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More state inspections reduce consumer rip-offs

The Detroit News (Michigan)

After an unprecedented crackdown on gas stations last year, your chances of being cheated at the pump are drastically down.

In 2006, Michigan’s gas inspectors checked more pumps than the previous three years combined. They found 1,358 faulty meters, handed down $250,000 in fines and condemned more pumps than ever before, according to a Detroit News analysis of more than a decade of inspection data.

The enforcement blitz paid off. State inspection records showed the chance of consumers getting less gas than they paid for — either due to dilapidated pumps or intentional fraud — fell by 60 percent.

“It’s akin to a police department putting more police on the streets — stations subject to increased testing are less likely to scam the customer,” said Macomb County Prosecutor Eric Smith, who convicted one of the state’s worst offenders in 2005. The crackdown took manpower and money and may be difficult to sustain with the state government facing a deficit of $1.6 billion to $2 billion for the fiscal year that begins Oct. 1.

Advocates question whether consumer protection at the pump will remain a top priority, especially when weighed against deep budget cuts for schools, public safety and health care.

To complete more than 53,000 inspections last year, the state’s weights and measures program added 10 field inspectors, bringing its staff to 30. This year, it has yet to replace an inspector who left.

“I can’t say we’ll hit the same mark as last year,” said Robert DeRubeis, weights and measures program manager in the Department of Agriculture, which oversees pump inspections. “Whether cuts happen or not is out of our control. We’ll continue to respond to 100 percent of complaints and work as efficiently as possible.”

Skimming boosts cash flow

More inspections root out gougers, like the Clinton Township station that was found to be shorting drivers by 5 percent in 2005, Smith said. State records showed the station had not been checked for more than four years before the violations were discovered. Such criminal prosecutions are rare because it can be difficult to tell whether a station owner has a faulty pump or is ripping off customers.

The Detroit News analysis of gas pump data showed that from 2001 to 2005, drivers received too little gas 1.8 percent of the time. That number fell to 0.7 percent last year after enforcement was stepped up. On the other hand, a driver’s chances of getting too much gas slightly increased last year over the previous five years.

“This is what you’d expect when you have regulator oversight that’s effective,” DeRubeis said. “In years past, we’d find a number of awful violations; now the industry is doing maintenance that’s required, so those violations are more rare.”

Getting shorted on one fill-up doesn’t have a huge impact on drivers’ wallets, but multiplied by hundreds of patrons per week, it could add up to some big bucks for a station owner.

For example, if a pump is shorting a customer by twice the state limit, drivers are getting about 1 percent less gas than they purchased. That’s a fifth of a gallon on a 20-gallon fill-up, or 61 cents based on recent gas prices.

For the typical station owner, who sells 100,000 gallons a month, skimming 1 percent could boost cash flow $3,000 a month, and tens of thousands a year. That’s an impressive profit for service stations when many are struggling to stay in business.

The chances that unscrupulous station owners can get away with shorting customers mount when owners know inspections are rare.

Even when oversight is at its most vigorous, Michigan doesn’t inspect pumps as frequently as other states. The average station is inspected every 25 months in Michigan. Other states require annual checks.

Since enforcement was stepped up, nearly one in 10 Michigan gas stations received its first visit from inspectors in at least five years.

Pump protection at risk?

State lawmakers say they will make inspections a priority even as they wrestle with budget cuts.

Consumer advocates, however, question if that resolve will hold up as more high-profile sacrifices that affect schools or public safety are considered. The weights and measures program was spared funding reductions in the current fiscal year, but state departments are expected to face deeper cuts in the next budget cycle.

“Consumer protection is one of the first things to go,” said Judy Dugan, research director at OilWatchDog.org.

In this year’s budget, the weights and measures consumer protection program, which in large part consists of gas inspections, is funded at $4.8 million. Some $2.8 million of that was pulled from a fund earmarked for cleaning up leaking underground tanks.

For now, Gov. Jennifer Granholm is recommending no change in funding for the program, spokeswoman Liz Boyd said. But she noted that budgets need lawmakers’ approval.

Consumer protection at the gas pumps is a high priority, but lawmakers will have to make difficult decisions to close the state’s budget deficit, said Matt Marsden, spokesman for Senate Majority Leader Mike Bishop, R-Rochester.

“Given the economic crisis that we face, we don’t have money we need to hire additional enforcement,” he said. “We can only spend what we have” and hope to find savings that would allow for more protection at the pump.

‘Bad apples’ clean up act

Considering the low incidence of cheating, Mark Griffin, president of the Michigan Petroleum Association, questioned the need for so much focus on gas station owners. Griffin’s association represents a majority of the nearly 5,000 stations in Michigan.

“The public is at much greater risk at their local deli than the gas station,” he said, referring to the fact that weights and measures field inspectors must oversee not only pumps, but also groceries, landscaping materials and any other product that is sold based on weight. He also argued that money earmarked for environmental control of storage tanks should be spent accordingly.

Griffin maintains that the increased inspections showed that most station owners were already following the rules.

“There may be one or two that are a problem — and we hope the state catches them and throws the book at them,” he said.

Others say tougher enforcement is needed to make sure drivers get a fair deal.

“The pumps need to be accurate, especially when I’m paying $3.49 a gallon for gas,” said Michael Klann, a dog trainer in Rogers City.

Calibration business booms

One sector benefiting from the closer eye of the inspector is companies who calibrate pumps for stations. Calibration business at Jackson-based R.W. Mercer has nearly doubled in the past two years. “More clients are being proactive because they know they’ll be checked,” service manger Mike Decker said. He said higher gas prices and razor-thin profit margins for stations also play a role because they don’t want to give away gas, either.

Stations he checks are as likely to give too much gas as too little.

“It’s a few bad apples,” Decker said.

“But the increased inspections have cleaned up their act.”

Check things out at the pump

What drivers should look for when filling up:

-Make sure prices on road signs match prices on pump displays.
– Check that the meter doesn’t start running until gas begins dispensing.
– Watch that the gallons display and price display are moving at a consistent rate.
– Look for leaks, especially where the handle meets the hose.
– Check that receipt matches pump display.

Customers should report weights and measures complaints to (800) 632-3835. For more information, visit www.michigan.gov/wminfo.

Source: Weights and measures program

Consumer Watchdog
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