Zooming Oil Price Makes "Hot Fuel" Fix More Urgent as Memorial Day Approaches
Consumer Groups Criticize Oil Industry Resistance to Fixing
Hidden Charge at Pump That Costs U.S. Drivers Close to $3 Billion Yearly
Washington, D.C. — As Memorial Day kicks off the summer driving season
and gas prices scrape and sometimes exceed $4 per gallon, U.S. auto and
truck drivers are paying $3 billion a year in hidden charges at the
pump for fuel that expands and loses value as it heats up. (For
information on audio news conference at 11:30 a.m. see note at end of
"A ‘hot fuel’ surcharge of up to a dime a gallon is concealed from
motorists because they have no way to tell if the fuel they’re buying
is 60 degrees, 90 degrees or more," said Judy Dugan, research director
of the nonprofit, nonpartisan Consumer Watchdog. "Fuel at gas stations
across the street from one another can vary by 10 or 15 degrees, so
drivers have no way to judge the actual value of what they’re buying,
no matter what the posted price."
The nation’s leading advocate for independent truckers, the Owner
Operator Independent Drivers Association (OOIDA), is also protesting
the failure of national regulators to fix this rip-off in the face of
oil industry lobbying. A number of individual truckers are pursuing a
national lawsuit against the deceptive practice.
"The hot fuel scam costs our members at least hundreds of dollars per
year," said John Siebert of OOIDA. "Fuel prices are adjusted for
temperature at every point in the sales chain except the final one to
consumers. It’s high time to end this hidden oil industry subsidy."
Gasoline is sold by volume, and it expands as the temperature rises,
a bit more than 1% for every 15 degree Fahrenheit increase in
temperature. A century-old oil industry standard fixes the assumed
temperature at point of sale at 60 degrees. Yet the average year-round
temperature of gasoline sold in the U.S. today is near 65 degrees.
Summertime temperatures are often drastically higher, especially in
warm states. At 90 degrees, a 20-gallon fill-up costs a driver $1.60
more than it should, because the expanded "hot fuel" loses energy.
A comprehensive investigation by the Kansas City Star published in
August 2006 estimated that U.S. consumers are shorted about 760 million
gallons of gas and diesel per year by hot fuel sales. At the current
average national price of $3.81/gallon, (for today’s prices see www.fuelgaugereport.com), that’s $2.88 billion per year. As U.S. prices increasingly cross the $4 barrier, the hot fuel tab will exceed $3 billion.
At current prices, in hot months in Western and Southern states, car
drivers pay an extra 7 cents to 9 cents per gallon. Even in the
unlikely event that the 18.4 cent a gallon federal gas tax was
suspended for the summer, drivers would be paying half their savings
back to oil companies for hot fuel that has been robbed of its full
"Adjusting fuel price to temperature is a matter of simple fairness,"
said Joan Claybrook, President of Public Citizen. "Sending customers
away with less than they paid for is unacceptable in any industry."
Simple, moderately priced technology that adjusts the price at the pump
to account for temperature has existed for decades. In Canada, where
average gasoline temperatures are lower than 60 degrees, the oil
industry lobbied for, and obtained, the right to adjust price to
temperature so consumers wouldn’t benefit from "cold gas." In the U.S.,
however, the industry has lobbied successfully against state
legislation or national regulations mandating temperature-adjusted
"The oil industry has taken a classic "heads-we-win-tails-you-lose"
position when it comes to temperature-based differences in fuel value,"
said Judy Dugan, research director of the nonprofit, nonpartisan
Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer
Rights). "In the U.S., oil companies and gasoline marketers argue that
retail temperature-adjusted pricing is unnecessary, even though the
dealers buy wholesale gasoline with a temperature adjustment. In
Canada, they have been more than willing to install retail temperature
adjustment, prompted only by their own profit calculations."
In February, a Federal District Judge in Kansas City denied a motion to
dismiss the national "hot fuel" lawsuit. Sen. Claire McCaskill of
Missouri is sponsoring legislation that would require retail
temperature adjustment over a period of several years.
Independent truckers are hit hardest by the hot fuel premium (large
trucking companies buy their own fuel in bulk and demand that it be
temperature adjusted). The Owner Operator Independent Drivers
Association, based in Missouri, supports the hot fuel lawsuit.
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