The real cost of fuel temperature

| September 05, 2007

The “hot fuel” controversy is getting hotter. The Owner-Operator Independent Drivers Association has launched a website, www.turndownhotfuel.com, intended to educate truckers and motorists about the issue, but really it’s pretty simple. The standard volume for a gallon of fuel is 231 cubic inches at 60 degrees in the continental United States. Retail pumps don’t adjust volume output according to the fuel’s temperature, which varies widely by region. Thus, truckers and motorists filling up with 70-degree fuel, which is slightly expanded, get less energy than is supposed to be in a standard gallon, and those filling up on 40-degree fuel get a great deal more energy.

There is much political rhetoric surrounding the hot-fuel debate and the rising average temperature in the United States. Numerous very large monetary figures have been bandied about to support the contention that drivers are being bilked – $1.5 billion lost by consumers this summer, for instance. But depending upon your area of hauling, losses may vary widely and could even be net gains.

The key to determining loss or gain from fuel-volume expansion and contraction is in knowing the temperature of fuel when it is delivered to the consumer, as emphasized by Michael Cleary, chairman of the National Conference on Weights and Measures. In a recent “hot fuel” hearing in the U.S. House of Representatives, a coordinator at the National Institute of Standards and Technology, Richard Suiter, referenced data collected by a manufacturer of fuel storage tank monitoring equipment that concluded a 64.7-degree average temperature of product in tanks in the United States, averaged annually. That’s about 10 degrees higher than average surface temperature, and an analysis of average air temps and tank temps by state reveals that monthly tank temps track roughly to monthly air temps in any given state, at an average annual difference of 11 degrees.

The map illustrates the potential real costs to owner-operators and trucking companies, based on average state diesel prices published in Truckers News (monthly figures from T-Chek Systems) between May 2006 and April 2007 and monthly state temperature averages recorded by the National Oceanic and Atmospheric Administration in the same period, adjusted to estimate average tank temp.


Prelude to a Mandate?
Membership in the National Conference on Weights and Measures voted at the organization’s July meeting in Salt Lake City on a measure to allow the adoption by states of an NCWM-built model fix to permit the use of automatic temperature compensation devices in the retail arena. Though majorities of state regulatory representatives in both of the NCWM’s houses voted to mandate ATC devices, both houses fell short of the 27 votes each would need to constitute a solid majority and hence pass the measure.

At a June 8 hearing in the House of Representatives, now-former NCWM chair Michael Cleary revealed under questioning that there were passionate interests on both sides of the issue among NCWM voting participants, who come from state weights and measures regulatory bodies.

The United States does not having a centralized regulatory authority in weights and measures.

Cleary “had to work long and hard against three of his predecessors,” says OOIDA’s John Siebert, to get the ATC measure to a vote. The incoming chair of the NCWM is Judy Cardin of Wisconsin, who’s recognized the importance of the issue but who, according to Siebert, spoke against the recent measure and likewise voted that way. But there were some, Siebert says, “who voted against this particular proposal who also defended [temperature compensation] philosophically.”

In July 2006, air temps in Utah averaged 76.4 degrees Fahrenheit – estimating storage-tank temp, truckers averaged 2 cents a gallon in energy losses that month. Conversely, in January this year, average air temp bottomed out at 20, netting a 3.7-cent gain per gallon.

Hearings in June and July before the House Domestic Policy Subcommittee of the Committee on Oversight and Government Reform, chaired by Dennis Kucinich (D-Ohio), examined the hot fuel issue. At each, held June 8 and July 25, the particular issue under examination was whether automatic temperature compensation devices ought to be mandated on retail fuel pumps. At bulk levels worldwide, and at the retail level in Canada on most pumps, ATC devices are typically used.

John Siebert, OOIDA’s hot fuel project leader, urged fuel retailers to take up what he deemed the most fair solution: “Apply the same technology used throughout the petroleum production and distribution industry to the final fuel transaction, the retail sale,” he said. “Automatic temperature compensation pumps are available for use throughout the world.” When selling and buying in bulk quantities, oil companies and fuel retailers typically adjust volume according to temperature.

The initial hearing was announced under the title “Hot Fuel: Big Oil’s Double Standard for Measuring Gasoline.” The Partnership for Uniform Marketing Practices (P.U.M.P.), of which NATSO is a member, entered testimony for consideration by the subcommittee stressing that the issue was not one of “big oil versus the truck driver/consumer.” Timothy Columbus, general counsel for the National Association of Convenience Stores and the Independent Gasoline Marketers of America, agreed with the coalition, stressing that “this is not about big oil. This is about little oil.”

Hugh Cooley, Shell’s vice president and general manager of national wholesale and joint ventures, reiterated the sentiment in his testimony before the subcommittee July 25, going on to argue that the proper place for the debate about temperature compensation was in the National Conference on Weights and Measures and that fuel prices are “intensely competitive and localized,” he said. “This intense competition necessarily adjusts prices to take into account the effect of temperature variations on retail [fuel] sales. Shell similarly believes based on economic principles that, if [fuel was] temperature-adjusted at the retail level, the intense competition in the market would adjust prices to take that into account as well.”

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