California group calls for temperature sensitive gasoline pumps

California group calls for temperature sensitive gasoline pumps

Washington (Platts)--28Aug2006

A consumer group in California Monday called on state and federal
regulators to require temperature sensitive gasoline pump technology to
account for volume changes at higher temperatures.

Citing a Kansas City Star investigative piece posted on the paper's
website Monday, the Foundation for Taxpayer & Consumer Rights wrote Governor
Arnold Schwarzenegger and US Energy Secretary Samuel Bodman that above 60
degrees "gasoline expands but pumps don't account for the bigger volumes and
consumers receive less gasoline than they should."

The technology to adjust for temperatures "has already been installed in
Canada [to account for colder temperatures], but domestic oil companies have
resisted because they made an extra $500 million in profits last year in
California due to failure to adjust for [higher] gasoline temperatures," the
letters said.

Gasoline is sold based on an assumed temperature of 60 degrees
Fahrenheit. Hawaii is the only state to adjust for higher temperatures and
assumes a fuel temperature of 80 degrees. The Hawaiian gasoline gallon
contains about 234 cu inches of fuel, compared to 231 cubic inches in the
rest of the US, the newspaper reported.

The average temperature of California gasoline is about 75 degrees,
"which means that consumers are losing three cents for nearly every gallon
they pump," the group wrote. The newspaper estimated that failing to adjust
for temperature fluctuations in warm-weather states is costing drivers
hundreds of million dollars a year.

Prentiss Searles, senior associate for marketing issues at the
American Petroleum Institute, countered that, "You do get a change in the
volume of fuel, but it's a very small change. But you also get a change when
it cools down, so it averages out across the year."

Consumers are not buying gasoline on a Btu basis, but on a gallon basis,
Searles said. "When you're looking at an individual buying 20 gallons of fuel,
sometimes he gets more for his money and sometimes he gets less for his
money."

The cost of installing a new pump that adjust for temperature would be
about $25,000, and would run into the billions of dollars across the US,
Searles said.

"It depends on how you crunch the numbers, and no one has good data on
the number of dispensers that would have to be replaced," he said. "But even
if you assume that [consumers] get some benefits in the warmer states, then
you would be looking at the cost of installing, maintaining and testing the
equipment. Someone will have to pay it and it will be the consumer. On
individual sales, it's just not worth it."

--Gerald Karey, gerry_karey@platts.com

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