Automatic Temperature Compensation

January 26, 2008

ATA letter to NCWM

The American Trucking Association (ATA) has told the National Conference on Weights and Measures (NCWM) that they are opposed to a national Automatic Temperature Compensation (ATC) retail mandate. ATA believes that due to the competitive nature of the retail motor fuel industry, inventory shrinkage or expansion is accounted for in the retail pricing of diesel, and “any impact of temperature variances is eliminated through competitive pricing.” ATA also voiced concern that the cost of the installation of temperature compensation devices would increase the retailer’s cost of goods and ultimately be passed on to the consumer. “For this reason, ATA is concerned that the installation of ATC devices is a solution that may be more expensive than the problem it is trying to address”.

As some may know, the energy content of gasoline fluctuates with the temperature. One gallon of gasoline is measured as 235 cubic inches at 60 degrees (238 cubic inches in Hawaii).  As the temperature rises and falls above or below 60 degrees, your vehicle gains or loses miles per gallon.  On average the amount of energy lost in winter is equivalent to a teaspoon.

ATC has caught the attention of the NCWM after several congressional hearings. Rep. Dennis Kucinich (D-OH) called several hearings and tried to drag the leaders of Exxon and Shell to testify on the matter.  Congress was alerted to the issue by several articles in the Kansas City Star after truck drivers noticed they got fewer miles per gallon after filling up at a particular truckstop out west.

If the NCWM approves mandated or permissive ATC, we will also see the cost of gasoline rise.


Initial Agreement Reached on National Economic Stimulus Package

January 24, 2008

With the Nation teetering on the verge of a recession, Congress and the President believe they must pass an economic stimulus package. Last night a tentative agreement was reached on a $145 billion economic stimulus package that would quickly send payments to the poor and middle class while offering businesses faster tax write-offs for corporate investment and immediate tax deductions for small-business investments in plants and equipment. Businesses also would be able to take tax deductions this year on operating losses from as long as five years ago.Every Member of Congress via the urging of interest groups will be lining up to add riders to the package. Of note for marketers, it is possible that an extension of the renewable energy tax credits will be in the package.* That would mean an extension of the biodiesel and ethanol tax credits, which are set to expire at the end of this year. The Senate Finance Committee still plans to put together provisions to be attached to the final bill.

Also, Senator Snowe (R-Maine) is fighting for full funding of the Low Income Home Energy Assistance Program (LIHEAP) at $5.1 billion and House Speaker Pelosi (D-Calif.) has set aside proposed funding increases for low-income heating assistance. PMAA has strongly urged Congress to fully fund the critical LIHEAP program.The process for passage of the package is for the House to take up the measure first, and for both chambers to pass the bill before President’s Day (February 18). It is likely that the regular committee process will be bypassed in order to move the package quickly.  *Senate Finance Chairman Max Baucus has signaled he does not support renewing the tax credits.

*Senate Finance Chairman Max Baucus has signaled he does not support renewing the tax credits.

The Petroleum Industry and You

January 22, 2008

When the news doesn’t talk about the presidential election, it talks about the price of gasoline.  I think it is important to understand how gasoline gets to $3/gallon and what that means for you.

The largest misconception of the petroleum industry is that it is dominated by Big Oil. But ExxonMobil, Shell, Texaco, etc. operate less than 5 percent of retail gasoline stations. They realized it is more profitable to sell or lease those assets to the people who live in your neighborhood. My organziation operates a program called Neighbors Serving Neighbors to remind and educate the community that they are buying gasoline from people in the neighborhood and not Big Oil.  The employees are not employed by the brand. 

There are several pressures on retailers that can drive the price up.  When you purchase a gallon of gasoline with a credit card, the credit card company makes 2% on the transaction, that is 6 cents/gallon at $3 gasoline, almost more than double what the convenience store owner makes on a per gallon basis.  

The federal government has not made it easier to sell gasoline either. From regional blends to confusing compliance requirements, various federal agencies and departments contribute to raising the cost of business.  For example the EPA requires special equipment at the pump to prevent ground-level ozone. 

To learn more about what contributes to rising gasoline prices and what that means for you, I am scheduled to speak to the Wednesday Republican Breakfast Club, Jan. 30 at 7:30am at the Eastport Yacht Club.