When US Rep. Dennis J. Kucinich (D-Ohio), who chairs the House Oversight and Government Reform Committee’s Domestic Policy Subcommittee, announced that he would hold a hearing on gasoline prices, I was skeptical. The event would follow gasoline price hearings by two other House committees. I thought Kucinich and the subcommittee’s staff couldn’t add anything new.
I was wrong. They could, and they did.
The June 8 hearing’s title-Hot Fuel: Big Oil’s Double Standard for Measuring Gasoline-came from a staff report which predicted that US consumers will pay a premium of approximately $1.5 billion on gasoline this summer.
Warmer temperatures make gasoline expand by volume but not by weight. Since the 1920s, the oil industry has considered this and used a 60º F. standard to measure wholesale gasoline transactions.
“But the oil industry does not adjust for temperature in retail sales to customers. As a result, consumers pay a premium when temperatures exceed 60º, as they do during the summer,” the report said. Assuming that thermal expansion will amount to 513.8 million gal this summer, the report arrived at the $1.5 billion estimate.
Used in Canada
“Existing technology can adjust for thermal expansion at the retail level with a technology known as automatic temperature compensation, or ATC. It’s already being used in Canada, but not in the United States, where summer temperatures are higher,” Kucinich said.
He said the National Conference on Weights and Measures will consider, at its annual meeting in July, a resolution to encourage gasoline retailers to install ATC devices. The conference’s chairman, Mike Cleary of the California Department of Food and Agriculture, testified that a model law for states to consider will be discussed.
Cleary said he has not taken a position on the issue but has established a steering committee to study technical questions raised by gasoline’s thermal expansion at the retail level “as I believe this work will need to be done regardless of the vote in July.”
Industry responses
Oil industry groups questioned whether this is necessary. “There’s already a vast organizational structure nationally and in each state to assure every consumer gets a fair measurement of any product,” said Prentiss Searles, a downstream marketing associate at the American Petroleum Institute, during a June 11 teleconference.
At the hearing, R. Timothy Columbus, general counsel for the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America, said retrofits would cost each retailer an average $8,000.
“This dispute has virtually nothing to do with the integrated oil companies. These companies own, much less than operate, less than 10% of the retail outlets in this country. This is all about independent retailers,” Columbus said.
US Rep. Darrell E. Issa (R-Calif.), the subcommittee’s chief minority member, was much more critical. He called the proceedings “political theater” and a “farce of a hearing.”