“Hot Fuel” Legislation Is a Step in the Wrong Direction

Sen. Claire McCaskill is proposing legislation, according to the Washington Missourian, to end the practice of selling "hot fuel" at the same per-unit volume as fuel sold when temperatures are lower. "Hot fuel" is the term used for fuel that has expanded in gasoline storage tanks during high-temperature weather, which means consumers end up buying slightly less gasoline per gallon, as measured in terms of energy output, than they would otherwise:

The Star series said at the standard 60 degrees, a 231-cubic-inch
gallon of fuel delivers a certain amount of energy. At 90 degrees,
however, the same gallon expands to more than 235 cubic inches. Because
consumers are still buying 231-cubic-inch gallons, "hot fuel" forces
them to spend more to obtain the same amount of energy.

According to the editorial, this legislation would help save Missouri motorists $15 million dollars annually, because it would require gas stations to install automatic temperature-compensating equipment in all retail gasoline
station pumps. The updated technology would adjust the price of gasoline as it
expands during warmer temperatures.

As a previous post discussed this same issue, supply and demand efficiently determines the retail price of gasoline in a competitive market — bidding down the price slightly when temperatures have temporarily expanded supplies. In general, motorists don’t think about the energy output that a
gallon of gas gives their cars, because that information isn’t relevant in deciding where to buy gas. Focusing on the price per gallon at one station in comparison to a nearby station helps fuel consumers much more than figuring out price per energy-output-unit at varying temperatures. Websites can also help consumers compare the cost of gas.

These new regulations would produce is higher fuel prices for consumers that would amount to much more than the $15 million dollars that "hot fuel" is ostensibly costing consumers in Missouri now. Rather than trying to find short-term relief through short-sighted legislation, we should encourage market-based technological solutions in our search for a way to reduce consumer energy costs.