Fuel Smarts

Hot Fuel Lawsuit Proceeding

February 25, 2008

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A lawsuit alleging that consumers are being cheated because fuel prices are not adjusted to account for temperature will proceed, a judge ruled last week.

Truckers are among the plaintiffs in the "hot fuel" case. The complaint is that during wholesale transactions, a gallon of fuel is defined by fuel companies as 231 cubic inches at 60 degrees. At retail, however, there is no consideration given for temperature. Studies have shown that national averaage termperaure of motor fuel is near 70 degrees, and even higher in warmer weather. Because the fuel expands as the temperature rises, the plaintiffs contend that fuel companies are profiting on "extra" gallons crated by the expansion. A U.S. House Committee on Oversight and Government Reform subcommittee study of 2006 data showed that hot fuel nationwide costs consumers an extra $2.3 billion per year.
The oil companies and gas retailers argue that state regulations and industry standards define a gallon of gasoline by volume, not in terms of its energy output, reported the Associated Press. As long as the customer receives 231 cubic inches of fuel, they said, the customer is getting what they paid for.
Last Thursday, the judge in the case denied a motion by the defendants to dismiss the case. The decision by District Court Judge Kathryn H. Vratil moves the case to the discovery stage -- or, as the Foundation for Taxpayer and Consumer Rights and its OilWatchdog project puts it, the "who knew what, when" stage.
The Judicial Panel on Multidistrict Litigation last year decided to centralize in U.S. District Court in Kansas City, Kan., dozens of lawsuits filed by consumers in 26 states, Washington, D.C., and Guam, rather than try them in separate courts.
The fuel industry says the cost of installing temperature adjustment equipment would be prohibitive. NATSO, a trade group that represents truck stop operators, has estimated the cost of equipping each pump at between $1,500 and $3,800. But plaintiffs point out that the petroleum industry has pushed for using these adjustments in Canada, where the temperature difference favors the consumer rather than the seller.
The issue has received attention at the federal level. Last summer, Rep. Dennis Kucinich, chairman of the Domestic Policy Subcommittee of the House Committee on Oversight and Government Reform, held a hearing on the hot fuel issue.
(The Kansas City Star covered this issue extensively last summer; go to their Hot Fuel Page.)

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