WASHINGTON -- Truck drivers and motorists in seven states filed a lawsuit in U.S. District Court in San Francisco on Wednesday against 17 oil companies and gasoline and diesel retailers for overcharging at the pump for fuel heated above the industry standard, said Public Citizen.
This hot fuel provides less energy than a standard gallon and bilks consumers of more than $2 billion nationwide, according to the consumer watchdog group.
Automobile travel and small-truck traffic will be heavy during this holiday season, said Public [image-nocss] Citizen president Joan Claybrook at a press conference. This lawsuit comes at a particularly appropriate time to expose a system that has been quietly picking money from the pockets of citizens throughout the country.
For decades, the group alleged, fuel retailers have been overcharging drivers by selling gasoline or diesel that is warmer than the industry standard of 60 degrees. Like all liquids, the volume of fuel expands and contracts when the temperature changes. Hotter fuel has less energy in each gallon than cooler fuel. Regardless of whether fuel temperature rises due to radiant heat from the sun or the refinery process, the results are the same: consumers pay more for less energy, it said.
Those who buy fuel in bulk, such as theU.S. armed forces, have temperature-adjusted purchase agreements with the oil industry. In fact, fuel is adjusted for temperature all along the distribution line except at the end point, when it is delivered to individual consumers, Public Citizen claimed. With U.S. retail pumps, motorists never know how much energy they will receive from a gallon of motor fuel. By some estimates, said the group, retailers are shortchanging drivers 760 million gallons per year.
The class-action lawsuit charges the petroleum retailers with breach of sales contract and consumer fraud and seeks relief for motor fuel consumers in the states ofCalifornia, Texas, Florida, Arizona, New Jersey, North Carolina and Virginia. It calls for remedies in the form of restitution and the installation of temperature correction equipment for pumps that dispense gasoline and diesel fuel.
The 17 companies charged in the suit are Alon USA Inc., Ambest Inc., Chevron USA Inc., Circle K Corp., Citgo Petroleum Corp., ConocoPhilips LLC, Costco Wholesale Corp. Flying J Inc., Petro Stopping Centers LP, Pilot Travel Centers LLC Inc., 7-Eleven Inc., Shell Oil Products Co. LLC, Tesoro Refining & Marketing Co., The Kroger Co., TravelCenters of America Inc., Valero Marketing & Supply Co. and Wal-Mart Stores Inc.
For Big Oil, hot fuel overcharges add up to huge, ill-gotten windfalls, said Public Citizen. To add insult to injury, the oil industry also benefits from state and federal tax loopholes related to overheated fuel. Gasoline and diesel fuel is measured and taxed at the time it is bought at wholesale. Any additional amount of taxes paid by motorists at the pump buying hot fuel does not go to federal and state governments to repair our highways, roads and bridgesit goes straight into the pockets of the oil companies and retailers.
The group also said that while the petroleum industry opposes temperature compensation in theUnited States, it embraces it in Canada, where it stands to lose money from selling cold fuel that has more energy than the standard gallon. The industry has voluntarily implemented the use of temperature control equipment at retail pumps in Canada and supported legislation there to make the technology mandatory at the point of sale, said the group.
Although the industry claims that the cost of hot fuel amounts to pennies for individual consumers, it really adds up to a $50 tax on every car in the country, said John Siebert, project manager of the Owner-Operator Independent Drivers Association (OOIDA) Foundation, which supports the suit.
Ultimately, Congress needs to protect U.S. consumers against the industry-wide practice of hot fuel overchargesbut in the absence of government protections, the only solution is for consumers to band together and force a remedy through the legal system, said Claybrook.
Although he would not comment on this specific case, John Bisney, spokesperson for the American Petroleum Institute (API), told CSP Daily News that the idea of temperature correction equipment at the retail level is somewhat bizarre. Now, when you buy a gallon of gas, you get a gallon of gas. If this kind of a proposal were put into place, sometimes youd get less, sometimes more. If this is a state-by-state thing, which is normally how weights and measures is handled, then what happens when you drive across the border and its hotter in one state one day? I understand it from a philosophical point of viewtheyre trying to make this a perfect world down to the final molecule. Lifes not like that.
He added, It would cost an awful lot to convert pumps. And it opens all kinds of strange cans of worms, where right now, its fairly transparent. You buy a gallon, you get a gallon. The cost of implementing something like this would probably end up being borne by the consumer. Where is the cost savings in that?
Dan Gilligan, president of the Petroleum Marketers Association of America (PMAA), told CSP Daily News, I am disappointed that Public Citizen did not do more research on this topic before moving forward. There has been substantial misinformation about temperature compensation published by newspapers and others in the past few months. Thankfully, the resolution of these matters rest with knowledgeable weights and measure officials who can see through the hyped-up grandstanding. PMAA attorneys and other industry attorneys will be anxious to read the pleadings in this case. I am of the opinion that Public Citizen probably made their decisions based on flawed newspaper reporting.
Click here to view the text of the suit.
Click here to view the text of Claybrooks statement.
Click here to view the text of the statement of Mark and Becky Rushing.
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