OOIDA, Public Citizen suing fuel retailers over ‘hot fuel’

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By Todd Dills

Ever wonder why you get better fuel mileage in the winter? The Owner-Operator Independent Drivers’ Association and Public Citizen hope to find out. The groups, normally at odds, announced on Thursday their support of a class-action suit that alleges fuel retailers unfairly price gas and diesel via insufficient control of fuel volume fluxuations under temperature changes.

The complaint says the imbalance costs retail fuel buyers an estimated $2 billion a year. The suit was filed in a federal court in California against a host of fuel retailers, including Ambest, Flying J, Petro, Pilot and TA. The suit was filed on behalf of residents, including some owner-operators, in seven states — Arizona, California, Florida, New Jersey, North Carolina, Texas and Virginia.

The standard temperature at which a gallon of motor fuel is determined was set at 60 degrees in an agreement between the oil industry and regulators nearly a century ago. At 60 degrees, a gallon of gas is measured at 261 cubic inches in volume. In the United States, pumps are set at this standard of volume, so if a person fuels up on a day when it’s 90 degrees outside, chances are the fuel is hotter than 60 degrees and the volume of the regulated gallon is more than 261 cubic inches. The suit alleges that person is getting cheated out of the difference.

In 1990 the Canadian government, with the cooperation of the oil industry, required retrofitting of gas pumps with devices that adjust output volume depending on the fuel’s temperature. In Canada, though, the problem wasn’t hot fuel, but cold. In a widely circulated August report, Kansas City Star investigative reporter Steve Everly said, “In Canada, the industry makes more money by adjusting. In the United States, the industry makes more money by not adjusting.”

The average yearly U.S. air temperature hovers around 65 degrees nationwide, says Public Citizen President Joan Claybrook. “In Texas, the average annual temperature is 78.” Consumers in states with average temperatures lower than 60 benefit from the current practice and vice versa, but the average is an overall loss, according to Claybrook.

John Siebert, OOIDA project manager, calls the issue “one of the best-kept secrets that big oil already knew about.” Siebert was partly responsible for bringing the issue to light, as reported by Everly, after he began responding to member queries about why their gas mileage suffered so much in the summer.

Siebert and Claybrook say crude oil volumes are adjusted for temperature when they’re shipped, as are bulk fuel purchases. In America, they say, the only place where temperature adjustment does not occur is at the retail pump. And if consumers don’t know with any certainty how much fuel they are pumping, it’s impossible to make an informed price choice or accurately chart gas mileage.

Mark Rushing of Spearsville, La., team drives with his wife, Becky. Rushing Enterprises, their owner-operator business, will log close to 250,000 miles this year, and the couple will spend close to $100,000 on diesel. Rushing is a plaintiff in the suit, as he does business in each of the states named.

Owner-operators in the represented states stand to benefit mightily from what lawyers are asking of fuel retailers, according to George Zelcs, a lawyer representing the plaintiffs.

“One of the remedies that we’re seeking is the installation of automatic temperature control devices on each pump,” Zelcs says. Likewise, the suit asks that consumers be given notice of the different volumes resulting from varying temperature in fuel and, says Zelcs, “restitution to the extent that consumers have overpaid for gasoline that doesn’t have the same amount of energy as a standard 60-degree Fahrenheit gallon.”

The restitution amount, says Zelcs, might be determined by the availability of electronic records of fuel purchases or paper receipts.

“I fully expect and hope that this lawsuit will start a movement, so that at the end of the day American customers have the equity that John Siebert talked about, namely that every time, whether you’re buying gasoline or diesel, when you go to the pump you know what you’re getting and you can make intelligent choices about what you want to pay for it,” says Zelcs.

But the American Petroleum Institute’s John Bisney says the trade association sees the issue as “swatting a horsefly with a hammer.” He estimates the cost of retrofitting a pump with temperature-controlled devices at $2,000 a pump, and pump replacements at $25,000, costs which he says will be passed on to the consumer.

“It strikes us as one of these attempts to make a perfect world,” he says. “It could be done, but in the end it’s not cost-effective and could end up actually costing more for the consumer.”