Paying for ‘Ghost Gas’

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Day to Day Program – National Public Radio (NPR)

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MADELEINE BRAND, Host: From NPR News, this is DAY TO DAY. Get ready for a gasoline supply crunch over the next five years; that today from an international energy agency report. But when you’re filling up this summer, you might be paying more for an entirely different reason, and it has to do with the way gas expands in hot weather.

MARKETPLACE’S Sam Eaton joins us to explain. And Sam, tell us what this means, expanding gas.

SAM EATON: Well, it basically comes down to simple physics, Madeleine. As the summer temperatures rise, gasoline expands because of the higher temperatures. Now, that means the amount of energy you get for a gallon of gas that’s hot is a lot less than when that gallon is cold. The problem is, retail gas stations don’t account for that difference in temperature. They sell it according to the national measurement standard, which it seems gasoline has an average temperature of about 60 degrees. And it pretty much does until the delivery truck pumps that gas into tanks, sitting under baking asphalt at the gas station. And once it’s there, it can get up to about 98 degrees before it goes into your car, according to one study.

I talked to Judy Dugan with the Foundation for Taxpayer and Consumer Rights. And she says that 60-degree benchmark for measuring gas in the marketplace is the equivalent of putting a thumb on the scale.

Ms. JUDY DUGAN (Research Director, Foundation for Taxpayer and Consumer Rights): This is what’s caused drivers for years to say, gosh, I get worse gas mileage in the summer, because it’s gasoline that’s being sold in a way that fundamentally works against the consumer and costs you about 50 cents a tankful.

EATON: Now, you add up those extra costs over the entire summer, she says, and US Drivers are paying more than $1.5 billion for gas they’re basically not getting.

BRAND: Now, consumer groups like hers have filed dozens of lawsuits against oil companies and gas retailers, I understand. Do they have a case?

EATON: Well, it — Madeleine, it depends on which side you’re talking to, of course. The consumers’ groups and several Democrats in Congress say it amounts to deception. They claim fuel distributors are unjustly enriching themselves on this phenomenon.

The solution, they believe, is to mandate the use of equipment that compensates for the temperature swings at the pump.

Now, Canada has been doing this for some time, but it’s easier to mandate there because gas is usually colder than 60 degrees, which means gas stations are actually losing money.

But here in the US, gas retailers argue that the upgrades would be too costly, anywhere from $1500 to $3800 a pump. They say that’s enough to put many independent gas stations out of business. They also say more research is needed, claiming the estimates of over-charging are the result of guesswork.

BRAND: What will happen? Will it get to court?

EATON: Well, this is where Congress comes in, actually. And this could happen before it goes to court. It’s putting pressure on a group called the National Conference on Weights and Measures, which gives final rule on how things are weighed and measured in the marketplace. And this group begins its annual meeting tomorrow in Salt Lake City. The question is whether the conference will cave to pressure from Congress, or whether the change will come from the dozens of consumer lawsuits we were mentioning.

BRAND: Thanks a lot, Sam. That’s Sam Eaton of Public Radio’s daily business show, MARKETPLACE, produced by American Public media.

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