McCaskill proposal on hot fuel would require dispensers to adjust volume for effects of temperature
The Kansas City Star
The U.S. Senate will consider a fix for “hot fuel,” setting the stage for a debate that pits the interests of consumers against those of gasoline and diesel retailers.
Sen. Claire McCaskill of Missouri on Friday filed legislation that would require retail fuel dispensers in the United States to adjust volumes to account for the effects of temperature. In addition, a trust fund would be established to help pay for the pump upgrades at retail establishments that are not owned by the major oil companies.
The legislation, called the Future Accountability in Retail Fuel Act, or FAIR, was inspired by The Kansas City Star’s coverage of hot fuel, McCaskill said in a statement. The stories, which began last August, found that consumers are being overcharged about $2.3 billion per year because of the effects of temperature on fuel.
“We have the technology to change that, and there’s no good reason not to utilize it,” McCaskill said.
The bill would give the Federal Trade Commission, working with the National Institute of Technology and Standards, the authority to implement its provisions. If the legislation is approved, its provisions would go into effect within a year of enactment.
The legislation calls for all retail dispensers in the United States to be equipped to adjust for fuel temperature fluctuations within six years. State inspectors would determine whether the necessary equipment had been installed.
A trust fund also would be established to help pay as much as $1,000 to upgrade each retail pump. To be eligible for the subsidy, however, the retail fuel stations could not be owned by a major oil company. Details on financing the trust are to be disclosed later.
The legislation is being supported by the Owner-Operator Independent Drivers Association, the Foundation for Taxpayer and Consumer Rights, the Consumer Federation of American, Consumers Union, and U.S. Public Interest Research Groups.
“This (legislation) means hot fuel has gone national,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif. “This is a very, very important step forward.”
Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association in Grain Valley, said that McCaskill “deserved high marks for standing up for consumers and small business — especially truckers who use large quantities of fuel.”
The physics of hot fuel are fairly straightforward. Fuel expands and contracts depending on temperature. At the longtime industry standard of 60 degrees, the 231-cubic-inch U.S. gallon puts out a certain amount of energy. But fuel is often sold at much higher temperatures, causing the fuel to expand and the amount of energy to decline for each gallon dispensed. Indeed, a study by the National Institute of Standards and Technology found that the nationwide, year-round average temperature of retail fuel was 64.7 degrees.
At other stages in the fuel delivery chain, the industry routinely adjusts volume for temperature change using the 60-degree industry standard. But retail pumps in America make no adjustment for changes in the volume caused by temperature, so consumers get only 231 cubic inches per gallon regardless of temperature.
Notably, the industry also has embraced selling temperature-adjusted fuel to consumers in Canada, where cooler temperatures would otherwise pinch profits for retailers.
But the oil industry has opposed making any changes that would permit the temperature adjustment at retail in this country.
In congressional hearings last month, executives from Exxon Mobil Corp. and Shell Oil Products US said they supported more study of the issue. But they went on to question whether there would be any benefit to consumers because fuel prices could increase if such a temperature adjustment was allowed or required.
Independent retailers that are not owned by major oil companies have also opposed the idea and said it would put an unfair burden on them to pay for the pump upgrades. The possibility of up to a $1,000 grant for each pump does not appear to have changed their opposition.
Sarah Dodge, vice president of government affairs for the National Association of Truck Stop Operators, said she liked the subsidy for pump upgrades. But she noted that $1,000 was unlikely to cover the cost of such upgrades, especially for retailers with the older mechanical pumps.
The new legislation marks the latest effort on the hot fuel issue by McCaskill, a Democrat.
In June, the freshman senator sought to attach an amendment to the Senate energy bill addressing the issue. A McCaskill-backed resolution also sought to push the National Conference on Weights and Measures, which has been debating hot fuel for decades, into approving a solution to the problem at its annual meeting in July.
Both efforts were rebuffed by procedural objections from the Republican leadership, which prevented the measures from being considered.
In the last year, more than three dozen lawsuits have been filed against the oil industry over hot fuel. In addition, it has become a major issue with the National Conference on Weights and Measures, which sets standards that the states can follow.
Last month the conference considered guidelines for temperature adjustment of fuel at retail. The measure won a substantial majority of those attending but failed to obtain the absolute majority necessary for passage.
A conference steering committee is scheduled to meet in Chicago later this month to discuss hot fuel, including technical issues. Another vote could be held next year.
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For previous stories on hot fuel, go to KansasCity.com.
To reach Steve Everly, call 816-234-4455 or send e-mail to [email protected].
