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AP Worldstream: Oil executives reject `hot fuel’ argument about gasoline overcharging

H. JOSEF HEBERT
Published: Jul 25, 2007

Oil executives denied that U.S. drivers are overpaying for gasoline because the fuel expands in hot weather and provides less energy per gallon.

“The idea that temperature adjustments will somehow give people more for their money simply does not take into account the realities of the gasoline market,” Hugh Cooley, a vice president for Shell Oil Co., told a U.S. House hearing Wednesday.

Critics say that when drivers buy gasoline during hot weather, they are paying as much as $1.5 billion (A1.09 billion) a year in overcharges. That amounts to 3 cents to 9 cents per gallon, depending on the pump price and the temperature, consumer advocates say.

The issue has led to more than two dozen consumer-based suits claiming motorists are being overcharged, with cases in Alabama, Arkansas, California, Florida, Kansas, Missouri Kentucky, Oklahoma and New Jersey.

An Exxon Mobil Corp. executive said gas station operators would have to pay to put into pumps new measuring devices that factor in temperature changes. Operators probably would pass the cost on to customers “without any additional benefit to consumers,” said Ben Soraci, the company’s retail sales director.

To Representative Dennis Kucinich, a Democratic presidential candidate whose subcommittee held a hearing on the issue Wednesday, oil companies are using a double standard.

Kucinich said the companies support the use of temperature adjustments in Canada, where gasoline often is cooler than the 60 degree Fahrenheit (15.5 Celsius) reference point. But, he said, they oppose them in the United States, where gasoline often exceeds 60 degrees, especially in the South.

Kucinich also said the industry long has used temperature-adjusted pricing when selling gasoline wholesale.

But Soraci, the Exxon Mobil executive, said factoring in temperature in pricing “would violate current laws and regulations” that define a gallon of gasoline as 231 cubic inches. That definition, he said, does not take into account energy content.

The oil executives said energy levels frequently vary slightly in gasoline. Variables include whether it is blended with an additive such as ethanol and where it is refined.

Soraci said Exxon Mobil would support a study into the costs and benefits of installing temperature adjusting devices into pumps.

Shell’s Cooley said his company does not believe that consumers “are harmed in any way by not having temperature adjustments at retail (gasoline) dispensers.” The current way of measuring gasoline, he said, “just makes good sense. Consumers understand this measurement.”

The industry executives said a shift toward temperature adjustments would cause confusion for motorists trying to compare prices and make it harder for state and county regulators to assure the accuracy of pumps

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