Hot Debate over Hot Fuel
WASHINGTON -- During a House hearing Wednesday, oil executives denied that drivers are overpaying for gasoline because the fuel expands in hot weather and provides less energy per gallon, The Associated Press reported.
"The idea that temperature adjustments will somehow give people more for their money simply does not take into account the realities of the gasoline market," Hugh Cooley, a vice president for Shell Oil Co., said at the hearing.
An Exxon Mobil Corp. executive said gas-station operators would have to pay to put new measuring devices into pumps that factor in temperature changes. Operators probably would pass the cost on "without any additional benefit to consumers," said Ben Soraci, the company's retail-sales director.
According to the AP report, critics say that when drivers buy gas during hot weather, they are paying as much as $1.5 billion a year in overcharges. That amounts to 3 cents to 9 cents per gallon, depending on the pump price and temperature, consumer advocates say.
To Rep. Dennis Kucinich, D-Ohio, a Democratic presidential candidate whose subcommittee held the hearing, oil companies are using a double standard. He said the companies support the use of temperature adjustments in Canada, where gasoline often is cooler than the 60 degree Fahrenheit reference point. But, he said, they oppose them in the U.S., where gasoline often exceeds 60 degrees, especially in the South. He also said the industry long has used temperature-adjusted pricing when selling gasoline wholesale.
But Soraci, the Exxon Mobil executive, said factoring in temperature in pricing "would violate current laws and regulations" that define a gallon of gasoline as 231 cubic inches. That definition, he said, does not take into account energy content, the report stated.
The oil executives said energy levels frequently vary slightly in gasoline. Variables include whether it is blended with an additive, such as ethanol, and where it is refined.
Soraci said Exxon Mobil would support a study into the costs and benefits of installing temperature adjusting devices into pumps. Meanwhile, Shell's Cooley said his company does not believe that consumers "are harmed in any way by not having temperature adjustments at retail (gasoline) dispensers." The current way of measuring gasoline, he said, "just makes good sense. Consumers understand this measurement."
As the AP reported, this "hot fuels" issue has led to more than two dozen consumer-based suits claiming motorists are being overcharged, with cases in Alabama, Arkansas, California, Florida, Kansas, Missouri Kentucky, Oklahoma and New Jersey.
Just this week, three Oklahoma County consumers said they're seeking class-action status on a lawsuit that claims they've been overcharged for gasoline because it was stored at hotter than usual temperatures. The suit names 13 retailers and oil companies, including 7-Eleven Inc., Albertson's LLC, ConocoPhillips Co., Shell Oil Co., Texaco Refining and Marketing Inc. and Wal-Mart Stores Inc., according to the Associated Press.
"The sellers of hot motor fuel are able to pocket these billions of additional dollars in temperature-inflated profits merely because the fuel they are selling is warmer than 60 degrees Fahrenheit, and customers are ignorant of the truth," the lawsuit claims.
Vance McSpadden, executive director of the Oklahoma Petroleum Marketers Association, questioned the reasoning behind the lawsuit. He noted that gasoline is often stored underground in tanks that generally remain around 60 degrees. Storage tanks that are above ground are more susceptible to temperature changes, but McSpadden said the benefit consumers get from colder temperatures in the winter would offset the impact of warmer temperatures in the summer.
"This is a feel-good deal for the consumer, but I don't think there's any basis to it at all," McSpadden said. "If there is, it's very small. It's certainly not billions of dollars."
The lawsuit, which seeks unspecified damages, was filed by attorney Jona R. Hefner on behalf of plaintiffs Hadley Bower, Larry O. Bower, Kristy DeAnn Mott and Oklahoma City manufacturing company, TEMCO, the AP report stated.
"We spend a lot of money on gas," said TEMCO manager Russ Godfrey. "Any penny we could save here or there would be nice since gas is so expensive now."
"The idea that temperature adjustments will somehow give people more for their money simply does not take into account the realities of the gasoline market," Hugh Cooley, a vice president for Shell Oil Co., said at the hearing.
An Exxon Mobil Corp. executive said gas-station operators would have to pay to put new measuring devices into pumps that factor in temperature changes. Operators probably would pass the cost on "without any additional benefit to consumers," said Ben Soraci, the company's retail-sales director.
According to the AP report, critics say that when drivers buy gas during hot weather, they are paying as much as $1.5 billion a year in overcharges. That amounts to 3 cents to 9 cents per gallon, depending on the pump price and temperature, consumer advocates say.
To Rep. Dennis Kucinich, D-Ohio, a Democratic presidential candidate whose subcommittee held the hearing, oil companies are using a double standard. He said the companies support the use of temperature adjustments in Canada, where gasoline often is cooler than the 60 degree Fahrenheit reference point. But, he said, they oppose them in the U.S., where gasoline often exceeds 60 degrees, especially in the South. He also said the industry long has used temperature-adjusted pricing when selling gasoline wholesale.
But Soraci, the Exxon Mobil executive, said factoring in temperature in pricing "would violate current laws and regulations" that define a gallon of gasoline as 231 cubic inches. That definition, he said, does not take into account energy content, the report stated.
The oil executives said energy levels frequently vary slightly in gasoline. Variables include whether it is blended with an additive, such as ethanol, and where it is refined.
Soraci said Exxon Mobil would support a study into the costs and benefits of installing temperature adjusting devices into pumps. Meanwhile, Shell's Cooley said his company does not believe that consumers "are harmed in any way by not having temperature adjustments at retail (gasoline) dispensers." The current way of measuring gasoline, he said, "just makes good sense. Consumers understand this measurement."
As the AP reported, this "hot fuels" issue has led to more than two dozen consumer-based suits claiming motorists are being overcharged, with cases in Alabama, Arkansas, California, Florida, Kansas, Missouri Kentucky, Oklahoma and New Jersey.
Just this week, three Oklahoma County consumers said they're seeking class-action status on a lawsuit that claims they've been overcharged for gasoline because it was stored at hotter than usual temperatures. The suit names 13 retailers and oil companies, including 7-Eleven Inc., Albertson's LLC, ConocoPhillips Co., Shell Oil Co., Texaco Refining and Marketing Inc. and Wal-Mart Stores Inc., according to the Associated Press.
"The sellers of hot motor fuel are able to pocket these billions of additional dollars in temperature-inflated profits merely because the fuel they are selling is warmer than 60 degrees Fahrenheit, and customers are ignorant of the truth," the lawsuit claims.
Vance McSpadden, executive director of the Oklahoma Petroleum Marketers Association, questioned the reasoning behind the lawsuit. He noted that gasoline is often stored underground in tanks that generally remain around 60 degrees. Storage tanks that are above ground are more susceptible to temperature changes, but McSpadden said the benefit consumers get from colder temperatures in the winter would offset the impact of warmer temperatures in the summer.
"This is a feel-good deal for the consumer, but I don't think there's any basis to it at all," McSpadden said. "If there is, it's very small. It's certainly not billions of dollars."
The lawsuit, which seeks unspecified damages, was filed by attorney Jona R. Hefner on behalf of plaintiffs Hadley Bower, Larry O. Bower, Kristy DeAnn Mott and Oklahoma City manufacturing company, TEMCO, the AP report stated.
"We spend a lot of money on gas," said TEMCO manager Russ Godfrey. "Any penny we could save here or there would be nice since gas is so expensive now."