Monday, July 30, 2007

Expanding and contracting arguments

I’m sure you’ve heard about the issue known as “hot fuel,” what with two recent congressional subcommittee hearings and a failed vote at the National Conference on Weights and Measures that could have given states some incentive to correct the problem.

We’ve gotten some interesting comments by phone and e-mail relating to the issue in recent weeks.

One person wrote to me to imply that “everything balances out in the end” when it comes to temperature and fuel. He said consumer losses incurred in the summer due to the expansion of liquid fuel balanced out in the end because the same liquid contracts during winter.

But, as we’re finding out, the “balance” at the national level isn’t as cut-and-dried as that. There is no 50-50 split between what’s hot and what’s cold unless a particular state has an exact average fuel temperature of 60 degrees, and that every consumer in that state buys the exact same amount of fuel when it’s hotter as when it’s colder. Not likely to happen.

The average fuel temperature in the U.S. is a shade over 66 degrees, not the standard of 60 degrees that fuel companies compensate for when trading fuel at wholesale.

It does not balance out in the end, and that’s why consumers involved in lawsuits against the retailers and oil companies feel justified in going after their losses.

If you’d like more information on hot fuel, you can check out OOIDA’s Web site on the topic here.