BILL FILED | ‘Fair shot’ sought for consumers

Texas targets overcharges on ‘hot fuel'

The step echoes a state effort in 1981 to ensure that wholesale gas was temperature-adjusted.

Texas consumers by 2008 would be able to purchase motor fuel adjusted for temperature if legislation filed this week in the state’s House is enacted.

The bill filed by Burt Solomons, a Republican representing a district that includes Plano, Frisco and a small section of Dallas, would require a gallon of gasoline or diesel to have its volume adjusted for temperature.

Solomons said it would help ensure that consumers get a "fair shot."

"This is something not to sweep under the rug," he said. "My hope is we’ll be able to pass something and be on the way to getting consumers what they think they are paying for."

Solomons was alerted to the issue by a constituent who had read reports in The Kansas City Star on the topic, dubbed "hot fuel," which were published beginning in August.

The newspaper reported that fuel was often sold at temperatures much hotter than the industry standard of 60 degrees -- a standard agreed to nearly a century ago by the industry and regulators, but virtually unknown to the average consumer.

As a liquid, gasoline expands and contracts depending on temperature. At 60 degrees, the 231-cubic-inch U.S. gallon puts out a certain amount of energy. But fuel is often sold at much hotter temperatures, causing the gas to expand and the amount of energy, by volume, to decrease. Yet consumers still get only 231 cubic inches per gallon.

The Star reported that consumers were being overcharged an estimated $2.3 billion annually at then-current prices for gasoline and diesel because of the hot fuel phenomenon. Even with the recent drop in gas prices, hot fuel still amounts to about $1.7 billion a year at today’s prices.

Texas is among the hardest-hit states. Its average annual fuel temperature, according to a study by the National Institute of Standards and Technology, is 78 degrees. That suggests that Texas consumers, at current prices, are being overcharged an estimated $300 million per year, including $29 million in state fuel taxes.

Texas, one of the nation’s biggest fuel-consuming states, is the first to see legislative action to deal with the retail hot fuel issue since The Star published its findings. In August, California’s attorney general launched an investigation, still ongoing, into the sale of hot fuel to consumers.

The Texas solution proposed by Solomons is to specify the size of a gallon of fuel in each of 10 sections of Texas. Those sections were originally established to estimate electrical usage, which also is affected by climate differences.

Under Solomons’ proposed legislation, consumers purchasing fuel in a district with fuel temperatures above 60 degrees would get a larger gallon than the current 231 cubic inches. That approach, if approved, would be similar to what Hawaii did in the 1970s when it decided that a gallon of fuel in that state should be 234 cubic inches because of its prevailing warm weather.

Solomons did not rule out the possibility that Texas consumers might eventually purchase fuel from retail pumps equipped to automatically adjust the volume based on the fuel’s temperature.

That approach could be phased in to ease the cost, Solomons said, adding that he expected his bill to trigger discussions on how to best accomplish giving consumers a temperature-adjusted gallon of fuel.

"I do think we need to do something about it," Solomons said.

Solomons has a successful track record of pushing consumer-friendly legislation. Among other things, he sponsored "no-call" legislation in 2001 that now restricts calls by telephone marketers.

The hot fuel proposal, however, will likely encounter opposition from the oil industry.

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