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Hot Fuel
Retailers offer to settle in ‘hot fuel’ lawsuit
OOIDA member among plantiffs in case filled in 2006

By David Tannerassociate editor

A number of large fuel retailers have offered to settle with consumer plaintiffs in the consolidated lawsuit over “hot fuel.”

Shell, BP and Conoco-Phillips were the first to offer settlements in April that included installing temperature compensation equipment on retail fuel pumps.

The offers came before a federal trial date scheduled for May 7. Plaintiff and OOIDA Senior Member Lesley “Lucky” Duke of Hertford, NC, said he hopes more retailers on the list of defendant companies will agree to settle.

“It’s been a long time coming,” Duke said. A decade ago, he was among the first consumers – if not the first – to notice that the temperature of the fuel he put into his tanks had an effect on mileage. In warmer states, where the fuel seemed hot to the touch at the pump, Duke’s fuel mileage dropped.

The term “hot fuel” refers to fuel sold above 60 degrees without the retailer taking expansion of the liquid into account.

Duke and others in the lawsuit say retailers should not be allowed to profit from the expansion of liquid fuel. The retailers claim that warmer and cooler temperatures balance out during the year.

Research by the OOIDA Foundation has shown that fuel temperatures in southern states do not balance out and that fuel is routinely sold at 70, 80, and even 90 degrees.

OOIDA, which was not part of the lawsuit, has a website dedicated to information and awareness of the hot fuel issue. That site is turndownhotfuel.com.

Reports prepared for Congress show hot fuel costs consumers billions each year. At $4 per gallon, hot fuel could be costing consumers $3.5 billion per year.

Consumers began to file lawsuits in 2006 seeking cash settlements and demanding that retailers install temperature compensation equipment on their fuel pumps. Known as “temp-comp,” the equipment would make sure consumers get exactly the right amount of Btu energy based on the 60-degree temperature standard.

The defendant companies say voluntary or mandatory temperature compensation equipment for their pumps would be costly and would lead to increases in the cost of fuel.

The consolidated case resides with Judge Kathryn Vratil in the U.S. District Court for the District of Kansas.

At press time, Duke was hopeful the plaintiffs’ lawyers would negotiate settlements with more of the fuel companies involved.

“We’re looking at the rest of the companies to fall in line now that we’re settling with three companies,” Duke said.

The plaintiffs have presented some strong arguments during the six-year court battle, including the fact that retailers were the ones pushing for temperature compensation in Canada when they found that they were losing money in cooler temperatures.

Another point is the fact that refiners and wholesalers have known about fuel expansion for more than 100 years and use a 60-degree standard for sales “above the rack.” Almost inexplicably, the retail location remains the only link in the supply chain for fuel that does not sell based on a 60-degree standard.

Weights and measures groups and congressional committees have attempted to roll out guidance to states to implement a retail version of the standard, but nothing has taken root to date. The hot fuel case could go a long way to push the envelope.

“We’ll have to see what happens,” Duke said as the trial date approached.

Two years ago, Costco Wholesale Corp. offered to settle and put temperature compensation equipment on fuel pumps in 14 states. Other companies, including ExxonMobil Corp. and Tesoro, have placed stickers on their pumps to notify consumers that they dispense motor fuel by volume only and without compensating for temperature. LL

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