10-08-07 by dugan
I’ve heard lots of arguments by gasoline distributors and retail chains about why they "can’t" adjust retail fuel sales for temperature expansion: "We’ve always done it this way, no one would benefit, we can’t afford to fix it."
The Kansas City Star now tells us that the same arguments were used by Big Oil when the dealers demanded–and won–wholesale temperature compensation in the 1980s. That’s why consumers also have to win their fight to fix the "hot fuel" ripoff.
It’s a tough fight because today, the major oil companies that resisted the change at wholesale are helping the same dealers fight our efforts to get a fair deal for consumers at the pump.
In Sunday’s Star story, headlined "Retail dealers once opposed ‘hot fuel,’ but now they fight to keep it," reporter Steve Everly opens with this:
Troy Hopkins seemed an unlikely figure to take on Big Oil over hot fuel.
But as an owner of an Alabama gas station, he knew a change was needed when his accountant told him he was being shortchanged by purchasing wholesale gasoline not adjusted for temperature.
He urged BP, his supplier, to sell him fuel with the adjustment. When nothing happened, he wrote another letter and lobbied the company’s employees. A lawsuit was filed.
Finally, after three years, the oil company agreed. Hopkins would later tell a jury how he felt when he looked at an invoice for wholesale fuel and realized he was no longer being shorted on the number of gallons he was buying.
"I was happy," he said.
Today, the debate over hot fuel is flaring again, but now it is about consumers buying temperature-adjusted fuel at the retail pump. And this time, dealers across the country are fighting the idea, saying that the way consumers now buy fuel is the one they understand best and that any change would not benefit them anyway.
"We have a great system that has worked well for 90 years," Billy Vollenweider, a vice president of a truck stop, told a conference of weights and measures officials in Chicago in July.
But it turns out that most dealers did not always think so well of the system. In an unheralded dispute that climaxed in the 1980s when gas prices were on the rise, dealers filed lawsuits and lobbied state legislatures to win the right to buy wholesale fuel adjusted for temperature.
In the end, the dealers were largely successful. Today, except for a handful of states in the north, retail fuel dealers can buy wholesale gasoline and diesel with the adjustment.
Why ‘hot fuel’ matters:
Fuel expands and contracts depending on temperature. At the longtime industry standard of 60 degrees, the 231-cubic-inch U.S. gallon puts out a certain amount of energy. But fuel is often sold at higher temperatures, causing the fuel to expand and the amount of energy to decline for each gallon dispensed. The total excess cost to U.S. consumers is estimated at $2.3 billion, and individuals pay up to a dime extra per gallon when it’s desert-hot.
At other stages in the fuel-delivery chain, the industry routinely adjusts volume for temperature change. When the gas is warmer, they get extra gallons. But retail pumps in America make no such adjustment, so consumers get only 231 cubic inches per gallon, regardless of temperature.
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