Hot fuel for you and cold cash for big oil:

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When gasoline gets hot, it expands. But U.S. fuel pumps don’t account for the bigger volume, and it’s costing American consumers about $2.3 billion a year.

The Kansas City Star

SUFFOLK, VA — Lesley “Lucky” Duke‘s mood darkens with every drop of diesel that flows into his 2005 Freightliner big rig.

The 52-year-old independent trucker from Hertford, N.C., has just dropped off a load of potatoes and now is topping off his tank on a sweltering summer day.

He whips out a thermometer and takes the temperature of the $2.80-per-gallon fuel gushing into his truck’s tanks. The thermometer hits 80. Then 90. Finally, it stops at 93 degrees Fahrenheit.

“Hot” fuel is costing him the price of a good lunch today, Duke reckons, and as much as $700 a year.

It gnaws at him. Duke, you see, is one of the few Americans who realize that fuel is often sold at temperatures much hotter than the government standard of 60 degrees. It’s a standard agreed to nearly a century ago by the industry and regulators, but virtually unknown to the average consumer.

But you should understand it too — because collectively it’s costing us billions of dollars a year. An investigation by The Kansas City Star has found that at recent prices U.S. consumers are spending about $2.3 billion more for gasoline and diesel this year than they otherwise would if fuel pumps were adjusted to account for expansion of hot fuel.

It works this way.

As a liquid, gasoline expands and contracts depending on temperature. At the 60-degree standard, the 231-cubic-inch American gallon puts out a certain amount of energy. But that same amount of gas expands to more than 235 cubic inches at 90 degrees, even though consumers still only get 231 cubic inches at the pump.

Put simply, every degree over the 60-degree standard diminishes the energy a 231-cubic-inch gallon delivers to the nation’s fleet of cars, trucks, boats, buses and heavy equipment — and forces drivers to consume more and pay more for fuel.

It is basic physics that, depending on the temperature, can amount to just a few cents per gallon. But it adds up to big money — coming straight out of consumers’ pockets and going right to the bottom line of major oil companies and other fuel retailers in the energy pipeline.

Moreover, it’s perfectly legal, because even though your local filling station measures out your gas as if it were stored at 60 degrees, no law requires retailers to adjust the pump to reflect the expansion of hot fuel.

In other words, no law ensures you get what you pay for.

For Duke, a former Boy Scout, selling hot fuel is a lie. He recites the scout laws and lingers on “trustworthy.” He thinks retailers should adjust for temperature changes or offer customers a refund. He complains about the hot fuel to the truck stop’s cashier while handing her his credit card.

“You know what that means, don’t you?” he says, grousing about the money he is losing.

The cashier eyes the card.

“Debit or credit?” she responds.

Double standards

While the problem may be costly to consumers, The Star’s examination reveals that it is eminently fixable. The technology exists to retrofit the nation’s filling stations to adjust the amount of fuel pumped to reflect changes in fuel temperatures.

Even so, Big Oil has argued successfully for decades that it would cost too much to retrofit the nation’s fuel pumps, particularly for independent retailers that now sell the majority of the nation’s fuel. The industry also argues that consumers simply wouldn’t understand fuel pumps that adjust for temperature change.

“The consumer doesn’t necessarily want to be confused,” contends Prentiss Searles, a senior associate for marketing issues at the American Petroleum Institute (API), a Washington, D.C.-based group that represents the industry. “They’re thinking, ‘I just want a gallon.'”

Most major oil companies either declined comment on the hot-fuel issue in the United States, or referred inquiries to the API.

However, Anne Peebles, a spokeswoman for Shell Oil Co., said in a statement that the value of automatic temperature correction “may be limited. … Temperature correction is not something one company can do on its own, it would have to be (a) regulatory requirement that puts all facilities on the same page.”

While the industry generally shies away from discussing the idea in this country, it has embraced temperature adjustment in Canada. The reason is simple. While hot fuel makes more money for the industry in the United States, cold fuel once cost the industry money in Canada.

The industry put a stop to its Canadian cold-fuel problem beginning in 1990. That’s when a Canadian law supported by oil companies and other gasoline marketers went into effect that permitted retailers to temperature-adjust on a voluntary basis. Supporters said the change, which meant Canadian consumers would stop catching a break on cold fuel, brought fairness to the marketplace.

Hans Kraus, who owned a company in Canada that supplied equipment to the petroleum industry, helped push the change. Kraus had produced a retrofit kit allowing temperature compensation at existing pumps, and he needed to market his gizmo. So he prepared a study showing that temperature compensation would make the industry money in Canada.

The industry bought his pitch and pushed for a change in Canadian law.

Today, sales material used by Kraus Global Products in Canada asserts that using fuel dispensers that don’t adjust for temperature is an “inherently inaccurate” way to sell fuel. In one example, the sales material claims an Edmonton, Alberta, gas station could save $23,000 for every $1 million in fuel it sold.

“Don’t let your profits drop with the temperature,” declares a Kraus marketing brochure. “Gas stations are losing millions of dollars due to temperature variations… until now!”

Texaco was the first company to sell temperature-compensated fuel in Canada, eventually followed by most of the others, including Esso, an Exxon Corp. subsidiary.

“I can assure you they were out there with calculators and thermometers analyzing the situation,” says Dennis Beattie, senior program officer at Measurement Canada, the government agency that oversees temperature adjustment. “(They) most certainly supported the idea.”

Canadian regulators now estimate that about 95 percent of motor fuel sold in the country is temperature-adjusted.

Dan McTeague, a member of Canada’s Parliament, says the way the industry has handled the fuel temperature issue is a classic case of situational lobbying. In Canada, the industry makes more money by adjusting. In the United States, the industry makes more money by not adjusting.

“It’s like one of those Norman Rockwell paintings where the kid has his finger on the scale,” he says.

Billions by the penny

Industry and government officials have known about the hot-fuel issue for decades.

The 60-degree standard was set by mutual agreement of the oil industry and weights and measures regulators roughly a century ago. At the time, those involved reckoned that figure roughly matched the average air temperature in the United States.

While the industry changed and technology improved over time, the 60-degree standard remained, quietly protected by Big Oil. The issue simmered briefly in the 1970s, when fuel prices soared during two major oil crises. While drivers sat in long lines to pay high prices, a few government weights and measures officials pushed to adjust gas pumps for temperature variations.

Big Oil pushed back. The API dispatched Harold Harris, head of Exxon‘s office of engineering operations, to defend the status quo.

In 1974, Harris told a group of weights and measures officials meeting in Washington, D.C., that his study found that average fuel temperatures were below 60 degrees. His analysis claimed consumers were getting the energy equivalent of 242 million gallons of extra fuel a year that they weren’t paying for.

Harris, retired and living in Houston, acknowledges now that the 1974 study was wrong.

An API-financed study the next year tracked fuel temperatures at 56 stations across the country and found the average was about 61.5 degrees. Even so, the industry continued to argue that the financial benefits of adjusting for temperature were so small that it wasn’t worth spending the money to solve the problem.

“It was better off to leave it alone,” Harris says.

But times have changed — for the worse for consumers.

— First, the retail price of gasoline has more than tripled since the late 1990s, worsening the financial impact of fuel expansion. The average retail price of gas has surged in recent years from 90 cents to $2.92 per gallon last week, racing ahead of inflation.

— The fuel being sold now also is hotter than in the past because of fundamental changes in how fuel is hauled, stored and sold. For instance, environmental regulations that require double-walled storage tanks to prevent leaks have effectively created a nation dotted with underground Thermoses — keeping fuel hotter longer.

— And much of the fuel-retailing industry has been consolidated from small corner stations into much larger outlets in recent years. At modern stations, which average eight hoses, fuel is sold in such massive daily volumes that the fuel in underground storage tanks turns over long before it has time to cool to ground temperature.

— Finally, a population shift from cooler Rust Belt states to hotter Sun Belt states means that more people are buying hotter fuel than ever before.

A database of fuel temperatures at 1,000 retail stations compiled by the National Institute of Standards and Technology, obtained by The Star, reveals that fuel in this country is sold at nearly 65 degrees when averaged year-round and across the entire country.

When state-by-state temperature and consumption patterns are calculated, The Star estimates U.S. consumers now are being shorted the energy equivalent of roughly 760 million gallons a year of gas and diesel because of fuel expansion caused by heat — fuel that’s worth about $2.3 billion at recent prices.

“This is the greatest rip-off in history,” says Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif.

To be sure, the amount being shorted is a small portion of the money spent annually for fuel in the United States. In California, for example, the inaccuracy equals about 3 cents per gallon. But those pennies pile up.

In car-crazed California, the state that consumes the most gasoline, the cost to consumers for not adjusting gasoline volumes for temperature is more than $500 million per year. In the three largest gas-consuming states — California, Texas and Florida — the total is more than $1.2 billion.

“The path to billions is pennies per gallon,” Court says.

Kansas and Missouri rank roughly in the middle of states in terms of the economic effects of hot fuel, according to The Star’s analysis, losing an estimated $12 million and $15 million this year, respectively, as cooler fuel temperatures in the winter help offset the overall effect of hot fuel.

At a 90-degree fuel temperature, which has been common in the Kansas City area this summer, motorists are being shorted the energy equivalent of more than a third of a gallon on a 20-gallon purchase. Hot fuel is one reason car mileage suffers during the summer months, the peak driving season.

James Mullins is one of the few area residents with intimate knowledge of both sides of the hot-fuel equation. Mullins once owned gas stations in Overland Park and North Kansas City. Now retired, he’s on the other side of the cash register every time he tops off.

“It’s a part of life, but it shouldn’t be,” Mullins muses. “And frankly, I’m tired of getting screwed.”

Talk but no action

In a windowless ballroom at the Chicago Marriott Downtown, more than 100 business executives and government officials gathered in July to discuss the country’s weights and measures regulations.

The National Conference of Weights and Measures is charged with establishing model codes for states to follow in regulating all forms of commerce.

Weights and measures professionals take pride in their work. Regulators say the integrity of daily commerce hinges on the basic trust that consumers know what they’re buying. Consumers don’t have to worry whether a gallon of milk is a pint short, or that a pound of hamburger weighs 15 ounces.

Even so, the conference never has formally endorsed a national code for temperature compensation of fuel at the pump. But this year a report on temperature compensation was on the agenda.

Michael Belue, a consultant for the API, argued that it would be too costly to adjust the nation’s fuel pumps.

“API recognizes the importance of temperature compensation at this conference,” Belue said, adding that any policy to deal with fuel temperature should be strictly voluntary.

The weights and measures conference took no action on the topic, deferring further action until next year at the earliest.

Those in attendance spent more time debating the size of lettering on meat scales at deli counters — and whether those scales should show “0” when empty — than they did on whether to adjust pumps to account for billions of dollars in hot fuel.

Ironically, while fighting against temperature-adjusted gas for consumers, Big Oil long ago made certain that its crude-oil transactions prior to the refining process were made on a temperature-adjusted basis.

Temperature compensation also is a fixture in pipelines. The Explorer pipeline, which transports gasoline and diesel from the Gulf Coast to the Midwest, has a provision in its contract that requires fuel volumes to be adjusted for temperature.

Wholesale fuel transaction measurements also are routinely adjusted for temperature. Even measurements of imported gasoline on tanker ships are adjusted for temperature.

Indeed, temperature adjustment occurs at almost every step in the energy pipeline — just not to retail consumers.

Even the government protects itself. Some large-volume buyers of fuel are able to negotiate deals to buy fuel that is temperature-adjusted. One is the U.S. military, which has required temperature adjustment for decades.

“It ensures we’re getting the quantity of fuel we are purchasing,” says Lindsey Hicks, chemist for the Defense Energy Support Center at Fort Belvoir, Va.

Truckers figure it out

While average motorists bear most of the economic cost of hot fuel, independent truckers are most vulnerable on an individual basis because their heavy rigs gulp a gallon of fuel every six miles. And trucker Howard Haffenden knows it.

The independent trucker from Campbell, Calif., was carrying a load of frozen vegetables in mid-July from California to New York when he stopped at a Kingman, Ariz., truck stop.

He peeled off his gloves and touched the sizzling fuel nozzle. It was a searing reminder that hot fuel makes his $75,000-per-year fuel bill higher than it should be.

“I’m starting to feel like a squirrel in a cage,” he grumbles.

Haffenden is a member of the Owner-Operators Independent Drivers Association, based in Grain Valley. Fuel costs are a top priority for the group, which has 141,000 members struggling to survive spiraling fuel prices. Unlike many major transport companies, independent truckers can’t simply pass on changing fuel prices in the form of surcharges.

The association’s board had been befuddled for years about why truck mileage seemed to vary depending on where fuel was purchased. So it assigned John Siebert, who works for the group’s foundation, to study the problem.

Siebert gathered 32 diesel samples from across the country and sent them to a lab for tests, such as whether there was water in the fuel. He was puzzled by the results.

“They really didn’t find anything wrong,” he says.

His inquiry might have ended there if not for a visit to the Linda Hall Library in Kansas City. Siebert had gone to the library to read some technical manuals about diesel. While reading about cetane, a diesel ingredient that helps the fuel ignite, he noticed a passing reference to temperature-adjusted volume.

“What’s this 60-degree business?” he recalls thinking.

Siebert posted a request on the trucking group’s Web site for drivers to take fuel temperatures. Responses flooded in — some startling.

A cluster of truck stops near Memphis, Tenn., just a few miles from a refinery, often sold fuel that was over 100 degrees. Truckers surmised that freshly refined fuel was being shipped hot and sold hot before it had a chance to cool. At 100 degrees, that meant a trucker buying 200 gallons of diesel would be shorted the energy equivalent of four gallons.

But Siebert is more concerned about the big picture. His anecdotal reports suggest that even in cool states, fuel doesn’t dip below 60 degrees until December.

“When it comes to fuel temperatures, we’re finding out that the winters are very, very short and the summers are real, real long,” he says.

Unknown to Siebert, others were coming to a similar conclusion.

New data confirm it

The National Institute of Standards and Technology is the federal agency in charge of advancing measurement science, standards and technology.

One of its 2,900 employees is Richard Suiter, a weights and measures coordinator with 37 years of experience.

Suiter had long believed that fuel needed to be adjusted for temperature simply to ensure fairness in the marketplace. But he wasn’t convinced that it would make a large net difference for the industry or consumers. After all, he reckoned, fuel is largely stored in underground tanks with a ground temperature close to 60 degrees.

But he began to have doubts after hearing anecdotal reports of fuel temperatures well above 60 degrees. The chance to find out more came during a training visit to the back room at an Illinois gas station.

The room contained monitoring equipment required by the Environmental Protection Agency to help detect fuel leaks in storage tanks. Among other things, the equipment tracked temperature to calculate changes in fuel volume.

The discovery led to a study in which Suiter retrieved average monthly fuel temperatures from 1,000 stations in 48 states and the District of Columbia from 2002 to 2004.

The results, which offer the most thorough analysis ever of fuel temperatures nationwide, were stunning.

The nation’s average fuel temperature was almost 5 degrees hotter than the standard — amounting to a multibillion-dollar shift from consumers to the industry every year. The API studies that had held sway since the 1970s didn’t reflect reality.

“It’s beginning to open some eyes,” Suiter says. “But it’s going to take some time.”

Searles, of the API, acknowledges that Suiter’s temperature data appears “accurate.” But another API official adds that the organization hasn’t done a thorough analysis of the hot-fuel topic for decades.

The open question, say advocates for temperature compensation for fuel, is whether anyone will notice — or care enough to do anything about it. They’re still waiting for regulators, the industry or politicians to take action.

Consider the story of Howard Estes. Estes once spoke before an annual meeting of the National Conference of Weights and Measures. It was high time, he said, to deal with temperature compensation.

The Flint, Mich., weights and measures official told the gathering that the principle of volume change and temperature was as “old as the hills.” Moreover, he warned, the impact was going to be noticed more as the United States used more fuel and it became more expensive.

“It is well that we are beginning to investigate it,” Estes said.
To reach the author Steve Everly, call (816) 234-4455 or send e-mail to [email protected]

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