'Hot fuel' fight: Three oil companies say they'll settle

| 4/6/2012

Three of the big oil companies have agreed to settle lawsuits that accuse them of selling “hot fuel” at the pump. The Kansas City Star reports that the details of what Shell, BP and Conoco-Phillips are offering aren’t available yet.

The three companies are among the defendants in a class-action lawsuit that accuses oil companies and gas stations of profiting to the tune of $3.5 billion a year by often selling hot gas and diesel fuel.

Plaintiffs in the case want temperature-compensation equipment installed at the pumps to ensure that fuel is sold at or near 60-degrees, but it’s not known if the oil company’s settlement proposal includes that. 

Although not part of the lawsuit, the Owner-Operator Independent Driver Association has been involved in this issue since 2002 when members expressed concern about how it affects their costs of operations.

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 60-degree standard, a gallon of fuel delivers a certain amount of measurable energy, or BTU. But when expanded by higher temperatures, that same amount of fuel actually delivers less energy.

The warmer the fuel, the less BTU and fewer miles to the gallons a vehicle will receive. Consequently, if a vehicle averages six miles per gallon, 200 gallons of 98-degree fuel is going to take a truck 36 fewer miles than 60-degree fuel.

OOIDA has been educating truckers and the non-trucking public about hot fuel via the Association’s media and a dedicated website, turndownhotfuel.com.

The Association points out that the problem is not only how much extra money consumers have been paying at the pump, but also the extra sales tax dollars kept by retailers.

Gasoline and diesel fuel are measured and taxed at the same time whenever the retailer purchases it wholesale from the refinery (or rack). Any additional amount of taxes paid by motorists at the pump, because they may be buying fuel at temperatures higher than 60 degrees, unfairly financially benefits the oil companies and the retailers.

In other words, the retailers are charging sales tax for a certain volume, but paying less themselves if the temperature of the fuel is higher than 60 degrees.