Motorists sue oil titans, retailers over ‘hot fuel’ losses

(USA Today) Think gas is expensive? It’s even more expensive on hot summer days. Gasoline expands as temperatures rise. That means motorists get less energy from a gallon of so-called “hot fuel” than from a cold one. When Brent Donaldson, a restaurant owner in Kansas City, Mo., discovered that fact earlier this year, he joined hundreds of consumers in more than a dozen states who are suing oil companies and gas retailers, alleging that they have been overcharged by billions of dollars. “The consumer is repeatedly being ripped off and not given a fair deal,” Donaldson says. He says he spends $60 a week filling his Acura. The lawsuits allege that higher temperatures of gasoline cost consumers between 3 and 9 cents a gallon extra at the pump.
Mystech: Just another reason to fill up your vehicle during the cooler hours of the late evening or early morning (also helps reduce air pollution through evaporating gasoline vapors). Or you could, you know, drive less too.  🙂

The litigation seeks to force the oil industry to install gas pumps that have temperature-compensation equipment.

Truck drivers and motorists in seven states, including California, Delaware and New Jersey, filed the first of more than 20 lawsuits late last year. Since then, lawsuits have been filed in Kansas, Oklahoma, Missouri, Louisiana, New Mexico, Nevada, Florida, Kentucky, Tennessee and Georgia.

Dan Gilligan, president of the Petroleum Marketers Association of America, predicts that the lawsuits will fail because they allege fraud, which he says has not occurred. He also disputed the billion-dollar estimates of costs to consumers.

“There is so much misinformation put out by people doing guesses,” he says. “They have no idea what the temperature at the nozzle is. We need facts, not hype.”

The unfolding legal drama centers on century-old oil industry gas pricing practices and competing scientific and mathematical testimony from experts on both sides. The price of gas has been based since the 1920s on a formula that measures a gallon of gas when it is 60 degrees, according to court papers filed by motorists.

According to industry and government standards, a gallon of gas at 60 degrees measures 231 cubic inches. Consumers buy 231 cubic inches of gas per gallon, regardless of its temperature, so when gas expands in the heat, the amount of energy put out per gallon declines.

The industry routinely makes price adjustments for temperature fluctuations for wholesalers, but not consumers, according to motorists’ court filings.

The lawsuits were consolidated last month in federal court in Kansas and assigned to U.S. District Judge Kathryn Vratil, who will oversee preliminary hearings. More than 100 defendants are named in the lawsuits, ranging from oil industry titans such as ExxonMobil and Chevron to retailers including Wal-Mart, QuikTrip and 7-Eleven.

The plaintiffs include hundreds of motorists such as Donaldson and long-haul truckers and other commercial driver groups.

The issue also has drawn the attention of Congress, which is considering regulations covering the way gas is priced. A House subcommittee report released last month concluded that consumers will pay a $1.5 billion premium for “hot fuel” this summer alone.

The National Conference on Weights and Measures, a 2,400-member organization that writes the standards for weights and measures in the marketplace, is scheduled to consider the issue at a meeting next week.

Gilligan says the cost of installing temperature adjustment equipment would be prohibitive. NATSO, a trade group that represents truck stop operators, has estimated the cost of equipping each pump at between $1,500 and $3,800.

“It’s our view, generally speaking, that most Americans are made whole in the course of a year,” Gilligan says. “They lose BTUs in the summer, but gain them back in the winter.”

However, the consumers’ attorneys say that in Canada — where gas temperatures are generally colder, and the advantage shifts to the consumer — temperature-adjustment equipment already has been installed at the gas pump.

George Zelk, a Chicago attorney representing truck drivers in several states, says the oil industry wants it both ways.

“The industry has pushed for this temperature adjustment in Canada, where they lose money, where it’s colder than 60 degrees, and opposed it in the United States where it’s warmer than 60 degrees,” Zelk says.