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SANTA MONICA, Calif. -- A California Energy Commission (CEC) draft report on the hot fuel issue proves beyond doubt that consumers are unfairly treated at the pump, yet it fails to recommend the situation be fixed through temperature compensation devices at the pump, said Consumer Watchdog in a release.
The CEC draft concedes to industry lobbyists' demands by calling for an outright ban on the voluntary sale of fuel adjusted by volume to compensate for higher temperatures in the state, said the nonprofit, nonpartisan Consumer Watchdog. The report also accepts the industry assertion consumers would not benefit from any correction because retailers would simply raise prices to recoup all costs, even though this is the least likely outcome in a competitive market.
In a letter sent last week to the CEC, Consumer Watchdog research director Judy Dugan said, "You prove there is a pick-pocket at the gas pump, then ask that he be required to keep his hand in our wallets indefinitely."
The Consumer Watchdog letter also said if the CEC does not call for a technical solution, it must "recommend adoption of a cost-free but less accurate solution—a statewide reference temperature of 71 degrees. This would require no equipment and little regulatory adjustment."
Additionally, the letter explained, "it would offer less benefit to consumers in warmer parts of the state, and be a greater cost burden on retailers in colder parts of the state. But by recommending an outright ban on adjustment at the pump, you leave yourselves no other option. To keep 'hot fuel' sales in place is, as your own study confirms, unfair to consumers."
The CEC draft, following a year-long process, acknowledges that consumers suffer an annual loss in the hundreds of millions of dollars statewide because when the temperature of gasoline rises above 60 degrees it expands, but gas pumps don't account for the bigger volume. As a result, consumers receive less energy per gallon than they should.
Gasoline averages more than 70 degrees in California, and is higher in summer and in the south. The energy loss to consumers averages a few cents a gallon, but reaches up to 10 cents a gallon when gasoline prices are high and temperatures are warmer.
See the CEC draft report at www.energy.ca.gov.