Oil Watchdog

Santa Monica, CA — Refiner Tesoro is putting warning decals on its
gas station pumps, including dozens of Shell stations, warning that
consumers may not get all the energy they paid for in a gallon of
gasoline, according to industry reports today. Instead of a warning on
the pumps, Tesoro should sell gasoline that is compensated for high
temperatures that cause the fuel to have less energy per gallon, said
the Foundation for Taxpayer and Consumer Rights.

"The warning labels are acknowledgement of this long-time oil
industry ripoff of motorists just as they begin their holiday trips,"
said Judy Dugan, research director of OilWatchdog.org and FTCR. "More
consumers will understand what’s causing their summer dropoff in gas
mileage and be furious. Tesoro would be better off if it went ahead and
sold its gasoline fairly."

FTCR said lawmakers should move quickly to require that gasoline sales compensate for higher temperatures at the pump.

The report appears in the July 2 edition of Oil Express, an oil
industry publication. (see story excerpt below) The warning decals are
apparently a response to lawsuits charging motorists are deceived by
"hot fuel" sales. Gasoline is sold and taxed as though its temperature
was 60 degrees. In California and dozens of other states, gasoline is
much hotter when sold, so it expands and provides a few cents’ less
energy per gallon. (see links below)

According to the report, the 3-inch by 3-inch decals say:
"This pump dispenses motor fuel by volume measured in standard gallons
(231 cubic inches), as certified by the California Division of
Measurement Standards, without adjustment for possible variations due
to temperature or other factors which may affect the energy content of
each standard gallon dispensed."

Tesoro has some stations of its own, plus the recently
acquired "USA" truck stops and numerous Southern California Shell
stations that came with Tesoro’s purchase of a large Shell refinery.

FTCR said the labels, despite their vagueness, will spur
motorists’ awareness and demands for fair pricing. However, the Oil
Express report says no other chains have yet indicated they’ll follow
suit.

"Consumers will soon decode the warning label’s gobbledygook
and demand to know why this is allowed when they’re already paying more
than $3 a gallon," said Dugan. "Tesoro is obviously hoping to escape
charges of deception, but the industry as a whole can’t escape the
injustice of its pricing practices."

Attempts to order temperature compensation of fuel in the
federal energy bill were defeated in the Senate, but a separate bill
may be offered later by Sen. Claire McCaskill of Missouri.

In the California Legislature, a purported "hot fuel" measure,
AB868, bows to industry by calling for two years of study and
discussion before any action can be taken, said FTCR. The pump labels
should push state legislators to fix the problem in months, not years.

Nozzle manufacturer Gilbarco already makes a pump nozzle that
measures the temperature of gasoline as it leaves the pump, and it is
widely used in Canada (where sellers benefit from lower gasoline
temperatures). The head of the California Weights and Measures board
has stated that the pump may be sold and used in California, but
Gilbarco has declined to offer it for sale.

In the Oil Express article, an attorney for distributors and
retailers argues that it is illegal to sell temperature-adjusted
gasoline. That is certainly not true in California, says FTCR, but the
legislature should make it required as well as legal.

"The loss is perhaps 50 cents per hot tankful for individual
motorists, but the collective loss is estimated, according to federal
data, at about $450 million a year in California," said Dugan. "Sales
must be honest to be fair. Yet the industry from the refinery level on
down cheats both motorists and taxpayers by pretending that fuel is 60
degrees in order to fatten their own profits."

For more information on hot fuel, see:

https://oilwatchdog.org/articles/?storyId=5464&topicId=8059&topicId=8064 (state by state toll)

https://oilwatchdog.org/articles/?storyId=3619&topicId=8059&topicId=8064&archive=2007 (stories and background)

http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=ab_868&sess=CUR&house=B&author=davis AB868 bill language

Text from Oil Express Article:

July 2, 2007
TESORO DECALS WORRY MARKETERS FACING LAWSUITS

Tesoro has become the first retailer to slap decals on
dispensers warning that drivers may not get the energy they are paying
for because it does not temperature-adjust its fuel, Oil Express
learns….

Tesoro plans to stick the 3-by-3 inch decals on dispensers at
its own stations in California and Arizona and at Shell sites it
acquired as part of its $1.63 billion purchase of Shell’s 97,500 b/d
Wilmington, Calif., refinery and 250 associated stations.

The decals say: "This pump dispenses motor fuel by volume
measured in standard gallons (231 cubic inches), as certified by the
California Division of Measurement Standards, without adjustment for
possible variations due to temperature or other factors which may
affect the energy content of each standard gallon dispensed."

– 30 –

The Foundation for Taxpayer and Consumer Rights (FTCR) is
California’s leading nonpartisan consumer advocacy organization. For
more information, visit us on the web at: www.ConsumerWatchdog.org