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Proposed Settlement Would See Costco Address 'Hot Fuel' Issue

April 23, 2009

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To settle a lawsuit, Costco has agreed to change pumps in the hottest regions of the country so they compensate for the fact that fuel at higher temperatures offers consumers less energy for their dollar.


The Kansas City Star, which has been following this "hot fuel" issue for some time, reports that the "precedent-setting plan ... which still needs court approval, also would end what had been unanimous opposition by the oil industry and retailers to selling U.S. consumers temperature-adjusted fuel."

The Star reports that Costco will change its gas pumps to make the adjustment in the warmest states where it has stores, including California, Texas and Florida. The wholesale fuel that Costco buys in those states is temperature-adjusted.

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In Missouri, Kansas, Maryland, Indiana, New Jersey, Oregon and Pennsylvania, the Star reports, Costco stores would not make changes to their pumps in those states, where the company doesn't buy temperature-adjusted fuel at wholesale, and therefore isn't pocketing any profit in the difference caused by the temperature differential.

While Costco sells gasoline, not commercial diesel fuel, this settlement could set a precedent and prompt other retailers to do the same. Another group that has been advocating for a change is the Owner-Operator Independent Drivers Association, which has a web site, www.turndownhotfuel.com, addressing the issue.

As that web site explains, the phrase "hot fuel" refers to expanded diesel fuel or gasoline that is sold at retail pumps at temperatures higher than the century-old government standard of 60 degrees. That is the temperature/volume used in the petro-chemical industry to measure all petroleum liquids at the refinery and every point after the refinery, except at the retail pump.

At the 60-degree standard, a gallon of fuel delivers a certain amount of measurable energy, referred to as Btu. But when expanded by higher temperatures, that same amount of fuel actually delivers less energy. The warmer the fuel, the less measurable energy and fewer miles to the gallons a vehicle will receive. For example, if a vehicle averages six miles per gallon, 200 gallons of 98-degree fuel is going to take that vehicle 36 fewer miles than 60-degree fuel.

There are devices that can be installed on retail pumps to make up the difference in price, called automatic temperature compensation retrofit kits.

OOIDA has been challenging the National Conference on Weights and Measures to require fuel retailers in all 50 states to install temperature-compensation devices as a solution to this problem. Unchecked temperatures at the pump have meant a discrepancy for decades between what consumers pay and what they actually get when filling their tanks.

Some states have already begun the legislative process to try to put an end to retailers' practice of selling fuel warmer than 60 degrees. The 60-degree standard was established a century ago by regulators and the refineries. During warmer weather, the temperature of gasoline or diesel fuel can reach as high as 90 degrees, expanding the volume, but decreasing the amount of energy per cubic inch. The result is less energy per gallon, and therefore consumers are getting fewer miles per gallon.

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