Hot gas blues

[April 4th, 2007] Wipe that springtime smile off your face. Warm weather may bring out T-shirts and sandals, but it also may mean you're getting screwed at the gas pump.

With Big Oil's reputation lower than dirt, consumer groups are calling foul on a scam they say has gone on for decades. And a lawsuit filed March 9 in U.S. District Court in Portland is plunging Oregonians into the fray.

Mark Haben, a long-haul trucker from Keizer, is suing Chevron USA Inc. and Tesoro Refining and Marketing Co. for failing to adjust measurements of fuel those two companies sell at the pump for fuel-temperature variations. The alleged cost of this practice to Oregon motorists: an estimated $10 million a year in extra cash spent on gas.

The class-action lawsuit could eventually include everyone who buys gasoline, depending on whether judges allow the case to move forward and how big a slice of the public they decide to let in on the action.

The science behind the debate is simple. When a liquid gets hot, the molecules move apart and it expands, so the same amount takes up more volume. When gasoline is sold at higher temperatures, you're actually getting less fuel in your tank—and less energy to burn—per gallon.

The per-gallon difference is tiny, but it adds up fast. That's why almost 100 years ago, oil companies established a standard temperature of 60 degrees. When the companies sell to each other or to gas stations, they adjust the amount based on temperature. If the fuel's hotter than 60 degrees, the buyer gets a little more; if it's colder, the buyer gets a little less.

In Canada, where gas-buying consumers would benefit from colder temperatures, gas pumps adjust the amount they dispense based on the fuel's temperature. But down south in the United States, where the average temperature of fuel sold is 64.7 degrees, pumps don't adjust—benefiting the oil companies. Drivers get nicked buying the warmer gas—more than $1.7 billion a year nationwide, according to consumer groups.

"Consumers get hammered because the oil companies have put the kibosh on fair prices," says Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif. "We're just asking them to apply the same fair standard that they apply at the wholesale level."

Truckers have long grumbled about the practice, but they gained no traction until the Kansas City Star ran a series of articles on so-called "hot fuel" starting last August. Since then, 28 lawsuits have been filed in 17 states, including Haben's in Oregon, where the weather is warm enough to make consumers a loser.

The Star investigation used gas-tank temperatures nationwide to estimate the net gain or loss to customers in each state. Some cold states actually come out ahead, but overall the nation takes a loss. The $10 million estimate in temperate Oregon is in the middle of the road, modest compared with $509 million a year in California.

Haben says he answered an email early this year from the Owner-Operator Independent Driver Association in Grain Valley, Mo., recruiting truckers to get involved in hot-fuel lawsuits. He didn't know much about the issue then, and still doesn't. He told WW he had no idea he was the only plaintiff in the Oregon lawsuit, and said he'd been neglecting to file paperwork requested by lawyers.

"It's been way on the back burner, 'cause I've been way skeptical about the whole thing," Haben says. He says he told lawyers he buys most of his gas at Chevron and Tesoro, which is why those companies are named in the lawsuit.

A spokeswoman for Tesoro in San Antonio, Texas, declined to comment. Chevron corporate headquarters in San Ramon, Calif., didn't return a phone call seeking comment.

Haben's Portland attorney, Linda Williams—whom Haben says he's never met—says the lawsuit and others like it around the country will almost certainly be folded into one case, before a court that's yet to be determined. Big class-action cases generally take two to three years to litigate, she says.

Guy Calladine, a San Francisco lawyer who filed the first two hot-fuel lawsuits in December, says if the plaintiffs win, the payoff could come in the form of a court-ordered rollback of gas prices nationwide. Lawyers are also asking that pumps be retrofitted to adjust for temperature, he says. He calls hot fuel a "dirty little secret that the industry knew about forever."