Oil companies and retailers that sell "hot fuel" are defrauding consumers and costing them billions of dollars per year, according to two lawsuits.
The lawsuits, filed this week in U.S. district courts in California and New Jersey, allege that fuel sold at volumes that aren't adjusted for temperature changes obscures the "true price" paid by consumers.
As a result, the lawsuits allege that consumers are unable to make informed decisions and are often being shorted on the amount of energy that they should be receiving in a gallon of gasoline or diesel.
"To add insult to injury, consumers that are already paying higher prices are being ripped off twice," said Joan Claybrook, former head of the National Highway Traffic Safety Administration and current president of Public Citizen, a consumer group that is supporting the lawsuit.
The lawsuits, filed late Wednesday and Thursday, are seeking class-action status. The list of defendants includes most of the major oil companies, including ConocoPhillips and Shell Oil Co., and several major retailers, including Flying J Inc. truck stops and 7-Eleven Inc.
Shell Oil said it had not received a copy of the lawsuit and wanted time to study it before making a comment. Other defendants that were contacted did not return messages asking for comment.
The American Petroleum Institute, a trade group that represents the oil industry, said as a matter of policy it did not comment on litigation.
But in recent months the institute has said that any fix addressing the hot-fuel issue would require equipping retail pumps with billions of dollars of gear that would outweigh any benefit. Moreover, much the cost would be shouldered by the independent businesses that own most gas stations.
The Mid-Atlantic Petroleum Distributors' Association in Maryland, in a statement delivered to weights and measures regulators at a recent meeting, reiterated the industry's widely held position that "variations in the measured volume of a gallon of motor fuel are minimal and that converting the infrastructure to adjust for temperature would be cost prohibitive and detrimental to the market."
The lawsuits seek to represent consumers in California, Arizona, Texas, Florida, North Carolina, New Jersey and Virginia, contending that consumer-protection laws in those states meant to stop fraud were broken. Besides seeking an unspecified amount of damages, the lawsuits are asking the courts to require retailers to install temperature-correction equipment on their retail pumps.
George Zelcs, an attorney for Chicago-based Korein Tillery, one of seven firms that jointly filed the lawsuits, said Thursday he expected their impact to go beyond the seven states and start a movement to bring equity to motor-fuel purchases in the United States "so that you will know what you are getting."
The lawsuits come nearly four months after The Kansas City Star began publishing stories on the hot-fuel topic. The newspaper reported that fuel was often sold at temperatures hotter than the industry standard of 60 degrees -- a standard agreed to nearly a century ago by the industry and regulators. Although the issue was virtually unknown to the average consumer, the oil industry has long adjusted fuel volumes to the standard through most of the distribution channel -- except at the retail pump.
Gasoline and diesel expand and contract depending on temperature. At the 60-degree standard, the 231-cubic-inch American gallon puts out a certain amount of energy. But that same amount of gasoline expands to more than 235 cubic inches at 90 degrees -- which is fairly common during summer months -- even though consumers still only get 231 cubic inches at the pump, since no adjustment is made.
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