In summer 2006, the Kansas City Star published a series of articles claiming that consumers are paying $2.3 billion annually for gas they do not receive because retailers do not compensate for temperature at the pump. The Owners-Operators Independent Drivers Association joined with activist group Public Citizen to file lawsuits in several states claiming that the petroleum industry is knowingly engaged in a campaign of fraud to steal from the consumer. These suits, now in excess of 40 naming major oil companies and retail chains as defendants, have been consolidated into one suit.
At issue is whether retailers should install devices that would adjust either the volume or the price of a gallon of gasoline and diesel fuel to compensate for the volumetric change in the product that occurs with fluctuations in fuel temperature. (Gasoline volumes change one percent for every 15 degrees F variation.) The National Conference of Weights and Measures (NCWM) spent several years evaluating the effect such temperature variations may have on measurement standards and consumers to determine if automatic temperature compensation (ATC) devices should be permitted or even mandated on retail fuel dispensers.
It is estimated that converting existing electronic dispensers to compensate for temperature would cost between $2,000 and $4,000 per unit. If permissive ATC were adopted, the market effects could be significant. Currently, the retail motor fuel market is the most transparent in the nation—empowering consumers to shop by price without ever leaving their vehicles. If retailers began selling different volumes of gasoline, this transparent pricing would be compromised—consumers would have difficulty determining the value from location to location.
NACS believes the proposal to compensate gasoline volumes for temperature is unnecessary and will ultimately hurt the consumer. NACS worked with others in the petroleum industry (in particular state associations) to oppose proposals for ATC at retail and commissioned a study to demonstrate that such regulations would be economically detrimental to both retailers and consumers.
In July 2009, the NCWM voted overwhelmingly to withdraw the proposals to either mandate or permit ATC at retail citing “economic cost factors, lack of benefit to consumers” as principle reasons for its decision. In January 2010, NCWM dissolved its steering committee that was commissioned to study the issue and in July 2010 it dismissed the remaining proposals dealing with the issue.
The class action suit continues and is in the process of discovery.