It’s one thing for consumer advocates to argue endlessly that oil companies are guilty of long-running collusion in setting prices. There’s plenty of evidence they are correct in that contention - the similarity of prices offered by different companies at the same intersections is one indicator. But no one has yet produced a smoking gun to prove such a conspiracy.
Yet, there’s another form of gas pricing deception for which there is plenty of proof, even including defiant admissions from some oil company executives in congressional testimony.
Take a close look at the pump, any pump, next time you pull into a service station to fill up your tank. Chances are there will be a seal of approval of some type from the county bureau of weights and standards attesting that when this pump says it’s giving you one gallon, it really is.
Trouble is, it often isn’t. And the pumps at ExxonMobil stations are the first to actually admit it.
For gasoline expands as temperatures rise. But the fuel is sold as if the temperature outside is always 60 degrees Fahrenheit, the so-called “industry standard.” This means that whenever the thermometer tops 60, motorists are cheated out of a few cents for each gallon they buy. Add this up over hundreds of thousands of cars and billions of gallons and you end up with oil companies cheating customers across the country out of approximately $2.3 billion dollars yearly. That’s about a $500 million loss each year to California drivers, or about $40 per year per registered vehicle, since year-round California weather (average temperature: 74.6 degrees) is 10 degrees above the national average (64.7). In the hottest weather, the discrepancy can amount to as much as 50 cents per gallon, as gallons are measured by the pump, when the price of a gallon tops $3.
If $40 per year per car for nothing but hot air isn’t a ripoff, it’s hard to see what is.
All that’s needed to fix the problem is temperature-adjusted gas pumps. But there’s been no move by either Gov. Arnold Schwarzenegger or the Legislature to make sure Californians get what they pay for.
Rather, Big Oil is getting what it pays for via campaign donations.
For the politicians seem to be agreeing with oil company executives, who testified this summer that they don’t plan to do anything about temperature adjustments. Shell Oil vice president Hugh Cooley, for one, told a congressional committee that Shell “does not believe that the American consumers are harmed in any way.”
That is, unless 40 bucks a year per car for nothing represents no harm.
Plainly, ExxonMobil, the world’s largest oil company, has some concerns about this, perhaps fearing a class action lawsuit with huge punitive damages for knowingly cheating the public.
So ExxonMobil in August became the first oil company to place small, unobtrusive stickers on all its pumps warning that the energy content of a gallon of its fuel will vary by temperature.
But ExxonMobil also has no plans to do anything about this, except print stickers.
“They acknowledge through these stickers that this is a ripoff,” says Jamie Court, president of the California-based Foundation for Consumer and Taxpayer Rights. “It’s like a grocery store posting warnings that a produce scale is broken - but you’ve got to use it anyway.”
Adds Judy Dugan, the foundation’s research director, "(They) owe drivers more than a cheap sticker in tiny print. The companies have funds that they use to help dealers with infrastructure, and which could be used to buy nozzles that adjust fuel volume for higher temperatures.”
But the oil companies are lobbying hard against a new bill by Democratic Sen. Claire McCaskill of Missouri that would require such temperature adjustments nationally.
Meanwhile, oil companies have quietly complied with a year-old Canadian law requiring all gasoline pumps there to be temperature adjusted. Of course, the average temperature in Canada is more than 10 degrees lower than the overall American average and more than 20 degrees lower than California’s.
Plainly, the companies have no problem in Canada, where temperatures don’t boost their profits much. But in America, and especially in California, they are fighting any such regulation.
Which means that even if you’re skeptical about oil companies’ price fixing, there can no longer be any doubt about the fact they are often selling nothing but hot air to California drivers.
Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It,” now available in an updated third printing. His e-mail is email@example.com