Don't Get It While It's Hot!
Hot fuel bilks truckers, motorists, class-action lawsuit charges.
By Tom Berg, Senior Equipment Editor
Owner-operator truckers and motorists are suing oil companies and retailers for selling energy-depleted warm fuel that allegedly costs consumers more than $2 billion extra each year. The class action suit was filed in mid December in seven mostly southern-tier states by a Chicago law firm with backing from groups representing truckers and consumers.
The suit followed research by the Owner-Operator Independent Drivers Association and the Kansas City Star which found that fuel is commonly sold at temperatures higher than an accepted industry standard. Fuel expands as its temperature rises due to refining, transportation and summer heat, so the total energy content per gallon falls even though a gallon costs as much as it does when it's cooler. Articles last summer in the Star publicized the situation.
The practice costs the typical owner-operator $500 to $750 a year, said John Siebert, who works for OOIDA Foundation and uncovered the hot fuel situation. The average motorist loses about $50 a year from hot gasoline. The losses become "unearned profits." adding up to $2.1 billion to $2.7 billion a year for oil companies and retailers, he said.
A husband-wife owner-operator team, Mark and Becky Rushing of Louisiana, spoke briefly at a phone-in press conference announcing the suit. They are among the plaintiffs. They complained that the higher costs of hot fuel add to the difficulty independent truckers face in trying to make a living and pay bills. Although OOIDA is supportive of the legal action, no trucking organizations or fleets are parties to the suit.
Failing to compensate for temperature is a long-standing practice that "has been quietly picking money from the pockets of citizens throughout the country,"said Joan Claybrook, a consumer activist and president of Public Citizen in Washington, D.C., who participated in announcing the suit but is not a part of it. Those who buy fuel in bulk, such as the U.S. armed forces, have temperature-adjusted purchase agreements with the oil industry.
"Most consumers don't know they're being ripped off," she said. Meanwhile, tax authorities are losing about $360 million a year in motor fuel taxes that could go toward highway building and maintenance. That's because fuel is taxed in bulk, before it gets to retail pumps, but companies keep the extra amounts they collect due to higher gallons being sold when fuel is hot.
The suit demands that compensating devices be installed on retail pumps, as they have been in other countries, so that a gallon of fuel has the same energy content no matter what its temperature. It also asks that consumers be reimbursed for monetary losses over the years, with amounts to be set by the courts.
At-the-pump temperature compensation is done in Canada, where cooler prevailing temps resulted in sales of denser fuel to the benefit of consumers. The oil industry argued for installation of compensating devices and won, and they are now on 95 percent of the pumps there, said George Zelcs, an attorney at Korein Tillery in Chicago, who prepared the suit. But the oil industry has fought efforts to install compensating devices in the United States because warmer weather and hotter fuel works to its advantage, he said.
The American Petroleum Institute has countered that such a change would confuse consumers, that any loses by American consumers are minor, and that installing compensating devices on pumps would be far too costly to the individuals who own and operate many filling stations. API said it would cost thousands of dollars to retrofit a fuel pump with a compensator, and that the total cost to the industry would be in the billions.
The Kansas City Star estimated that the pump retrofitting would cost $1.9 billion, but that's merely one week's profits for the industry, Siebert said. Zelcs and Claybrook put the retrofit cost at $800 to $1,800 for a modern electronically metered pump, and said the devices are now available from pump suppliers. And consumers would not be confused when informed that they're getting the same amount of energy no matter what temperature the fuel is pumped at, they said.
The industry's standard temperature was set at 60 degrees about 100 years ago because oil producers, refiners and distributors knew about fluid expansion and contraction, and needed to allow for it in charging each other for products and transportation, Siebert explained. Sixty degrees was then the average temperature of fuel stored in underground tanks.
Since then, old single-wall steel tanks that allowed chilled earth to cool warm fuel have been replaced with double-walled tanks made partially of insulating fiberglass. Distribution is more efficient, so fuel heated from refining and pumping through pipelines now sits in tanks for only short periods before being sold. Sometimes fuel is sold only a few hours after it's refined, Siebert said.
A National Institute of Science survey of 1,000 pumps throughout the country several years ago showed that the average year-round temperature of fuel was 65 degrees, he said. In Texas, the average is 78 and in California it's 75. OOIDA's 2-gallon samples taken in summer found diesel fuel was 75 to 98 degrees. A sample at a pump in Arizona registered 115 degrees on an OOIDA member's thermometer; fuel there did not cool to 60 degrees until Christmas, and was back up to 95 by mid-April.
Over 60 degrees, diesel fuel expands by 0.6 percent for every 15 degrees. At 90 degrees, the trucker must buy an extra 1.2 gallon for every 200 gallons to make his truck go the same distance, Siebert said. The expansion rate for gasoline causes about a quart of loss per 20 gallons at 90 degrees. That's why monetary losses to motorists are individually less, but add up to big gains for producers and sellers of gasoline.
The suit was filed in six warm-weather states – California, Arizona, Texas, Florida, North Carolina and Virginia – and one where the weather is cooler – New Jersey.
There is more than one lawsuit because of fuel retailing is often a regional business, according to OOIDA. The companies charged in the suit varies according to state. The 17 companies charged in the California suit are Alon USA, Ambest, Chevron USA, Circle K Corp., Citgo Petroleum Corp., ConocoPhilips, Costco Wholesale Corp., Flying J Inc., Petro Stopping Centers, Pilot Travel Centers, 7-Eleven, Shell Oil Products, Tesoro Refining and Marketing Co., The Kroger Co., TravelCenters of America, Valero Marketing and Supply Co. and Wal-Mart. In New Jersey, there are five defendants: Amerada Hess Corp., ExxonMobil, Getty Petroleum Marketing, Motiva Enterprises and Sunoco.
Emissions Authority continued...
