California drivers were overcharged $376.4 million on gasoline in one year because fuel pumps don’t adjust for changing temperatures, according to a state study.
And that has consumer advocates livid.
Just like other fluids, gasoline expands as it warms up. But gas pumps always dispense the same volume, both in winter’s chill and summer’s heat. So in warmer months, the fuel in your tank is less dense and packs less energy than in cold weather.
For years, consumer organizations have claimed that "hot fuel" rips off American drivers, and the new study from the California Energy Commission backs those fears. The problem doesn’t just hurt commuters. The study estimated that truckers in the state spent an extra $61.1 million on hot diesel fuel.
The U.S. census in 2000 counted 11.5 million households in California, each of which spent about $32.73 extra during the year covered in the study, April 2007 through March 2008. And because gas prices have tumbled since then, the cost per household would now be even less.
But Judy Dugan, research director at the nonprofit organization Consumer Watchdog, said that doesn’t matter. Drivers are being systematically ripped off because oil companies and gas station owners don’t want to install pumps that adjust for temperature, she said.
"As far as the amount, the point is that you’re being cheated, and a cheat is a cheat," said Dugan, whose organization wants the state to use pumps that adjust for temperature.
Those pumps are widely used in Canada, where long and frigid winters otherwise would cost oil companies money. And in the United States, the oil industry adjusts for temperature throughout its supply chain as gasoline is piped from refineries to distribution centers and trucked to gas stations. Only at the final step – the driver buying gas – is no adjustment made.
The industry, so far, has blocked efforts to bring temperature-adjusting pumps to the United States. California legislators have toyed with the idea of requiring temperature-adjusting pumps and last year ordered the energy commission to study the issue. The commission report spells out ways that the state could enforce such a requirement.
But the report also concludes that forcing gas station owners to switch or retrofit their pumps would do the public little good.
California’s station owners would have to spend $102 million to $123 million on equipment in the first year and face annual costs of $1.2 million to $10.3 million. The owners probably would try to recoup those expenses by raising the price of gasoline as well as the cost of car washes and sundries in their convenience stores, according to the report. They also would boost prices to compensate for any profit they lost as a result of the new temperature-adjusting pumps.
"We’re only surmising, because we don’t know what the station owners will do," said Susanne Garfield, spokeswoman for the energy commission. "Those costs will most likely be passed along to the consumers."
Commuters and truckers, in other words, wouldn’t see any real benefit. And because station owners would have to go through the trouble of switching their gear, "the net cost to society is slightly negative," according to the report.
The oil industry has argued much the same thing for several years, although consumer advocates insist stations wouldn’t be able to pass along all the costs.
"We agree that the costs outweigh the benefits," said Jay McKeeman, vice president of government relations for the California Independent Oil Marketers Association. "We don’t agree with the term ‘slight.’ "
McKeeman argues that because most of the gasoline supply chain takes temperature into account, temperature changes are already reflected in the wholesale prices that station owners pay. Therefore, they’re also reflected in the retail price.
"Honestly, the reason I think it works in Canada is because the consumer has no idea that they’re getting less than a gallon of gasoline when it’s cold," McKeeman said.
A committee of the energy commission will discuss the report on Tuesday. Any recommendations about whether to use temperature-adjusting pumps would have to be adopted by the full commission. In February, commissioners must send the report, along with their recommendations, to the Legislature.
Dugan worries that the report will give legislators an excuse to do nothing. She’s particularly alarmed by one potential recommendation: that the state not allow gas stations to voluntarily start using temperature-adjusting pumps until better standards for the equipment are developed.
"That’s my belief, that this has all been a matter of political cover by the fuel industry to stop fuel-temperature compensation in California," she said.
Garfield said no decisions have been made. "The staff was supposed to look at the whole issue," she said. "The commissioners will have to make a recommendation."
The issue hinges not just on physics but on the definition of a gallon.
The oil industry considers a gallon of gas to be 231 cubic inches at 60 degrees. But fuel temperatures can change substantially with the seasons. And in warm-weather states, they often stay well above that level, meaning drivers usually get less energy in their tanks than they should.
The energy commission examined temperatures at counties across the state for one year. The average temperature for regular gasoline was 71.1 degrees.
Gas pump legends
Theories abound about the best times and places to fill up on gas. Some appear to be grounded in fact, while others don’t.
Q: Is it better to fill up in the morning or at night than during the day?
A: It probably doesn’t make much difference. Although gasoline expands in warmer temperatures, modern underground storage tanks hold temperatures quite well. As a result, the fuel tends to stay near whatever temperature it had when it was delivered to the station.
Q: Do you get more energy for your buck when you buy gas in winter?
A: Yes, unless you live somewhere that’s hot year-round.
Q: Are you better off buying in colder places, like San Francisco, than in warmer ones, like Tracy?
A: In theory, yes. But this gets dicey. For example, if a refinery in the East Bay ships a tanker truck of gasoline to San Francisco and another to Danville, both truckloads will be at much the same temperature when they reach the station. Also, some places, like San Francisco, tend to have higher gasoline prices than others, potentially wiping out any savings you might get.
Q: What’s the perfect temperature?
A: 60 degrees. A gallon of gasoline is sold as 231 cubic inches at 60 degrees.
Source: California Energy Commission, Chronicle research
E-mail David R. Baker at [email protected].