Thursday, June 21, 2007

Hot Gas or Hot Air?

My column from this week's Potomac News, about the "problem" of gas station pumps not adjusting for gas expansion in the summer heat.

Hot Gas or Hot Air excerpts:
Every year around this time we are treated to a spate of news stories about consumers being ripped off by gas stations selling hot gas. No, not stolen gasoline, but rather gasoline warmed by summer temperatures. But this "rip-off" is more hot air than truth, while there is a bigger scam that goes unreported.
In case you didn't know, Gasoline does expand as it warms up, so one gallon of warm gasoline has a little less energy than one gallon of cold gasoline. The change is very small, as the expansion value for Gasoline is 0.000950/degree celsius. As I explain in the column:
First of all, the temperature effect is actually very small. If gas costs 3 dollars/gallon, a 30 degree temperature change would cost about 4.5 cents per gallon. That's less than the difference in local station prices, and much less than the difference in price from state to state.
That's if the gas really gets hotter. As I also point out:
Second, gasoline is not usually stored above ground, but rather in underground tanks, where the temperature is cool and fairly constant, changing only a few degrees between winter and summer. Once the gasoline sits underground overnight, the summer temperatures don't really matter.
Different gas can also have different energy levels:
Take "premium gas" for example. "Octane" is not a measure of energy, and there is no relationship between the octane rating of gasoline and how much energy it has. However, many manufacturers make high-octane gasoline differently, so it does have more energy. Then they charge extra, so you pay more for the energy anyway. Other manufacturers use methods for raising octane levels that lower the amount of energy in a gallon of gas.
This article was based on an AP story which appeared in the Potomac News, titled "Higher temperatures mean lower gasoline potency", which I found online from HERE:
Consumer watchdog groups warn that higher temperatures can cost consumers between 3 and 9 cents a gallon. That could total more than $1.5 billion in the summertime, including $228 million to drivers in California alone, according to the House subcommittee on domestic policy, which recently addressed the concerns in hearings. The subcommittee's new chair, Rep. Dennis Kucinich, D-Ohio, has long been active on the issue.
So I noted that while the true effect of summer heat on gasoline volume is minimal there are other things that really change the energy in our gasoline:
Each winter many locations (like Prince William County) require "gasohol", which is gasoline with ethanol added. But ethanol has a much lower energy value than gasoline (only about 2/3rds as much energy). So gasohol sold in the winter costs the consumer about 10 cents per gallon extra in energy, or more than twice the cost of a 30-degree temperature rise. We actually save over 5 cents a gallon even with hotter gas over the winter gas with ethanol.
But this misses the real point -- there isn't some "set price" for the energy in gasoline, such that if the gas station can heat up the gas, they can make money on the deal. Each station sets the price of their gasoline to make money, and to compete with every other station:
One last thing -- the typical gasoline retailer makes about a penny a gallon selling gasoline, regardless of the price. If we adjusted the pumps to provide more real gallons per "gallon" in the summer, the retailers will have to raise their price enough to still make their penny profit. In fact, any real effect of "hot gas" has already been accounted for in the retail price, based on competition with other sellers.

So the politicians will continue to blow hot air about the cost of hot gas, but in the end no matter what they do, it will only serve to drive up the cost of providing gasoline to the consumer, rather than saving us money.
The one thing I'm sure of. If we tax the gas companies MORE, it will mean we will pay more for gas. If we make gas companies install more expensive pumps, we will pay more. And if the new pumps credit fewer gallons pumped (to adjust for heat), the gas stations will simply raise the price-per-gallon on hot days.

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