posts 8/28/2006 6:45 pm
8/28/2006 7:36 pm
Selling Hot Fuel
Back in July I posted a blog about Oil Barrel/Prices, well I got a great email today and was shocked to this and as I read it, you can say it just PISSED me off more!
Did you know that the hotter the temperature the less gas you get because of expansion? But you pay more for less! Get this it is perfectly LEGAL! Yes
Gas sold at higher temps boosts Big Oil
'Hot' fuel costs U.S. consumers billions of dollars
Kansas City (Mo.) Star
Aug. 28, 2006 12:00 AM
SUFFOLK, Va. - Lesley "Lucky" Duke's mood darkens with every drop of diesel that flows into his 2005 Freightliner big rig.
The 52-year-old independent trucker from Hertford, N.C., has just dropped off a load of potatoes and is topping off his tank on a sweltering summer day.
He whips out a thermometer and takes the temperature of the $2.80-a-gallon fuel gushing into his truck's tanks. The thermometer stops at 93 degrees Fahrenheit.
"Hot" fuel is costing him the price of a good lunch today, Duke reckons, and as much as $700 a year.
Duke, you see, is one of the few Americans who realize that fuel is often sold at temperatures much hotter than the federal standard of 60 degrees. It's a standard agreed to nearly a century ago by the industry and regulators but virtually unknown to the average consumer.
But you should understand it because it's costing us billions of dollars a year. An investigation by the Kansas City (Mo.) Star has found that at current prices, U.S. consumers are spending about $2.3 billion, $115 million of that in Arizona, more for gasoline and diesel this year than they would if fuel pumps were adjusted to account for expansion of hot fuel.
It works this way: As a liquid, gasoline expands and contracts depending on temperature. At the 60-degree standard, the 231-cubic-inch U.S. gallon puts out a certain amount of energy. That same amount of gas expands to more than 235 cubic inches at 90 degrees, even though consumers still only get 231 cubic inches at the pump.
Put simply, every degree over 60 degrees diminishes the energy a 231-cubic-inch gallon delivers to cars, trucks, boats, buses and heavy equipment, and forces drivers to consume more and pay more for fuel.
It is basic physics that, depending on the temperature, can amount to just a few cents a gallon. But it adds up to big money, coming straight out of consumers' pockets and going right to the bottom line of major oil companies and other fuel retailers in the energy pipeline.
Moreover, it's legal, because even though your local filling station measures out your gas as if it were stored at 60 degrees, no law requires retailers to adjust the pump to reflect the expansion of hot fuel.
In other words, no law ensures that you get what you pay for.
Pumps can be adjusted
While the problem may be costly to consumers, the Star's examination reveals that it is fixable. The technology exists to retrofit the nation's filling stations to adjust the amount of fuel pumped to reflect changes in fuel temperatures.
Even so, Big Oil has argued successfully for decades that it would cost too much to retrofit the nation's fuel pumps, particularly for independent retailers that now sell the majority of the nation's fuel. The industry also argues that consumers simply wouldn't understand fuel pumps that adjust for temperature change.
"The consumer doesn't necessarily want to be confused," contended Prentiss Searles, a senior associate for marketing issues at the American Petroleum Institute, a Washington, D.C.-based group that represents the industry. "They're thinking, 'I just want a gallon.' "
Most major oil companies either declined comment on the hot-fuel issue in the United States or referred inquiries to the institute.
However, Anne Peebles, a spokeswoman for Shell Oil Co., said in a statement that the value of automatic temperature correction "may be limited. . . . Temperature correction is not something one company can do on its own, it would have to be a regulatory requirement that puts all facilities on the same page."
Standard is a century old
The 60-degree standard was set by mutual agreement of the oil industry and weights and measures regulators roughly a century ago. At the time, those involved reckoned that figure roughly matched the average air temperature in the United States.
While the industry changed and technology improved over time, the 60-degree standard remained, quietly protected by Big Oil. The issue simmered briefly in the 1970s, when fuel prices soared during two major oil crises. While drivers sat in long lines to pay high prices, a few government weights and measures officials pushed to adjust gas pumps for temperature variations.
Big Oil pushed back. The American Petroleum Institute dispatched Harold Harris, head of Exxon's (as it was known then) office of engineering operations, to defend the status quo.
In 1974, Harris told a group of weights and measures officials meeting in Washington, D.C., that his study found that average fuel temperatures were below 60 degrees. His analysis claimed that consumers were getting the energy equivalent of 242 million gallons of extra fuel a year that they weren't paying for.
Harris, retired and living in Houston, acknowledges now that the 1974 study was wrong.
Times have changed for the worse for consumers.
First, the retail price of gasoline has more than tripled since the late 1990s, worsening the financial impact of fuel expansion.
The fuel being sold now also is hotter than in the past because of fundamental changes in how fuel is hauled, stored and sold.
And much of the fuel-retailing industry has been consolidated from small corner stations into much larger outlets in recent years. At modern stations, which average eight hoses, fuel is sold in such massive daily volumes that the fuel in underground storage tanks turns over long before it has time to cool to ground temperature.
Finally, a population shift from cooler Rust Belt states to hotter Sun Belt states means that more people are buying hotter fuel than ever before.
A database of fuel temperatures at 1,000 retail stations compiled by the National Institute of Standards and Technology, obtained by the Star, reveals that fuel is sold at nearly 65 degrees when averaged year-round and across the country.
When state-by-state temperature and consumption patterns are calculated, the Star estimates that U.S. consumers are being shorted the energy equivalent of roughly 760 million gallons a year of gas and diesel because of fuel expansion caused by heat, fuel worth about $2.3 billion at current prices.
In car-crazed California, the state that consumes the most gasoline, the cost to consumers for not adjusting gasoline volumes for temperature is more than $500 million a year. In the three largest gas-consuming states - California, Texas and Florida - the total is more than $1.2 billion. In Arizona, the loss to consumers is $115 million.
No national code pushed
In a windowless ballroom at the Chicago Marriott Downtown, more than 100 business executives and government officials gathered in July to discuss the country's weights and measures regulations.
The National Conference of Weights and Measures is charged with establishing model codes for states to follow in regulating all forms of commerce.
Weights and measures professionals take pride in their work. Regulators say the integrity of daily commerce hinges on the basic trust that consumers know what they're buying. Consumers don't have to worry whether a gallon of milk is a pint short or that a pound of hamburger weighs 15 ounces.
Even so, the conference never has formally endorsed a national code for temperature compensation of fuel at the pump. But this year a report on it was on the agenda.
Michael Belue, a consultant for the American Petroleum Institute, argued that it would be too costly to adjust the nation's fuel pumps.
"API recognizes the importance of temperature compensation at this conference," Belue said, adding that any policy to deal with fuel temperature should be strictly voluntary.
The weights and measures conference took no action.
Big Oil adjusts own fuel
While fighting against temperature-adjusted gas for consumers, Big Oil long ago made certain that its crude-oil transactions before the refining process were made on a temperature-adjusted basis.
Temperature compensation also is a fixture in pipelines. The Explorer pipeline, which transports gasoline and diesel from the Gulf Coast to the Midwest, has a provision in its contract that requires fuel volumes to be adjusted for temperature.
Wholesale fuel-transaction measurements also are routinely adjusted for temperature. Even measurements of imported gasoline on tanker ships are adjusted for temperature.
Indeed, temperature adjustment occurs at almost every step in the energy pipeline, just not to retail consumers.
Even the government protects itself. Some large-volume buyers of fuel are able to negotiate deals to buy fuel that is temperature-adjusted. One is the U.S. military, which has required temperature adjustment for decades.
"It ensures we're getting the quantity of fuel we are purchasing," said Lindsey Hicks, a chemist for the Defense Energy Support Center at Fort Belvoir, Va.
Not reflecting reality
The National Institute of Standards and Technology is the federal agency in charge of advancing measurement science, standards and technology.
One of its 2,900 employees is Richard Suiter, a weights and measures coordinator with 37 years of experience.
Suiter had long believed that fuel needed to be adjusted for temperature simply to ensure fairness in the marketplace. But he wasn't convinced that it would make a large net difference for the industry or consumers. After all, he reckoned, fuel is largely stored in underground tanks with a ground temperature close to 60 degrees.
But he began to have doubts after hearing anecdotal reports of fuel temperatures well above 60 degrees. The chance to find out more came during a training visit to a back room at an Illinois gas station.
The room contained monitoring equipment required by the Environmental Protection Agency to help detect fuel leaks in storage tanks. Among other things, the equipment tracked temperature to calculate changes in fuel volume.
The discovery led to a study in which Suiter retrieved average monthly fuel temperatures from 1,000 stations in 48 states and the District of Columbia from 2002 to 2004.
The results, which offer the most thorough analysis ever of fuel temperatures nationwide, were stunning.
The nation's average fuel temperature was almost 5 degrees higher than the standard, amounting to a multibillion-dollar shift from consumers to the industry every year. The American Petroleum Institute studies that had held sway since the 1970s did not reflect reality.
The top 10 Hotter States Pay The Price For Gas
I have listed the top 10 below. To read you will see state name, Average Temp., Effect on retail gas consumption in millions of gallons, Consumers gain or loss in millions of dollars (using different color)
California-75, 158, -$509
Texas-78, 143, -$416
Florida-82, 122, -$367
Arizona-82, 39, -$115
Georgia-72, 41, -$123
Louisiana-77, 28, -$81
N. Carolina-69, 25, -$74
Alabama-72, 22, -$63
S.Carolina-73, 22, -$61
Tennessee-70, 21, -$60
Now I went through the entire list and not one state has a gain under the column of Consumers gain or loss in millions of dollars. Paying $0 to $5 million less. In fact the lowest state is:
Vermont-54, -1.4, -$4
Alaska-47, -2, -$7
I can hardly wait to see what Tuesday email will be about when I get it title below!
Tuesday: What can be done? Hawaii already adjusts for temperature.