Hot Fuel is an issue that was initiated by Owner Operator Independent Drivers Association Foundation, Inc. There was little done or said about the issue until the local newspaper the, Kansas City Star. ran a series of articles concerning the hot fuel problems. The Project Director for the Foundation provided facts and information to the reporter and it gained national attention. OOIDA provided 85% of the named plaintiffs in a class action law suit that have been filed in over half the states of the country. Comments were presented to a congressional subcommittee in Washington D.C. concerning the economic effects of Hot Fuel.
The Owner-Operator Independent Drivers Association is the nations’ largest trade association representing small fleets and truck drivers. OOIDA represents the interests of 158,000 active members from a total population of 350,000 owner-operators.
Many of our members were reporting a wide range of miles per gallon from one fill-up to the next and that prompted the OOIDA Foundation to perform a nationwide survey of diesel fuel quality, and the only significant variable we could identify was the temperature of the fuel. We had temperatures reported as high as 114 degrees.
Here are some facts:
- Fuel when heated expands
- The expansion reduces the amount of energy that can be used as power
- A gallon of diesel fuel is suppose to contain 130,500 BTUs, but doesn’t when heated
- Petroleum distributors buy the fuel temperature compensated at 60 degrees
- Retailers pay for fuel from the rack that is temperature compensated
If the fuel is heated or is hot the 8,000 gallons bought at the rack may expand to 8,240 gallons that the retailer can sell but at reduced energy.
Simply put, the American consumers are not getting what they are paying for and states are not getting their fair share of taxes on the fuel sold. (I don’t know if federal tax is paid by retailers at the rack; if so, I would bring in the amount lost to the Feds in a time of funding problems).
At a time when states are selling off their roads to foreign investors to maintain their roadways and bills are being introduced to regulate price gouging it is unconscionable that this is allowed to happen. The States of California, Missouri and (Any others) are already looking at the millions of dollars of tax revenue that is being lost.
How it affects our members:
- Our members purchased 4.1 billion gallons of fuel in 2006.
- At $2.65 per gallon that equals $11 billion per year.
- At a time when fuel prices jump every time there is a hiccup in the Gulf or anywhere else in the world this can mean staying solvent or declaring bankruptcy.
- For the American consumer in the southern states this can equal $30-50 per car a year and to the trucker it can mean $500-700 dollars per truck per year.
What can be done:
- Temperature compensated pumps, or retrofitted pumps, can be installed that regulate the temperature of fuel being dispensed.
- There already precedents for this
- Hawaii adopted temperature compensation in 1975
- Puerto Rico mandates temperature compensation of all retail pumps
- Canada, where fuel was cooler, retailers were very supportive of temperature compensation for pumps.
Why it hasn’t been addressed before:
- Last year it is estimated that retailers made an additional $2.3 billion dollars off of Hot Fuel sales.
- There is no active enforcement of temperature compensation regulations.
- Petroleum producers and retailers use the petroleum gallon that is temperature compensated and sell it as the U.S. Standard Gallon.
The American Petroleum Institute has stated that mandating temperature compensated or retrofitted pumps for fuel stations would put mom and pop operations out of business.
- Approximately 25% of fuel stations are owned and operated by large oil producers.
- The other 75% is often in a franchise ownership that is dependent on large oils agreements.
- If mom and pop have owned the station for any length of time they have been ripping off the American consumer for years and should have enough money to retrofit and/or buy temperature compensated pumps.
- The API admits that HOT FUEL provides less energy but will tell you it all balances out when buying cool fuel in the winter. I direct you to the charts and graphs in my written hand-out to show that this is not the case.
If you wish to calculate how much hot fuel is costing you, return to the home page and under Trucking Tools you will find a hot fuel calculator.