the gas stations in the three northern counties and my view is that they're just not interested in being competitive and they get away with what they can get away with. So we're focusing on that and we're looking at ways to address that issue."
When asked if anything is occurring in Vermont that he thinks is illegal, Sen. Sanders said that's a good question and he's asked the Federal Trade Commission to investigate.
"What the FTC will tell you is that collusion, from a legal perspective, is probably difficult to prove... There's not an email from these guys that says 'let's have gas prices today at $3.65 a gallon'... You're not going to have that. You're not going to have telephone calls; but they have basically admitted that they look out the window and they see what the other guy is doing. That's what they said publicly.
It seems that they are getting away with it (inflated profit margins) because they can get away with it. But we have a website now that focuses attention on it, and by the way, as soon as you focus attention on it, something interesting happens. You know what happens? Gas prices go down!
I realize this is a national problem and it's not an easy problem to solve; it's gone on for many, many years. We're looking at national legislation and we're working with folks in the Vermont legislature to see what they can do.
It's an issue that we're going to stay on; I can't give you the exact remedy right now; I don't know what that is. We'll do what we have to do so folks in Vermont do not continue to get ripped off."
Senator Sanders said he thinks one potential legislative approach to protect consumers might suggest boundaries defining the relationship between wholesale and retail gasoline prices where the retail price would not legally exceed the wholesale price by x, y, or z...
"It's a tough issue and it's all over the country -- it's not unique to Vermont," Sanders added.
"But, as part of this process a couple of months ago," he said, "the FTC said to us that based on their computer models, prices in Vermont are 10 to 43 cents greater than what they would have expected them to be."
Sen. Sanders has established a website dedicated to tracking the issue. Consumers may also go here and sign up for updates:
Consumer Watch: An Eye on Gas Prices
Stay tuned. The senator's got his teeth into this like a pitbull on a porterhouse steak. Hopefully, elected representatives in more states will follow his lead and be the watchdogs that we need them to be rather than accessories to the crime.