The Kansas City Star (Missouri)
KANSAS CITY, MO — When it comes to hot fuel, the head of the Federal Trade Commission has a couple of well-chosen words for Congress: “I… apologize.”
Deborah Platt Majoras, the FTC’s chairwoman and a former private attorney for Chevron Corp., has admitted that a recent letter questioning of the consumer benefit of fixing hot fuel used inaccurate information about the effect of temperature fluctuation on gasoline.
“I highly regret the error,” she wrote in a letter sent Tuesday to Rep. Dennis Kucinich, chairman of the House Domestic Policy Committee.
The apology came just days after a letter sent by Majoras to Rep. Darrell Issa of California was released to the public.
In the letter, Majoras said the FTC had not done a formal study on the effects of temperature on fuel, but added that the benefit to consumers if retail pumps were equipped to adjust for hot fuel could be so small that the FTC might not even consider its sale to be a deceptive practice.
To make the point, Majoras used an example of dispensing 80-degree fuel for a 20-gallon fill-up, which she concluded would amount to a change in its volume of only 6 tablespoons. She went on to urge Congress to collect more facts on the issue before requiring that retail pumps be equipped to account for fuel temperatures, which she added could end up raising fuel prices.
But the true effect that temperature has on gasoline volume was understated by more than 90 percent in the Majoras letter. Indeed, the National Institute of Standards and Technology confirmed that the real difference in the example used by Majoras was more than a quart.
Kucinich quickly pointed out the “significant error” to Majoras, adding that using the incorrect number called into question her opinion on whether hot fuel should be fixed.
Majoras, in her reply to Kucinich, said that after the congressman had pointed out the error, her staff made further inquiries “and confirmed that data we relied on was wrong.”
“I write to apologize for providing some inaccurate information in my Aug. 28, 2007 letter to Congressman Issa,” Majoras wrote.
“I highly regret the error,” Majoras said, adding that she was directing her staff to conduct a thorough reassessment of the issue “based on accurate data.”
It remains unclear whether that reassessment using accurate data will sway Majoras’ opinion on the issue.
A spokeswoman for Kucinich said he had no comment and would let the Majoras letter “speak for itself.”
The numbers in question go to the very heart of the hot fuel issue.
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.
Fuel temperatures during the summer can exceed 100 degrees in many states.
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.
In a series of stories beginning last year, The Kansas City Star estimated that hot fuel costs consumers an estimated $2.3 billion annually.
The oil industry has questioned whether there would be benefits for consumers from addressing hot fuel, arguing it would cost too much to fix. Even so, the industry has embraced temperature adjustment of retail fuel sales in Canada, where “cold fuel” would otherwise pinch profits.
Issa, who opposes hot fuel reform, on July 13 wrote Majoras soliciting the views of the FTC or its staff on the desirability of federal legislation to require that fuel pumps make an adjustment for temperature. Last week, Issa cited the FTC’s response. In a prepared statement, Issa argued that the FTC
letter showed that Democrats had “fudged numbers” when it came to discussing hot fuel.
The FTC is the main federal agency to investigate deceptive business practices, but it is increasingly viewed by consumer groups as pro-business. The appointment of Majoras as FTC chairman in 2004 heightened those concerns because of her previous work as a private attorney for Chevron.
The FTC typically is the agency that investigates allegations of manipulation of gas prices. But it regularly dismisses such allegations as unfounded. It has opposed a federal gas-price gouging law, and last month released a study that it had found no evidence of manipulation causing gas price spikes during the summer of 2006.
That the FTC fumbled an essential fact in the hot fuel debate was initially met with disbelief by many who have closely followed the issue. That disbelief has since segued into humor. A weights and measures official attending a regional meeting this week referred to the FTC’s views as an example of “tablespoon science.”
Although the FTC has promised to take another look at the hot fuel issue, some consumer groups would prefer that it now recuse itself.
Judy Dugan, research director for The Foundation for Taxpayer & Consumer Rights, said the initial letter sent by FTC was so blatantly political that the federal agency has lost its credibility, especially since it made such a serious error about hot fuel‘s impact.
“This should remove the FTC from any authority to comment on the hot-fuel issue,” Dugan said.