Sunday, June 29, 2008

Is the Gas Hose Hosing Us?

As promised yesterday, Part Two of Gas Wars. As I mentioned, my personal interest in gas prices is negligible, I barely use the witches' brew of variously compounded formulations, my 32 year old pickup runs on propane. I was really surprised to find "hot fuel" was an issue at all, but a quick Google shows over 4 million entries.

The issue has to do with basic physics, ie, gasoline expands as it heats up, diesel less so, about 60% that of gasoline. The national standard volumetric gallon is 231 cubic inches, that being the volume of a 60 degree gallon. Hawaii is excepted, they recalibrated to 80 degrees during the old OPEC embargo days. The result in plain terms is, if you buy gas that is 90 degrees, you will get fewer BTUs and fewer miles out of that expanded gallon. Other hand, if you buy gas at 10 degrees, you get a bargain.

As I said, the issue surprised me, propane in Texas has been sold retail by temperature compensated meters for over twenty years, required by law. Gasoline and diesel are traded at the wholesale level all the way to the retailer in temperature compensated gallons. The retail marketer is required by EPA to "take the temperature" of its storage tanks daily to better detect leaks, so they cannot plead ignorance. Just for fun, next time you fill up, ask the clerk what the tank temp is today. If they claim they don't know, whisper "EPA", you will get someone's attention.

An aside here; there is an urban myth going around that one should buy in the AM when the gas is cool. Bunk! A double walled underground tank is a fairly efficient thermos bottle. Given the turnover in a 35,000 gallon tank, you will buy gas at about the temperature the truck delivering it registered.

The National Institute of Standards and Technology testified before Congress that this was not a pressing issue, as the national average temperature of retail gasoline was about 64 degrees. True enough, but that is national. I don't give a rat's what the annual mean temp is in Green Bay, me and thee care about Texas. Some states are about a wash year round, some consumers benefit (Minnesota makes it illegal for retailers to sell "honest", or temp compensated gallons) but southwest states' consumers are getting hosed. LA Times, May 23rd estimated a real cost of 8 cents per gallon. Arizona customers get the biggest hit per capita, but Texas is second only to Cal. in overall consumer cost, about $350 million per year at $3.50 a gallon.

To save the reader a lot of the debate, I cut to the chase on the lobbying. In America, we have the oil jobbers lobby, PUMP. They not only don't want temp compensators mandated, they want them made illegal! They don't want some enterprising retailer selling honest gallons and advertising that advantage. Now, move to Canada. The same people who make up PUMP in America pushed Canada to require temperature compensated meters, our Molson sipping cousins to the north were doing to the gas companies there what they do to us here. The term "raped with our pants on" comes to mind.

The industry will shed large and salty crocodile tears over the cost of retro-fitting pumps and tell you the annual savings would be cancelled out by a $5,000 per unit cost that would be passed to the consumer. Now Gilbarco/ Veeder Root (the company which did the propane units I'm familiar with) claims they can install at about $2,000 per, but let's not quibble. Even PUMP estimates it would cost so much to refit pumps in costs passed to consumers it would be an even wash over the course of a year. Assuming so, what about year two, year three, etc.?

PUMP will tell you further that temperature compensation would require a virtual army of inspectors to check the devices. Bunkum, bogus and horse-apples! Anyone selling any fuel has their pumps "proved" at least annually. I can tell you from experience, if our propane meter prover forgot to call us, we called them since wear goes both ways. Often as not, we would find our meter giving away as much as a half gallon per hundred, it was in our interest to have annual inspections.

This is not exactly a local issue in that the city doesn't have the authority to mandate one way or the other. I make this exception in that it is a local pocketbook issue. Last Texas Legislature had two bills on this introduced, both died in committee. Our local Representative Drew Darby has been out of state, I could not ask him, but in fairness, it is unlikely he ever got the chance to vote yea or nay last session, as the bills never hit the floor. I can say his aide was as surprised as I was, this might be an issue we want to encourage Rep. Darby to get behind.

Going back to yesterday's drive-off theft article, I might be more sympathetic to local retailer losses by theft if they did not benefit from institutionalized volumetric theft from their customers. One local option that does come to mind involves that old-fashioned free market. Long before wholesalers had temp compensated pumps available, they sold "net", or compensated gallons by adjusting gross gallons to that day's temp, up or down. If local fleet and gov't buyers insisted on net gallons per the daily EPA temp report, retailers might see an advantage to the cost of tempertature compensators for the rest of us.

No comments:

Post a Comment