Marketplace Radio Program (American Public Media)

The following commentary by FTCR President Jamie Court, was broadcast on American Public Media’s Marketplace radio program on NPR on Monday, March 26th, 2007. Listen to the audio of the commentary here.
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KAI RYSSDAL (HOST): One thing you didn’t hear President Bush or the car company CEO’s pointing out this morning, is that right about the time they were talking, oil was hitting $63 a barrel. Or that gas prices are up sharply as well, more than a nickel in the past two weeks. $2.61 is the average for a gallon of self-serve regular now. Part of that’s geopolitical. Tensions in the Middle East and supply problems in Nigeria rarely make prices to go down. But commentator and consumer advocate Jamie Court suggests there are some sleight of hand behind those rising gas prices, too.

JAMIE COURT (PRESIDENT, FOUNDATION FOR TAXPAYER AND CONSUMER RIGHTS): It’s simple physics. When it gets hot, gasoline expands, so you get less energy per gallon. Unfortunately, our gas pumps don’t account for that. So on warm weather, drivers get less energy out of their gasoline and have to fill up more often. On average, that costs Americans about $1.7 billion every year in overcharges, according to the Kansas City Star. It works like this, when gas station owners buy their gas from oil companies, they get the gallon they pay for. They do that by measuring the temperature of the gas and making sure they’re getting the extra volume that matches that higher temperature.

But then, when gas stations sell that gas to us consumers, they don’t adjust for the actual temperature. In hotter places like California, consumers end up paying about three cents more per gallon on average than they’re really getting. That adds up. Of course, it works both ways. In colder climates, oil companies would be selling gas that delivers more punch per gallon. They’re hip to this. They have installed temperature-adjusted pumps in Canada so that motorists pay them fully for their gas. The only state in the US that forces oil companies to temperature-adjust the gas they sell to consumers is Hawaii.

Now, finally, California has approved the use of a temperature-adjusted pump. The snag is the manufacturer suddenly said it won’t be selling the technology in the state. Reportedly, oil companies threatened to boycott that company’s products. That’s absurd. It would be like letting supermarkets rig produce scales and then stopping the sale of accurate scales all across America. What do we do? If Canada can temperature-adjust their gas, so can all of America. But it’s probably gonna take the government to force our global warmers to give us an honest measurement as the heat rises.

KAI RYSSDAL (HOST): Jamie Court is the president of the Foundation for Taxpayer and Consumer Rights. You can send us your thoughts through our Web site. It’s http://www.Marketplace.org.