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Costco Wholesale reportedly has settled a lawsuit over the sale of “hot gasoline” – fuel that expands when it goes over 60 degrees, but that is not accounted for inside fuel pumps.

According to Consumer Watchdog, “For every 15-degree rise in temperature, 1% of the fuel is lost to expansion … A 2% expansion of gasoline at 90 degrees, at even $3.00 a gallon, is a $1.20 loss on a 20-gallon fill-up. At $4 a gallon, the loss is $1.60. The loss to all drivers nationally adds up to $3 billion or more.”

The settlement would have Costco installing special pumps with sensors that will compensate for any increased temperature at all affected locations where it is legal within five years. The states where Costco is impacted include Arizona, California, Florida, Georgia, Kentucky, Nevada, New Mexico, North Carolina, Tennessee, Texas, Utah and Virginia.

The Kansas City Star notes, by the way, that “the American Petroleum Institute and the Petroleum Marketers Association of America have strongly opposed attempts to require temperature-adjusted pumps at U.S. filling stations.”

KC's View:
I was curious about this story, because it concerns a phenomenon that, to be honest, I never had heard about. So I went over to the website of the National Association of Convenience Stores (NACS) to see what they had to say about it, since it is an organization with a stake in how this issue is decided.

Now, my science skills would be described as rusty if I’d ever had any science skills to begin with…but since I never did, consider that a caveat as I work my way through the explanation.

If I understand the industry position correctly, it is that 1) the science actually isn’t be disputed, but the impact is; 2) retail prices already reflect the expansion differential; 3) there is no “conspiracy” on the part of the petroleum industry to defraud consumers; and 4) if sensors were installed at the nation’s gas pumps, it would actually cost consumers more money because those costs would have to be factored into retail prices.

The official industry position also suggests that Costco is reaping a public relations bonanza by agreeing to a settlement that it may not actually to act on, since it will not have to install new heat-sensing pumps in any states that have not made them legal.

My considered opinion, having read all this stuff, is that I have no idea who is right and who is wrong. I’m confused and I expect that shoppers are confused as well. From a consumer perspective, I suspect that the Costco decision plays best…and I’m just not confident enough with the industry position to say that it’ll overcome the clear advantage that Costco has at this point.