Nick Snow
Washington Correspondent
WASHINGTON, DC, Sept. 7 -- US Federal Trade Commission Chairwoman Deborah Platt Majoras has questioned proposed cures for so-called "hot fuels" distortions alleged by some House Democrats, saying the proposed "solution" may be worse than the problem, said Rep. Darrell E. Issa (R-Calif.) in releasing a letter from Majoras.
Issa, ranking minority member of the House Oversight and Government Reform Committee's Domestic Policy Committee, asked Majoras for the FTC's view after subcommittee chairman Dennis J. Kucinich (D-Ohio) held a second hearing this summer to determine whether new federal regulations are needed to measure gasoline volumes more accurately.
"In considering whether to enact legislation concerning this issue, Congress may wish to gather facts and weigh carefully the benefits and costs that may result from such legislation," Majoras said in her letter. "Although the FTC has not conducted an investigation of this matter, it appears that the sale of 'hot fuel' might not cost consumers extra money, while the solution under consideration may raise consumer prices."
Issa, who has criticized Kucinich's allegations that major oil companies cheat motorists out of billions of dollars during summer months when gasoline expands, said Majoras's letter shows that Democrats have wasted time with contrived problems. "Using suspect accusations to stir up anger over high energy costs may be shrewd politics, but it is not good government oversight," he maintained.
Majoras said examining the two basic approaches addressing the "hot fuels" issue puts the costs and benefits in sharper perspective.
Retrofitting costs
The first approach, she said, involves requiring installation of devices designed to automatically adjust the fuel's temperature when it is dispensed. "FTC staff understands that the cost of retrofitting pumps with such devices is considerable and probably would ultimately fall on consumers in the form of higher gasoline prices," Majoras said.
She said the other approach, which involves changing the definition of a "gallon" to reflect local fuel conditions, presupposes that markets' competitive dynamics do not take "hot fuel" conditions into consideration already.
"If legislation required more gasoline to be dispensed on hot days to compensate for the increased temperature of the fuel, this would add to retailers' costs and likely increase retail prices. If that occurred, the added compliance burden on gasoline retailers would raise consumer prices at the pump without providing consumers with a corresponding benefit," Majoras wrote Issa.
She said state weights and measurements officials informed the FTC staff that a 20° F. temperature variation affects the volume of a typical 20-gal tank of gasoline by about 6 tablespoons.
"FTC staff also understands that, in connection with the calibration of gasoline pumps, it is not uncommon for states to include tolerances of plus or minus 6 tablespoons for every 5 gal of gasoline pumped," Majoras said.
"While pursuing 'hot fuels,' Democrats have fudged numbers, talked themselves silly about a nonissue and concocted a fix that would actually cost consumers money," Issa declared. "The FTC has reaffirmed that convenience stores that sell gas, like most small businesses, don't need this burdensome government regulation that will ultimately cost consumers money."
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