The Oil Drum: Hot Gas is a Bunch of Hot Air

News headlines about the so-called “hot gas” issue have been appearing occasionally in the Drumbeats, so I thought it was time to shine some light on the subject. The Owner Operator Independent Drivers Association (OIDA) recently launched a new website to “educate” people on this issue. And by educate, I mean obfuscate, mislead, and misinform people. Consider for a moment their headline story:

Hot Fuel Costs Consumers More Than 2.3 Billion Dollars Annually

Let’s see, Americans consume 140 billion gallons of gasoline and over 60 billion gallons of diesel each year. That means that even if their headline above was correct, the “rip-off” amounts to just over 1 cent a gallon. And given that pricing is set by supply and demand, what will happen with temperature compensation is that the average gasoline price will go up by just over 1 cent a gallon, plus a bit more as every retailer tries to recoup the cost of temperature compensation equipment. Who wins? The makers of the temperature compensation equipment, and the lawyers. Even in the best case, the average consumer who uses about 600 gallons of fuel a year would win $6 a year if you could suspend the laws of supply and demand.

The Oil Drum