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Archive for Tuesday, June 19, 2007

Hot fuel’ drives up motorist spending

June 19, 2007

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— It's not just increased demand that sends summertime gasoline prices soaring. It's also the increased temperature.

As the temperature rises, liquid gasoline expands and the amount of energy in each gallon drops. Because gas is priced at a 60-degree standard and gas pumps don't adjust for any temperature changes, motorists often get less bang for their buck in warmer weather.

Consumer watchdog groups warn that the temperature increase could end up costing consumers between 3 and 9 cents a gallon at the pump.

The effect could cost U.S. drivers more than $1.5 billion in the summertime, including $228 million to drivers in California alone, according to the House Subcommittee on Domestic Policy, which recently addressed it in hearings. The committee's chair, Rep. Dennis Kucinich, D-Ohio, has long been an advocate on the issue and has new clout as a member of the congressional majority.

Gas retailers say forcing stations to adjust their pumps would be too costly, and they asked Kucinich to call off the hearings and wait for more studies.

The issue has driven trial lawyers to fire off as many as 20 federal lawsuits accusing retailers of using simple physics to take advantage of consumers. Challenges have been filed in California, Kansas, Missouri and New Jersey, among other states and some are seeking class-action status.

The latest lawsuit, filed last week in federal district court in Georgia, claims that distributors have been "unjustly enriched" by tens of millions of dollars. They did so by paying taxes on the fuel based on the colder industry standard but pocketing the taxes collected from customers when the temperature soars, it alleged.

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