Our firm is involved in the “Hot Fuel case” in Kansas where a federal court is allowing discovery to proceed against petroleum marketers, refiners, and oil companies. The case involves claims brought by 46 plaintiffs against defendants in 26 states and territories in the United States. The Kansas court has consolidated various underlying class actions in these States and territories into one action. The 46 named plaintiffs in this multi-district litigation proceeding represent the plaintiffs in all the underlying class actions.
Plaintiffs’ claims arise out of a concerted effort by the oil industry in the U.S. to sell consumers less fuel than the amount of fuel consumers believe they are purchasing. Every time you, as a consumer, fill up your tank, you pay the posted price-per-gallon for each gallon of gasoline or diesel fuel you pump into your vehicle. But, the actual amount of fuel a consumer pumps is less than the amount of fuel for which he or she pays, because fuel is sold to consumers “hot,” at a temperature above industry standard.
The science behind the hot-fuel controversy isn’t in dispute. The U.S. government defines a gallon of gas this way: At 60 degrees, a gallon is 231 cubic inches. When fuel is hotter than 60 degrees, the liquid expands, yielding less energy per gallon. When fuel is colder, it contracts. Gasoline expands or contracts 1% for every 15-degree change in the fuel’s temperature. Diesel volumes change 0.6% per 15-degree change.
The phenomenon – and the economic effects of it – are so well known that U.S. oil companies and distributors track the temperature of the fuel they sell one another and adjust the price to conform to the 60-degree standard. But, when these same oil companies sell fuel to consumers in the U.S., the companies do not adjust the price to account for temperatures over 60 degrees for one simple reason: the average temperature at which fuel is stored in the U.S. exceeds 60 degrees.
When consumers purchase this “hot fuel,” they do not receive an honest gallon. Instead, they receive an expanded gallon with less energy than the standard 60 degree gallon the oil companies sell each other. As a result, the oil companies sell more gallons of fuel each year to consumers than the companies produce and have reaped windfall profits in excess of $3.4 million just this summer. Judy Dugan, director of Consumer Watchdog, formerly, the Foundation for Taxpayer and Consumer Rights, observed:
It’s the equivalent of the grocer taking your meat into the back room to weigh it and putting his thumb on the scale. With gasoline, everybody has their thumb on the scale.
In Canada, where colder weather keeps the average temperature of fuel storage less than 60 degrees, the oil companies have voluntarily installed Automatic Temperature Compensation (ATC) devices on virtually every fuel pump in the country. Canadian consumers would benefit from purchasing non-temperature-adjusted gallons, because colder fuel contains more energy per gallon, giving consumers the advantage at the pump. But in the U.S., these same oil companies refuse to install ATC devices, claiming the devices are cost-prohibitive and would not benefit consumers in the long run – as if to say, “trust us, we’re the oil industry.”
As anyone knows who has watched gasoline prices skyrocket as Big Oil profits keep climbing to record heights – and certainly as anyone knows who has followed the State of Alabama’s stymied efforts to recover money oil companies have cheated out of the State – the oil industry is at the bottom of the list of folks who should be trusted. A number of firms across the country are working together to hold the oil companies accountable for what the companies have cheated out of consumers. Our firm is one of several firms taking a leadership role. Rhon Jones, who heads up our Toxic Torts Section, is handling the Hot Fuel litigation for our firm.
Source: Los Angeles Times
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