April 14, 2009 12:03 PM
- Text
"Hot Fuel" Costing Consumers Big Bucks?
(CBS)
Many drivers have been conditioned to know that when summer comes, gas prices seem to head higher with the temperature, thanks to greater seasonal demand.
But what if we told you that you might be paying more, literally because of the temperature?
As CBS News correspondent Susan McGinnis reports, this phenomenon is called "hot fuel" and it's become a burning issue from Main Street to Congress.
Bill Younger has been driving trucks for 56 years. He's been on the road about as long as he's been old enough to drive. Even in his 70's, he still clocks about 600 miles a day.
"I've known about the hot fuel issue for about four or five years," he says.
And this little known issue has this lifelong driver worried about losing his livelihood.
Hot fuel boils down to simple physics: when temperatures rise, gasoline expands. So on hotter days, you're getting less usable fuel from a gallon of gas.
But gas is bought by retailers based on a standard temperature of 60 degrees. When it's hotter than that, the argument goes that drivers end up paying the difference.
On a 90-plus degree day, McGinnis decided to take a measurement of the gasoline's temperature – the thermometer settled at 78.5 degrees, a lot higher than the 60 degree standard.
Consumer groups say the difference could cost drivers three to nine cents a gallon more at the pumps, totaling more than $1.5 billion this summer, $2.3 billion for the year.
That's making it a hot issue from the highways to Capitol Hill, where hearings recently got heated over the issue. And about 20 federal lawsuits have accused retailers and distributors of unfairly profiting from hot fuel.
Bill Younger is one of the plaintiffs. "It should be 60 degrees, that's what the government says it's supposed to be," he says. "You're not getting what your paying for."
An oil industry trade association declined comment, but does say more research is needed. They defer to retailers.
Station owners say the only way to fix the problem is to retro-fit pumps with pricey equipment that adjusts for temperature changes, something they say would cost thousands of dollars per pump.
"The average retail station owner who's going to have to spend a lot of money on expensive pumps is really making only a couple of cents in net profit on gasoline," says oil analyst Tom Kloza.
Kloza says that would punish the wrong culprit. "At the end of the day, we're talking about a thimbles' worth of gasoline sometimes when people are fueling up in hot temperatures. And I don't think at the end of the day that makes a difference in getting us out of this energy mess that we're in," he says.
Try telling that to Bill Younger. He fills up two to three times a day and believes everybody loses as a result.
"This isn't just for me. This is for the whole trucking industry. The cost of groceries goes up. Anybody who gets anything from a truck, which is everybody. I mean, if you got it, you eat it, you wear it, whatever. It was brought to you by a truck. So somebody's paying for it. And 'who' ultimately is the consumer," Younger says.
But what if we told you that you might be paying more, literally because of the temperature?
As CBS News correspondent Susan McGinnis reports, this phenomenon is called "hot fuel" and it's become a burning issue from Main Street to Congress.
Bill Younger has been driving trucks for 56 years. He's been on the road about as long as he's been old enough to drive. Even in his 70's, he still clocks about 600 miles a day.
"I've known about the hot fuel issue for about four or five years," he says.
And this little known issue has this lifelong driver worried about losing his livelihood.
Hot fuel boils down to simple physics: when temperatures rise, gasoline expands. So on hotter days, you're getting less usable fuel from a gallon of gas.
But gas is bought by retailers based on a standard temperature of 60 degrees. When it's hotter than that, the argument goes that drivers end up paying the difference.
On a 90-plus degree day, McGinnis decided to take a measurement of the gasoline's temperature – the thermometer settled at 78.5 degrees, a lot higher than the 60 degree standard.
Consumer groups say the difference could cost drivers three to nine cents a gallon more at the pumps, totaling more than $1.5 billion this summer, $2.3 billion for the year.
That's making it a hot issue from the highways to Capitol Hill, where hearings recently got heated over the issue. And about 20 federal lawsuits have accused retailers and distributors of unfairly profiting from hot fuel.
Bill Younger is one of the plaintiffs. "It should be 60 degrees, that's what the government says it's supposed to be," he says. "You're not getting what your paying for."
An oil industry trade association declined comment, but does say more research is needed. They defer to retailers.
Station owners say the only way to fix the problem is to retro-fit pumps with pricey equipment that adjusts for temperature changes, something they say would cost thousands of dollars per pump.
"The average retail station owner who's going to have to spend a lot of money on expensive pumps is really making only a couple of cents in net profit on gasoline," says oil analyst Tom Kloza.
Kloza says that would punish the wrong culprit. "At the end of the day, we're talking about a thimbles' worth of gasoline sometimes when people are fueling up in hot temperatures. And I don't think at the end of the day that makes a difference in getting us out of this energy mess that we're in," he says.
Try telling that to Bill Younger. He fills up two to three times a day and believes everybody loses as a result.
"This isn't just for me. This is for the whole trucking industry. The cost of groceries goes up. Anybody who gets anything from a truck, which is everybody. I mean, if you got it, you eat it, you wear it, whatever. It was brought to you by a truck. So somebody's paying for it. And 'who' ultimately is the consumer," Younger says.
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