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How Hot Fuel Fix Got Axed | Oil Watchdog

Press Release

How Hot Fuel Fix Got Axed


Fri, Feb 22, 2008 at 6:23 pm

    How Hot Fuel Fix Got Axed

    2-22-08 by dugan



    Is this week’s early-stage victory for a national lawsuit against the "hot fuel" ripoff important? Ever more so, Considering the collapse of would-be regulation to fix it. Here’s a memo I wrote recently to the National Conference on Weights and Measures, giving a flavor of how cowed by industry the regulatory group is. Skip to the bullet points if the rundown of the politics at the beginning is too MEGO.

    Feb. 8, 2008

    To: The National Conference on Weights and Measures

    From: Judy Dugan, The Foundation for Taxpayer and Consumer Rights (FTCR) and OilWatchdog.org

    RE: "Hot Fuel" Issue and proceedings of NCEW Interim meeting Jan. 27-30, Albuquerque, NM.

    Statement for inclusion in meeting record

    The National Conference on Weights and Measures has presented incontrovertible evidence that gasoline is sold in an unfair manner to consumers when there is no adjustment for energy loss (or less often gain) due to wide temperature variation. Weights and measures regulators freely acknowledge that the unfairness can be corrected with existing, available technology. Yet the leadership of the NCWM refused again in 2008 to even step toward a decision on automatic temperature compensation at the gas pump.

    On Jan. 29 the Laws and Regulations Committee of the NCWM, without debate, committed the Automatic Temperature Compensation issue to a technical purgatory, giving it a status that prevents any member from requesting a vote on the merits at your full annual meeting.

    The vote gave every appearance of having been decided in advance, well out of public sight. We would welcome evidence to the contrary. What we see, however, is a de facto federal regulator that welcomes funding support by and the membership of regulated industries. Lobbyist groups even provide entertainment outings and hospitality at meetings of the conference’s regional groups–West, Northeast, South and Midwest. Lobbyists are asked openly for "hospitality funds" in meeting announcements.

    The National Conference on Weights and Measures proudly describes itself as a "consensus" organization. Yet its financial dependence and members’ social ties create an atmosphere that appears to demand the assent of the regulated industry before the NCWM can act. On an issue as obviously contentious to the petroleum and petroleum marketing industries as retail temperature compensation of gasoline and diesel fuels, the National Conference on Weights and Measures appears politically paralyzed.

    Industry and supplier groups are also potential future employers of the state weights and measures officials who make up your voting membership.

    Observers widely expected a robust committee discussion with divergent views on automatic temperature compensation at the interim meeting. Instead, the working meeting was minutes long, and to an outsider eye its events seemed scripted.

    The chairwoman of the committee even cited as reason not to act her tally showing that more oil and marketing lobbyists had spoken against temperature compensation in the open meeting than consumer advocates who spoke for it. This is tantamount to regulation (or failure to regulate) on the basis of who can afford to send the most lobbyists to the Albuquerque Hyatt Regency.

    For the record, we assert:

    • Gasoline should be sold by the same method from refinery to wholesaler to retailer to consumer. To have the top of the sales chain receiving goods compensated for temperature and the bottom, particularly consumers, receiving no temperature compensation is unfair on its face. At the least, NCWM should require the same method of sale throughout the chain. If refiners and wholesalers are willing to go back to gross (uncompensated) sales, that would also provide a fair method of sale. The unacceptable method of sale, for consumers, is the present broken chain.

    • No ordinary consumer has the ability to determine the temperature of gasoline at the pump, or to make temperature comparisons among retailers. The consumer is therefore unable to make actual price to energy-value comparisons.The presentation by Henry Opperman at the open meeting Jan. 28 showed that, even in a small sample, stations within blocks of one another had gasoline temperature variations of up to 10 degrees F.

    • Consumers are smart enough to understand temperature compensation if it is offered to them. The marketing lobby’s contention that ATC would simply confuse their customers is true only if both regulators and sellers mis-educate buyers. The same "confusion" argument was made by food packagers attempting to prevent nutritional content labeling, ultimately one of the great successes of the Food and Drug Administration.

    • The cost of ATC to retailers is a function of time. FTCR and the Owner Operater Independent Drivers Association have been fully willing to agree to a timeline for ATC that comports with usual pump replacement time frames, minimizing the cost of retrofit or replacement. We have also agreed that small-volume rural stations, particularly those using mechanical pumps, may be exempted, for a longer period of time. These stations, much wept-over by marketing lobbyists at the meeting, are not and never have been at issue. In addition, the major oil companies and refiners often provide financial assistance for equipment upgrades.

    • Consumers have no way to validate marketers’ claim that retailers somehow "compensate" with pricing for fuel temperature variation, and thus the consumer loses nothing to hot fuel. If that were true, certain retailers would not embrace flat-black aboveground fuel tanks, which are only the most blatant, visible heating of fuel. Without method of validation, no claim is believable. The NCWM, above all others, should believe in "trust but verify."

    • As gasoline prices rise, hot fuel becomes a larger apparent cost to consumers and a larger temptation for gaming by retailers. Losing 1% of energy on a $1.49 gallon of gasoline mattered little to consumers, just as a similar loss on "cold fuel" at $1.49 mattered less to retailers. We’re done with $1.49 gasoline, however. At $3.00, and even more at $4.00 a gallon, fuel temperature matters. Since miles driven and gallons used rise in spring and summer, the overall unfairness is exaggerated to the detriment of consumers.


    Judith Dugan
    Research Director
    Foundation for Taxpayer and Consumer Rights

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