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SBD
Admiral
Joined: 19 Aug 2004
Posts: 1022
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 Posted: Thu Aug 31, 2006 1:44 am Post subject: $500 mill/year gas rip-off in California-Billions Nationwide |
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The Foundation For Taxpayer And Consumer Rights
1750 Ocean Park Boulevard, #200,
Santa Monica, CA 90405 - 4938
Tel: 310-392-0522
Fax: 310-392-8874
Net: consumerwatchdog.org
August 28,2006
Governor Arnold Schwarzenegger
State Capitol
Sacramento, CA 95814
Dear Governor,
I am writing to call your attention to an astounding investigation by the Kansas City Star that found motorists, especially in sun belt states like California, are losing billions because oil companies have failed to upgrade the technology in their gasoline pumps to be temperature sensitive. Reporter Steve Everly found fuel pumps that do not adjust for temperature cost Californians at least 3 cents for every gallon in warmer weather and overcharge Americans more than $2.3 billion annually.
When the temperature of gasoline rises above the regulatory standard of 60 degrees, the gasoline expands, and less fuel per gallon is pumped into the gas tank. But pumps don't account for the bigger volume and consumers receive less gasoline than they should, according to the newspaper. The technology to adjust for temperature has already been installed in Canada, where lower temperatures cost oil companies money, but domestic oil companies have resisted because they made an extra $500 million in profits per year in California due to failure to adjust for gasoline temperature. Hawaii is the only state to adjust its pumps for hotter gas.
It's outrageous that Americans, who are already paying too much for their gasoline so oil companies can make billions in profits, cannot rely on an honest measurement for every gallon of gasoline they pump. Every penny matters and oil companies should be accountable for every penny charged. I urge you to immediately embrace a requirement that oil companies update their gasoline pump technology to account for temperature fluctuation.
In the Star story, one of the state's top officials at the weights and measures department, Dennis Johannes, defended the oil industry's current technology saying that consumers couldn't understand the issue and trying to address it was futile. Governor, the average temperature of California gasoline all year long is about 75 degrees, which means that consumers are losing three cents for nearly every gallon they pump and that's how oil companies are making billions.
For Mr. Johannes to dismiss a solution to a $500 million rip-off of motorists in California shows he does not have consumers' interest at heart. You should dismiss him from his post immediately and take steps to force oil companies to adjust their gasoline pump tecnologies in keeping with Hawaii and Canada. The California economy and California families deserve an honest measurement at the pump for every gallon and a fair price for it as well. Pennies add up for every motorist and oil companies should be accountable for every penny they charge.
While you have received more than $2 million in campaign contributions from oil companies, your administration has yet to take a single step to help California motorists who have paid the highest price for gasoline in the nation and use more gasoline than residents of every other state. Frankly, Governor, the requirement for new temperature sensitive pumps in a state like a California is a "no brainer." If you have any concern for the impact of high gas prices on the residents of our state, you will move immediately to force oil companies to change their current technology to be temperature-sensitive or, as Hawaii has done, recalibrate gasoline pumps to assume gasoline is stored at higher temperatures.
I hope you will take action immediately.
Sincerely,
Jamie Court |
This is the first of 3 letters written by The Foundation For Taxpayer And Consumer Rights. The other letters were to Bill Lockyer, Attorney General of California and Samuel Bodman, U.S. Secretary of Energy
Link to all three letters
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SBD
Admiral
Joined: 19 Aug 2004
Posts: 1022
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| Posted: Thu Aug 31, 2006 2:10 am Post subject: |
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| Quote: | ‘Hot’ fuel triggers investigation
One state decides to pursue the gas-pumping problem after an inquiry by The Star finds it’s costing consumers $2.3 billion a year.
By STEVE EVERLY
The Kansas City Star
“It’s a simple principle. You should get what you pay for.”
Tom Dressler, spokesman for the California attorney general
The California attorney general’s office has launched an investigation of gas stations and truck stops selling “hot” fuel to consumers without making adjustments for changes in fuel volume.
Tom Dressler, a spokesman for Attorney General Bill Lockyer, said on Monday that his office will investigate whether any state laws or regulations were broken. The attorney general also plans to make recommendations on how the problem can be fixed.
The action comes in response to a series in The Kansas City Star describing how gasoline and diesel retailers profit from selling fuel that is hotter than the 60-degree standard agreed to by the industry and government regulators nearly a century ago.
Drawing on a fuel temperature database compiled by a federal agency, and adjusting for state-by-state fuel temperatures and consumption patterns, The Star estimated that hot fuel was costing consumers in the United States about $2.3 billion annually at recent prices. The financial impact in California, which uses more gasoline than any other state, accounted for more than $500 million of that figure.
The Star’s series also described methods that could be used to address the hot-fuel problem.
In Hawaii, for example, the state requires that retailers dispense 234 cubic inches per gallon, rather than the 231 cubic inches dispensed in the rest of country, to compensate for hot fuel.
In Canada, where cold fuel once cost retailers money, the industry has supported a voluntary program to retrofit pumps to automatically adjust volumes to account for temperature change. The Star estimated that such a technological fix would cost $1.4 billion to $1.9 billion in the United States.
“It’s a simple principle. You should get what you pay for,” said Dressler, adding that it was “most disturbing” the major oil companies and other retailers were “nickel and diming” Californians while posting record profits.
The American Petroleum Institute (API), which represents the oil industry, has argued that the hot-fuel problem is “negligible” and wasn’t worth fixing, citing the high cost of retrofitting the country’s gas and diesel pumps. The API also has argued that consumers would be confused by fuel dispensers that adjust the volume of fuel pumped for temperature variation.
“It doesn’t make sense,” Prentiss Searles, a senior associate for marketing issues with API, recently told The Star.
Dressler said the attorney general rejected the notion that U.S. consumers would get confused by purchasing gas adjusted for temperature, especially since it is already done in Canada.
“Our consumers are just as smart as those north of the border,” he said.
Announcement of the attorney general’s investigation followed letters sent by The Foundation for Taxpayer and Consumer Rights to the attorney general, California Gov. Arnold Schwarzenegger and U.S. Secretary of Energy Samuel Bodman.
“It’s outrageous that Americans, who are already paying too much for their gasoline so oil companies can make billions in profits, cannot rely on an honest measurement for every gallon of gasoline they pump,” wrote Jamie Court, president of the Santa Monica-based consumer advocacy group, in a letter to Schwarzenegger.
Bill Maile, a spokesman for Schwarzenegger, said the governor had not received the letter and could not respond until it had been reviewed.
The physics behind hot fuel are fairly simple. At the standard of 60 degrees, a 231-cubic-inch gallon of fuel delivers a certain amount of energy. At 90 degrees, however, the same gallon of fuel expands to more than 235 cubic inches. Because consumers are still buying 231-cubic-inch gallons, hot fuel forces them to spend more to obtain the same amount of energy.
The Star’s series estimated that U.S. consumers overall are paying annually for an additional 760 million gallons of gasoline and diesel because of fuel being sold above the 60-degree standard. A study of 1,000 gas stations and truck stops in 48 states and the District of Columbia by the National Institute of Standards and Technology found that fuel is being sold at an average of 64.7 degrees when averaged across the country and year-round.
Consumers in some northern states with cooler climates actually benefit from buying cold fuel. But those savings are minuscule compared with the additional money paid out by consumers in more heavily populated, hotter states elsewhere in the country. In Kansas and Missouri, for example, consumers pay an estimated $12 million and $15 million extra annually buying hot fuel.
The Foundation for Taxpayer and Consumer Rights said it would prefer to see pumps retrofitted to automatically adjust the fuel’s volume for any difference in temperature from the 60-degree standard. If that isn’t done, the group believes the 60-degree standard should be changed to more accurately reflect the temperature of fuel. In the early 1970s, for example, Hawaii changed the size of its gallon based on the assumption of 80-degree fuel.
Court, of The Foundation for Taxpayer and Consumer Rights, called hot fuel an “outrageous overcharge of American motorists.” In his letter to Schwarzenegger, Court called adoption of temperature-adjusting pumps in California a “no-brainer.”
In his letter to Schwarzenegger, Court also noted that the governor had received more than $2 million in campaign contributions from oil companies.
“Now is the time to do it,” Court said in an interview with The Star. “And if it doesn’t happen it’s because of the power of the oil industry.”
@Go to KansasCity.com to read more about hot fuel, the industry’s stance on the issue and The Foundation for Taxpayer and Consumer Rights’ letters to the California attorney general, Gov. Arnold Schwarzenegger and U.S. Energy Secretary Samuel Bodman. |
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