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The Arizona Republic: Not getting what you pay for at the pump

Ariz. shortchanged by the heat; activists pursue fairer fill-ups
Ryan Randazzo
Aug. 31, 2007 12:00 AM

Each time drivers fill their fuel tanks in Arizona’s simmering summers, they likely see $1 or more evaporate.

Because gasoline expands in the heat, that’s the estimated dollar amount of energy they purchase but they never receive.

Nobody serves hotter gas than stations in the Arizona desert, and after more than a year of discussion, debate over the issue is beginning to boil.

The state Department of Weights and Measures is taking fuel temperatures at gas stations and considering voluntary temperature compensation, while consumer advocates are pushing aggressively for changes.

When gas heats up, it takes up more space but doesn’t provide any more energy. That means there is less energy in a tank full of 105-degree gas than the same tank filled with 70-degree gas. However, stations charge by the volume of gas they sell, not how much energy it contains.

“Arizona is the epicenter of hot-fuel rip-offs,” said Judy Dugan, a founder of OilWatchdog.org, which is calling for gas stations to compensate for the temperature of gas they sell. “With the weather Phoenix is experiencing now, every time you fill the tank, you could be losing a dime a gallon. It’s an extra penalty for living in the desert imposed on you by the oil companies and oil refineries.”

Major oil companies and independent station operators argue that retrofitting pumps and compensating fuel sales for temperature won’t save consumers money and oppose moves to require such equipment or even allow it in the marketplace.

At least 38 lawsuits have been filed nationwide against gas stations and oil companies. Earlier this month, Sen. Claire McCaskill, D-Mo., introduced legislation that would require new and upgraded pumps to use temperature-compensation equipment.

But things have heated up even more in Arizona:

• The Arizona Department of Weights and Measures is taking fuel temperatures at stations to get a 12-month average but already has found summer temperatures of about 104 degrees. Based on that data, Valley motorists pay about $1 more for a 15-gallon fill-up than they would for the same amount of energy if the gas were 60 degrees, the industry standard. That figure rises when prices hit the $3 mark they saw earlier this summer.

• Exxon Mobil Corp. stations owned by the company, not franchisees, in Arizona and California have begun putting warning stickers on pumps to let people know they don’t compensate for temperature, ostensibly a response to the lawsuits.

• A recent report for the U.S. House found Arizona has the highest hot-fuel premium nationwide, based on temperature data collected in 2003.

Local lawsuit

Fuel experts have known for decades that gas expands when heated, and that trait can benefit or harm buyers and sellers when not calculated into transactions.

The current debate flaredin 2002 when the Missouri-based Owner-Operator Independent Drivers Association representing truckers got involved.

OOIDA began investigating the mileage variances in diesel fuel when truckers suspected fraud.

The group found that temperature accounted for the different mileage truckers were experiencing, even though diesel doesn’t expand as much as gasoline when heated.

Their research and subsequent news coverage prompted dozens of class-action lawsuits on behalf of independent truck drivers and motorists, all of which are being consolidated in Kansas.

Among the 38 cases with more than 150 plaintiffs and defendants is James Anliker, owner of Jim’s Trucking Inc. in Tolleson. He and another Arizona motorist, Christopher Payne, filed their suit in May on behalf of everyone who has bought fuel warmer than 60 degrees in the state from the nine defendants, including Exxon Mobil, Shell, Flying J and Chevron.

“The defendants have resisted all efforts to change their deceptive marketing practices and retrofit service-station fuel pumps with temperature-correction devices because the petroleum industry profits from the sale of motor fuel to consumers and non-standard, non-temperature-adjusted gallons,” their complaint says.

It also criticizes the fact that stations don’t report the temperature of fuel being sold so consumers can calculate the purchase themselves.

The complaint also alleges the companies pay taxes on the amount of fuel they purchase at the industry standard of 60 degrees and could collect more taxes than they remit on the fuel when it is sold hotter and, therefore, “obtain a tax windfall at the expense of the consumers.”

Solution debated

Hot-fuel critics see a double standard, with Canadian gas stations compensating for temperature to prevent being left short when chilly weather reduces the volume of gas they sell.

Not to mention the temperature calculations oil companies often use when making shipments and major sales in the U.S.

For those large transactions, the industry standard is 60 degrees. That way, companies get an even trade when exchanging 5,000 temperature-compensated gallons of fuel in California, where it is 90 degrees, for 5,000 gallons of temperature-compensated of fuel in Minnesota, where it is 60 degrees.

Too costly, industry says

But industry representatives say that’s not needed at pumps.

And spending $2,000 or more per pump to add temperature-compensating equipment will only hurt consumers, said Andrea Martincic, executive director of the Arizona Petroleum Marketers Association, representing the 93 percent of the state’s 2,000 stations who are independent.

“Consumers likely will see a price increase,” Martincic said.

She represented her views in Chicago this week during a National Conference on Weights and Measures meeting on the possible pitfalls of introducing temperature compensation in the U.S.

“The advocates for this are assuming the stations will sell fuel at the same price with the new equipment,” she said. “It’s a little misleading to say consumers are losing a dollar or whatever per sale. A gallon is a gallon.”

Temperature adjustment also could require more state inspectors, increasing fees on stations that could be passed on to consumers.

And if temperature adjustment is simply allowed, not required, it could create unfair competition among stations, she said.

“There is a risk in rural communities or at older stations, where potentially owners just say it’s not worth it,” she said. “If we don’t know it will help consumers, then why would you move forward with it?”

Industry opposition

Oil companies such as Shell Oil and Exxon Mobil also have argued that the cost of adding the equipment to gas pumps would only hurt the business owners who run most of their franchises.

And temperature compensation won’t mean they get more gas to fit in their tanks or that stations will lower prices, they said in testimony before a special committee of the U.S. House last month.

“Shell believes that making automatic temperature adjustment permissive throughout the United States would not be a good idea,” said Hugh Cooley, Shell’s vice president and general manager for national wholesale and joint ventures.

“First, if in any given area some stations adopted the technology and others did not, consumers would be confused over how to compare prices.”

Exxon Mobil provided similar comments but would only reply via an informal e-mail when asked by The Republic about the new stickers on Arizona pumps. And then the company wouldn’t answer why just two states were singled out.

“(The stickers are) simply a reminder that the dispenser sells motor fuel by volume,” spokeswoman Prem Nair wrote. “This is how fuel has traditionally been sold at retail in the continental United States.”

Awareness limited

Most drivers haven’t yet heard of the issue, even those who take fuel seriously.

“I didn’t know that,” 18-year-old Tim Senzee said while filling his pickup this month at a Phoenix QuikTrip as the mercury hit 109 degrees. “And I drive for a job, and have to pay for my own gas.”

Senzee can write off his delivery-service mileage on his taxes but still watches spiking prices.

“It definitely is a problem,” he said. “It can be pretty annoying.”

Other consumers were a bit cynical about hot-fuel regulation.

“I don’t think they’ll do it unless there is a law changed,” Kay Averkamp said as she pumped $27.86 worth of gas into her Honda Prius at a Phoenix am/pm station. “I don’t think they’ll do it out of the goodness of their hearts.”

But truckers say they see the impact, even though major trucking companies such as Phoenix-based Swift Transportation have stayed out of the fray.

“When you don’t get a real gallon of fuel, that’s when it hurts my wallet,” independent driver Sam Battaglia of Louisville, Ky., said recently after putting $170 worth of diesel into his International 9900 near Nashville.

“You notice when you fill up, then park overnight and the gauge reads less than full in the morning,” said Battaglia, a member of the independent-truckers group pushing for temperature compensation.

The state Department of Weights and Measures investigates about 1,000 complaints a month regarding gas pumps, but it hasn’t taken a stance on hot fuel, spokesman Steve Meissner said.

“The oil industry says it’s too expensive,” Meissner said. “So we could say, ‘OK, how about a voluntary system where the pump is labeled (as compensating for temperature),’ and if they have to charge an extra nickel a gallon or so, fine, they could let the market decide if it’s worth it.”

Reach the reporter at [email protected] .com or (602) 444-4331.

http://www.azcentral.com/arizonarepublic/news/articles/0831biz-hotfuel0831.html

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1 Comment on “The Arizona Republic: Not getting what you pay for at the pump”

  1. #1 No Pun Intended
    on Apr 7th, 2008 at 14:21

    No Pun Intended…

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