BURLINGTON - "People are being forced to pay excessively high prices for the gas they need to get to work€¦Service stations have a right to make a profit. They just don€™t have a right to rip people off," said U.S. Sen. Bernie Sanders (I-VT) last week.
Sen. Sanders is circulating a document called "Report on the Profit Margins for Retail Unleaded Gasoline in Vermont" that uses OPIS data to show that gasoline profit margins in northwest Vermont at the end of June were double the national average. This discrepancy prompted the senator to call for a federal investigation by the Federal Trade Commission and the U.S. Department of Justice into "unusually high gas prices in northwestern Vermont," notes his website.
In looking at the Q2 data presented by Sanders, it appears that he has selectively focused on a moment in time. By taking a look at the end of Q1, OPIS reported on April 5 that gasoline prices were near their peak. The markup was 15.2 cents (and lower, 14.4 cents in VT). The April 5 issue also lists the top 25 markets to make a profit for the year thus far, which Burlington is not on. Retailers in Burlington, at best, saw roughly a 5-cent a gallon profit for Q1 €" not including credit card fees.
"[Fuel] margins are constantly changing, gasoline markets are volatile and margins sometimes go the other way. Nearly every distributor or dealer I talk to has complained about periods of time when it is impossible to cover his or her costs. One thing that makes this industry so vulnerable to this type of analysis is its transparency. We post our prices on three-foot signs on the street for all to see, and you can get wholesale prices from many sources. The same is not true of other consumer products," Joe Choquette, spokesman for the Vermont Petroleum Association, told NACS Daily.
Choquette also clarified that Vermont and Burlington gasoline prices have continued to fall even as national and wholesale prices have increased. Furthermore, Sanders€™ analysis confuses gross margin with profit margin. It also accounts for state and federal taxes and a 1.5-cent per gallon transportation allowance, but not for credit card fees, distributor costs and the cost of running the station or store.