Most Arizona motorists are unaware that the temperature of 3,603,450,000 gallons of motor fuel pumped into their vehicles during 2006 had a measurable effect on energy content of the fuel they purchased.  Because this fact is well understood within the petroleum industry, bulk deliveries of petroleum products are volume corrected to 60º F.   Clearly, most motor fuel purchases in the major population centers of Arizona (Phoenix, Tucson, Yuma) occur at temperatures markedly above 60º F.

     Arizona Revised Statutes, Title 41, Chapter 15, Section 41-2082, requires that sales of motor fuel in a quantity of 5000 gallons or more must be temperature compensated (see 41-2082) ; however, this provision is essentially meaningless for retail sales of motor fuel (i.e. gasoline and diesel fuel) in Arizona.  Amendment of Arizona Revised Statutes requiring that retail sales of motor fuel must also be temperature compensated would provide the Arizona Department of Weights and Measures with authority to ensure, by law, that all Arizona motorists could purchase motor fuel based on energy content.

     Most gasoline sold to Canadian motorists is volume corrected to 15º C at the dispenser (HOW GASOLINE IS SOLD IN CANADA) and, by state law, gasoline dispensers in Hawaii are calibrated to 80º F. ( HOW GASOLINE IS SOLD IN HAWAII).   Gasoline dispensers, if appropriately programmed, could deliver to Arizona motorists gasoline purchases of standardized energy content throughout the year.

     All motorists are well aware that active price competition exists among the various service stations within a given area of the state.  However, for at least the past 70 years, competition has been nonexistent when it comes to the 9/10 cent per gallon portion of the gasoline or diesel price, although fractional cents other than 9/10 are, and for many years have been, as easily programmable into the dispenser computer as changes in whole cents.  The 9/10 cent pricing concept, accepted without question by Arizona motorists, creates a false sense of accuracy when applied to any gasoline or diesel purchase made at current prices.  Also, 9/10 cent pricing of gasoline and diesel requires that almost all purchases be rounded to the nearest whole cent.  Because traditional mathematical rules for rounding are not applied to certain gasoline and diesel purchases, a 15 to 10 bias exists toward rounding up (SOME NUMBERS TO THINK ABOUT.)  Certainly, in the 21st century, the time has come to abandon the deceptive, anachronistic and collusive practice of 9/10 cent pricing of a gallon of gasoline or diesel fuel.

     Support by the Arizona Department of Weights and Measures for a more consistent approach to measuring the accuracy of motor fuel sales within the State together with action by the State legislature regarding these two aspects of gasoline and diesel pricing, would result in a more appropriate application of available technology to the purchase of motor fuel by Arizona motorists.

     The ideas expressed here have absolutely nothing to do with the cost of gasoline or diesel fuel sold in Arizona. (see THINK GLOBAL).

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     Anyone over 70 years of age might recall when a trip to the service station involved the hand pumping of gasoline by the attendant into a glass cylinder mounted high on the pump to facilitate gravity flow of the requested volume of gasoline into the fuel tank once it was released.   Each gallon of gasoline delivered via this method cost about a dime.
 

     The gasoline dispenser in use today is a very sophisticated application of computerized technology.  It may permit purchase via credit or debit card, it may accept cash, it can provide for delivery of three grades of gasoline, it prevents vapor loss and overfill, it rounds the total cost of the purchase up to the next whole cent for multiples between one and five gallons (i.e. 1, 11, 21, ... gallons) and rounds cost down to the next whole cent for multiples between six and nine gallons (i.e. 6, 16, 26, ... gallons), it registers any volume of gasoline delivered to the nearest 0.001 gallon (approximately ¾ of a teaspoonful), it may provide a touch screen, bar code reader, even provide Internet access and, in Canada, using automatic temperature compensation (ATC), it will correct the volume of gasoline dispensed to 15º C (HOW GASOLINE IS SOLD IN CANADA.) or, in Hawaii, it will correct the volume dispensed to 80º F (HOW GASOLINE IS SOLD IN HAWAII.)   For examples of the latest technology applied to gasoline dispensers go to: Tokheim , Gilbarco and Wayne.

     Exactly when and where the tenth cent pricing practice was first used to set the cost of a gallon of gasoline has been difficult to determine.   Requests for information on this subject addressed to the major oil companies and to the many petroleum marketing associations, with one exception, were not helpful.  A response from the Customer Relations Department of Mobil Oil Corporation suggested that tenth cent pricing probably started no earlier than the late 1920s and early 1930s.

     An Iowa law, effective June of 1985 (Omaha World-Herald, 1985), mandated whole-cent prices for gasoline sold in that state, thus eliminating the long-standing practice of adding 9/10 cent to the price of a gallon of gasoline.  The new law was well received by Iowa motorists; however, four years later in May of 1989 (Omaha World-Herald, 1989) through some legislative sleight of hand, an amendment reinstating the 9/10 cent gasoline pricing practice was attached to a bill making wording changes in state law.  The amendment was not debated in the Senate before attachment to the code-change bill and neither the Iowa Attorney General's office nor the Iowa Department of Weights & Measures was involved in the law change.  One lawmaker said that the change had been 'sneaked' through the Legislature and that he would work to repeal it;  however, whole-cent pricing of gasoline was never again enacted into law in the state of Iowa.

      The addition of 9/10 cent to the price of a gallon of gasoline makes impossible the purchase of one gallon of gasoline at the advertised price.

     Let's take a look at what actually happens each time you make a gasoline purchase.  You are encouraged to observe carefully the information about your next purchase provided on the gasoline dispenser display.

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     The National Institute of Standards & Technology (NIST) Office of Weights and Measures (OWM) is a non regulatory federal agency that works in cooperation with the states and private sector to develop uniform weights and measures laws and regulations.  NIST sponsors the National Conference on Weights and Measures (NCWM) an organization that meets annually to amend and adopt device standards.  The NCWM membership is comprised of weights and measures officials, device manufacturers and associations, other government agencies, consumers, and other interested parties.

      The specifications, tolerances, and other technical requirements adopted by the NCWM for commercial devices that measure gasoline are published by NIST in NIST Handbook 44.  Many state and/or local governments adopt Handbook 44 in part or entirety as regulation or law.  The permissible error for retail motor fuel dispensers as stated in Handbook 44 may vary based on several factors.

     In paragraph T.2.1.2. (a) of Handbook 44, the retail device maintenance tolerance value is one cubic inch plus one cubic inch per indicated gallon and never less than two cubic inches; therefore, on a five gallon delivery the tolerance is ± six cubic inches.  Maintenance tolerances are applied to devices in use.  Acceptance tolerances (usually one half of maintenance) are applied to equipment in use for the first time, newly returned to service, or under type evaluation.

     OWM develops a minimum set of specifications and tolerances for test standards used by weights and measures officials and anyone wishing to verify the quantity of liquid products measured by meters. The specifications and tolerances for graduated neck type volumetric field standards (provers) are published in NIST Handbook 105-3.  Handbook 105-3 contains diagrams of provers and measuring gauge assemblies.

     The following images show the gauge assembly on a five gallon prover indicating in color the current permissible error range in volume delivered (± six cubic inches) and also a hypothetical error range assuming meter accuracy of 0.001 gallons.  The method used to read the meniscus in the tube is critical to the accuracy of measurement.

     Gasoline is sold by the liter in Canada and is priced in one-tenth cent increments.  A brochure published by Canadian Petroleum Products Institute entitled "Gasoline prices: just give me the facts." states, in part "..it has been shown that a difference of two-tenths of a cent per liter (6¢ to 8¢ for an average fill-up) may be enough to sway consumers' buying decisions.  Because of this, service stations quickly react to the price posted on the street corner by their competition and adjust their price accordingly.  If not, they risk the possibility of losing their customers."   Unlike the pricing of gasoline in the U.S., in Canada, there is very active price competition measured in fractional cents per liter. http://ottawagasprices.com/

     By far the most meaningful difference in the way gasoline is sold in Canada relates to the concept of "Volume Corrected to 15º C".  The volume of gasoline, propane or diesel fuel, like that of any other liquid, varies according to its temperature.  A brochure published by Industry Canada's Weights and Measures Division entitled "Volume Corrected to 15º C" states, in part "..the technology that works as follows:  A temperature sensor continuously measures the temperature as the fuel is being metered.  It transmits the readings to an electronic register, which automatically selects the right correction factor and applies it to the amount of fuel to calculate the volume at 15º C.  So, when you see the words "Volume Corrected to 15º C", you know that the volume of energy your fuel dollar buys is not influenced by the temperature of the fuel."

     Gasoline volume changes approximately 0.125% for every 1ºC change in temperature (0.058%/ºF) .  The energy content of a gallon of gasoline purchased by a motorist in Nome, Alaska in January could, theoretically, be as much as 8-10% greater that that of a gallon of gasoline purchased by a motorist in Phoenix, Arizona in July.  Although temperature extremes in Canada would be far less than this example, attention to the effect of temperature on energy content of a given volume of gasoline has resulted in voluntary volume correction of most gasoline sold in Canada to 15º C.

     Volume correction of retail sales of gasoline to 15º C in Canada is not without controversy: Getting Hosed.   Because the yearly mean temperature in Canada is only 6º C (43º F),  gasoline is likely be purchased at temperatures below 15º C and would therefore be priced to take into account the higher energy content.  Some Canadian motorists have complained that the oil industry was involved in establishing volume correction of retail sales since dealers felt they were selling fewer gallons of gasoline than they were paying for. Basing the cost of a liter of gasoline on energy content standardizes its value for all concerned.

     The Report of the 59th National Conference on Weights and Measures 1974 (NBS SP 407-59, 1974) included a presentation (pgs. 166-181) by Dr. George E. Mattimoe, Deputy Director, Division of Weights and Measures, Department of Agriculture, State of Hawaii entitled 'TEMPERATURE CORRECTION OF PETROLEUM PRODUCTS AT RETAIL - Why temperature correction?'  Dr. Mattimoe's talk was essentially a summary of his presentation to the Hawaii state legislature resulting in the unanimous enactment into statute law, Act 239, which the governor signed on June 14, 1974.  It mandated temperature correction on petroleum product transactions, whether public or private, and ratified the actions of the Division of Weights and Measures taken three years earlier.

     The yearly mean temperature in Hawaii is 76.9º F, with a mean high temperature of 83.8º F and a mean low temperature of 70º F.  Because of the relatively minor fluctuations in temperature throughout the year, gasoline dispensers in Hawaii are calibrated to 80º F by State law.  Automatic temperature correction is not used to determine the appropriate volume correction factor, rather, dispensers are calibrated to deliver 233.8 in.³ of 80º F gasoline per gallon (see table below).  Although George Mattimoe was unsuccessful in his attempt, in 1974, to convince the National Conference on Weights and Measures to '...amend the Liquid Measuring Device Code, Handbook 44,  to permit and guide those jurisdictions desiring a permissive application of temperature correction so as to assure optimum uniformity.', Hawaii, has practiced some form of temperature correction of retail sales of motor fuel for the past 29 years.  Check out Hawaii Revised Statutes 486-50 & 52 Measurement Standard, Amended 1995 by Act 146 and Department of Agriculture, Measurement Standards for more information.

     Every day in the U.S. approximately 350,000,000 gallons of gasoline are pumped to generate dispenser displays similar to that shown above.  The temperature was 110º F as the final 0.001 gallon (¾ teaspoon)  of gasoline was pumped into this vehicle on a July afternoon in Phoenix.  The purchase price shown on the dispenser display indicated to the motorist a purported accuracy unachievable in any other transaction in commerce - 13.401 gallons x $1.39^9/10 = $18.747999 (rounded to $18.75).  Instead, the unwillingness of the National Conference on Weights and Measures to amend the Liquid Measuring Device Code to permit temperature correction of retail sales of motor fuels, possible dispenser inaccuracy and the influence of fuel residual from the previous purchase combine to result in a transaction inaccuracy that should be of concern to the Arizona Department of Weights and Measures and to every Arizona motorist.  The gallon of gasoline measured under Arizona Revised Statutes, Title 41, Chapter 15, 41-2082 is not the same gallon of gasoline measured to generate the dispenser display shown above.  This, notwithstanding an expressed commitment by the Arizona Department of Weights and Measures to ensure consumers that 'a gallon of gas is a gallon' (as would be true of a gallon of milk or of water).

1.  Effect of temperature on a 13.401 gal. purchase of gasoline at $1.39^9/10/gal.

     The volume of a U.S. petroleum gallon of gasoline at 60º F is 231 in.³, whereas the volume of the same U.S. petroleum gallon of gasoline at 95º F has increased to 235.9 in.³.   For many years volume correction factors have been applied by the petroleum industry to bulk deliveries of gasoline at temperatures other that 60º F (see above VCF table).

     Consider this scenario: A tanker truck just finished unloading 8000 gals. of regular unleaded gasoline at the service station where you plan to refuel your vehicle. The temperature of the gasoline when pumped into the tanker was 95º F, thus the service station operator only paid for 7834 gallons of temperature-compensated gasoline (8000 gal. x 0.9793 = 7834 gal.)

     You pump 13.401 gals. of gasoline priced at $1.39^9/10 into your vehicle from the just-filled underground storage tank.  The amount of your purchase is $18.75.  Overlooking any dispenser inaccuracy, the gasoline you are about to purchase contains only 97.93% the energy content of the U.S. petroleum gallon of gasoline just delivered to the service station operator.  Thus, the value of the 13.401 gallons of gasoline you pumped into your vehicle is $18.36, based on the uncorrected volume, $0.39 less than the amount you are being asked to pay.

     Another way of looking at this transaction is that the gallon of gasoline priced at 1.39^9/10 pumped from the underground storage tank into your vehicle has become a different gallon of gasoline than that pumped from the tanker into the underground storage tank just minutes earlier.

     Had your gasoline purchase been temperature-corrected you should have received the actual volume occupied by 13.401 gallons of gasoline at 95º F ( 13.401 x 235.9 in.³ = 3161.3 in.³/231 in.³ = 13.685 gallons) or you should have been charged the temperature-corrected price of $18.36 ($18.75 x 0.9793).  Because your purchase was not temperature-corrected by either of these methods, it was shorted by the volume of gasoline shown in the picture at the left (1072.3 mL = 1.1 qt.).
 

   The 0.001 gallon shown on the dispenser display is meaningless considering that the volume of gasoline in the measuring container is 283 times the 0.001 gallon of gasoline contained in the teaspoon in the foreground.  The temperature-induced inaccuracy in this example exceeds by a factor of 4.5 the permissible dispenser inaccuracy.

     This scenario plays out many millions of times each day in the U.S.  The temperature of the gasoline will vary depending upon where it is pumped and the time of year, but a gallon of temperature-compensated gasoline would always have a standardized net btu content.  Assuming a mean tank temperature of 82º F (NIST study) for the  2,713,680,000 gallons of gasoline purchased by Arizona motorists in 2006,  35,277,840 gallons of gasoline would have been sold, but not paid for, by the various service stations throughout the state.  At $2.75^9/10/gal., this motorist subsidized gift to the sellers of this gasoline would amount to $97,331,561 for the year.

     Assuming a mean tank temperature of 82º F (NIST study) for the 889,770,000 gallons of diesel fuel purchased by Arizona motorists in 2006,  9,520,539 gallons of diesel fuel would have been sold, but not paid for, by the various service stations throughout the state.  At $2.75^9/10/gal. this motorist subsidized gift to the sellers of this diesel fuel would amount to $26,267,167 for the year.

2.  Permissible dispenser error on a 13.401 gal. purchase of gasoline.

 

The Department to Weights & Measures permits a 1 in.3 error in volume ± 1 in.3 for each gallon delivered by a gasoline dispenser - thus, a 13.401 gal. dispenser display has a ± 14.401 in.3 error range.  Rather than a delivered volume accurate to 0.001 gal.  the allowable dispenser inaccuracy for a 13.401 gal. purchase is a range from 13.339 gals. to 13.463 gals. - ± 236 mL (± approximately ½ pint).  Of the 23,000 motor fuel dispensers tested every 3 years by the Arizona Department of Weights and Measures approximately 8% are found to exceed the tolerance for error. Gasoline purchases with a temperature outside the range of 52º F to 68º F, uncorrected for temperature, exceed the allowable dispenser error.

3.A 13.401 gal. purchase of gasoline priced at $1.39^9/10/gal. vs $1.40/gal.

 

	dispenser rounding
13.401 gals. x $1.40/gal. = $18.76140	$18.76
13.401 gals. x $1.399/10/gal. = $18.747999	$18.75

     The National Conference on Weights and Measures has consistently taken the position for many years that automatic temperature compensation of retail sales of the 'overall average gallon of motor fuel' is unnecessary because the 'overall average consumer' benefits from existing practice based on the concept of the 60º F isotherm.

     The Report of the 59th National Conference on Weights and Measures 1974 (NBS SP 407-59, 1974) included a presentation (pgs. 181-198) by Harold E. Harris, Engineering Coordinator, Exxon Company, entitled  'TEMPERATURE CORRECTION OF PETROLEUM PRODUCTS AT RETAIL'.  Mr. Harris began his talk with the comment that 'A rather intensive investigation by the American Petroleum Institute (API) into the relationship between temperature and retail sales of motor fuel in the United States proves that it is the consumer who benefits from the present practice of selling without temperature compensation'.   The effect of temperature on a motor fuel purchase was viewed as insignificant as it would 'balance out for the overall consumer' (presumably also including Arizona motorists).     Most of Mr. Harris' presentation was spent establishing the validity of the 60º F isotherm concept and he concluded his remarks with this statement:  'In conclusion, the American Petroleum Institute recommends to the National Conference on Weights and Measures that temperature compensation at retail should not be mandatory nor selective geographically.

     Mr. Harris' presentation followed that of Dr. George Mattimoe who had pointed out that the U.S. petroleum gallon is the international unit of measurement from the point when crude oil is extracted, as it is shipped and distributed, and as it is processed, then transported and wholesaled.  Dr. Mattimoe also noted that the U.S. petroleum gallon was the unit of measurement when a petroleum product is prepackaged into quart containers, barreled into 55-gallon drums and used to fuel aircraft - only when it is pumped into an automobile is temperature ignored.

     Dr. Mattimoe addressed the 60º F isotherm concept as follows:  'Presumably, along this 60º F isotherm the 'average concept' or the 'balance out' theory would prevail, wherein the cold dense gasoline over-delivered in the winter would be offset by the warm less-dense gasoline short-delivered in summer.  Such a presumption is wrong and is based upon the premise that two wrongs make a right.  How does shorting the consumer in the warm season and shorting the retailer in the cold season equate to equity?  It does not and there is nothing equitable about it!'

     It should be pointed out that the short-delivered volume of approximately 1.1 qts. when purchasing 13.401 gallons of 95º F gasoline during the summer in Phoenix, AZ would result in an over-delivered volume of approximately 1.1 qts. when purchasing 13.401 gallons of 25º F gasoline during the winter in Minneapolis, MN.  The American Petroleum Institute considers these two transactions to 'balance out' and it is upon this basis that the recommendation to the National Conference on Weights and Measures that temperature compensation at retail should not be mandatory nor selective geographically was made in 1974.

     One could apply the 'balance out' concept to make the argument that it is unnecessary to test motor fuel dispensers for accuracy once every three years since they are as likely to over-deliver as under-deliver motor fuel, hence the 'overall' dispenser would accurately deliver motor fuel.

     A motor fuel purchase of 13.401 gallons priced at $1.39^9/10 /gallon at a temperature of 95º F can be divided into several separate calculations:

1.  13.401 gallons = 13401 data inputs each of measurable accuracy.  A single input = $0.001399
 

2.  1/10 cent = $0.001 x 13.401 gallons = $0.013401 saving on the $18.75 purchase.
 

3.  14.401 in.³/3095.631 in³  = 0.004652 x $18.75 = ± $0.087226 permissible dispenser error.
 

     So far in these calculations the dispenser computer chip has processed many 0s and 1s and arranged decimal points with no clear idea yet of what is being calculated.  It is only with this additional calculation that the purchaser can be assured that the price of 13.401 gallons of motor fuel has been adjusted for the net btus contained in that volume - a factor in  determining how far the vehicle will travel before the next motor fuel purchase.

4.  13.401 gallons x 231 in.³  = 3095.631 in.³ (volume uncorrected for temperature)

     13.401 gallons x 235.9 in³  = 3161.065 in.³ (volume of 13.401 U.S. petroleum gallons of gasoline at 95º F)

     3095.631 in.³/3161.065 in.³ = 0.9793 x $18.75 = $18.36 (the value of 13.401 gallons of gasoline at 95º F after application of the  volume correction factor)

     $18.75 - $18.36 = $0.39 overcharge for 13.401 gallons at 95º F uncorrected for temperature.
 

5.  Finally, there is one other component of this purchase which contributes to the uncertainty of the value of the motor fuel purchased.  Depending on the manufacturer, a single hose dispenser delivering 3 grades of gasoline has from 0.5 to 0.75 gallons of residual motor fuel contained in the hose from the pump to the nozzle of the dispenser.  The price of this residual fuel may differ by as much as $0.20/gallon from the fuel selected for the next transaction.  The range in residual volume amounts to 3.7 - 5.6% of a 13.401 gallon purchase.  Consider these possible scenarios for the gasoline purchase used in the above examples:

      13.401 gallons shown on the dispenser display
      0.5 gallon residual volume of premium grade gasoline priced at $1.59^9/10/gal. = $0.80
      12.901 gallons of regular gasoline priced at $1.39^9/10/gal. = $18.05
      Value of 13.401 gallons of the gasoline mixture = $18.85 - $0.10 more that shown on the dispenser display

     A previous purchase of premium grade gasoline priced at $0.20/gal. more than the next purchase of regular unleaded gasoline from the same dispenser would result in a mixture of gasoline worth $0.10 more than the purchase price shown on the dispenser display, assuming a residual volume of 0.5 gals. Should the next motorist select premium grade gasoline and pump 13.401 gallons, the residual effect of 0.5 gals of regular unleaded gasoline would result in an overcharge of $0.10.  If the residual volume was 0.75 gallons rather than 0.5 gallons possible over and under charges for a purchase of 13.401 gallons of gasoline would be ±$0.15.

     For any motor fuel purchase these various contributors to inaccuracy are additive - on a particularly bad day a purchase of 13.401 gallons of gasoline at 95º F could result in a total overcharge of $0.62.  On the best day the overcharge would be no more than $0.16.

     Dispenser computers could be programmed to adjust the purchase price of a transaction for the price and volume of the residual from the previous purchase.

     The one certainty in all these numbers is that there is absolutely no justification for the fractional cent pricing of gasoline in a series of calculations, each of which contribute variously to uncertainty of the end result.

1. By State statute, retail sales of motor fuel in Arizona should be volume corrected for temperature.

  a. Arizona motorists are entitled to purchase motor fuel based on a standard U.S. petroleum gallon exactly as it was purchased by the dealer, especially since Arizona Revised Statutes,Title 41, Chapter 15, Section 41-2082 requires that the price of 5000 or more gallons of motor fuel must be calculated in this manner.

  b. The temperature of motor fuel purchased by most Arizona motorists is likely to exceed 60º F. During the summer months in valley locations motor fuel purchases may be as much as50º F. above a standard U.S. petroleum gallon.  Strangely, Arizona Revised Statutes, Title 41, Chapter 15, Section 41-2084 prohibits the heating of motor fuel by any 'heating device' yet ignores the effect of solar heating.

  c.  Failure to temperature correct motor fuel purchases, at least in the population centers of the State (Maricopa, Pima & Yuma counties, comprising 80% of the State's population), may represent the greatest source of inaccuracy in the motor fuel purchase.

  d. This change in the way motor fuel is sold in Arizona could be phased in with a possible initial modification of motor fuel dispenser pulse rates in the valley counties once information has been compiled on underground storage tank temperatures and gross vs net figures from product delivery documents.  Replacement of motor fuel dispensers made in future years should require automatic temperature compensators (ATC).

  e.  Significant opposition on the part of the oil industry and the National Conference on Weights and Measures would be anticipated, particularly since Arizona's lead might result in interest by other southern tier states in addressing this issue.   The point should be emphasized that the existing inequity has persisted for many years and with higher motor fuel prices predicted for the future the time has come to correct it.

  f.  The temperature of motor fuel at the time of purchase should be considered an important aspect of fuel quality.

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RECENT DEVELOPMENTS IN AUTOMATIC TEMPERATURE COMPENSATION OF MOTOR FUELS

National Conference on Weights and Measures http://www.ncwm.net/ (click on 2008 Interim Meeting)

Owner-Operator Independent Drivers Association (Interim Meeting Presentation)

Public Citizen position statement on temperature compensation (Interim Meeting Presentation)

National Conference on Weights and Measures, (July vote)

Texas 80th Legislature, Regular Session, HB37 (enter bill number, choose Text)

General Assembly of the State of Missouri, HB105

United States District Court, Northern District of California - Class Action Complaint Jury Trial Demand

United States District Court, District of New Jersey - Class Action Complaint and Jury Trial Demand

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2. By State statute, fractional cent pricing of motor fuel sold in Arizona should be prohibited.

  a.  It is not possible to purchase one gallon of motor fuel at the advertised price - a circumstance totally unique in commerce.

  b.  Changes in motor fuel prices are always made in whole cents, not fractional cents.

  c.  The banning of 9/10 cent motor fuel pricing by Iowa state law was well received by Iowa motorists from 1985 to 1989 before special interests reinstated the deceptive pricing practice.  The Iowa experience demonstrated that motorists preferred whole-cent pricing of motor fuel and the Arizona State Legislature could easily  provide Arizona motorists these advantages by State statute.

  d. The 9/10 cent pricing practice was initiated at a time when a 1/10 cent saving per gallon of motor fuel represented a much larger portion of the total purchase price than is the case today.

  e.  Fractional cent pricing other that 9/10 cent can easily be programmed into a dispenser computer but there is no recorded instance where this has ever been done since the technology became available.

  f.  Motor fuel price changes are among the most volatile of retail transactions and are always made in whole cents, yet the 9/10 cent portion of the per gallon price is, and always has been, a constant, whereas the remainder of the price continually changes. This pricing concept is totally unique in commerce.

  g.  The industry-wide and unchanging 9/10 cent pricing practice for a gallon of motor fuels should be considered price collusion and a deceptive marketing practice.

  h.  Active price competition exists at 1/10 cent per liter for motor fuel sold in Canada.  One-tenth cent per liter approximates 4/10 cent per gallon.  One-tenth cent per gallon pricing implies a transactional accuracy that is unachievable, given failure to volume correct for temperature, the effect of residual volume from the previous purchase and the permissible error in dispenser accuracy.

  i.  Motor fuel purchases involving 9/10 pricing must always be rounded either up or down to the nearest whole cent except for those multiples of 10.000 gallons (i.e. 10.000, 20.000, ...gallons.)   For exact gallon purchases, the need for rounding would disappear once 9/10 cent pricing was discontinued and would only be required when divisibility of the purchase is not possible.  When rounding exact half cent purchases, motor fuel dispenser  meters should be programmed to apply commonly accepted mathematical rules for rounding, thus eliminating the current 15 to 10 bias toward rounding up.

  j.  Arguments against prohibiting 9/10 cent motor fuel pricing by State statute must provide evidence that consumers and dealers would, in some demonstrable manner, be harmed.  The benefits have been presented and it is not a reasonable or sufficient argument that motor fuel has traditionally been priced in this manner.

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PENDING LEGISLATION PROHIBITING FRACTIONAL CENT PRICING OF GASOLINE AND DIESEL FUEL

2008 Legislative Sessions

Hawaii State Legislature, Senate, SB846

Hawaii State Legislature, Senate, SB989

Hawaii State Legislature, House of Representatives, HB425

Georgia General Assembly, House of Representatives, 2007-2008 Legislative Session, HB928

New Hampshire General Court, SB382

New Hampshire General Court, HB1249

State of Rhode Island in General Assembly, 2008 - H7154

The State of Vermont Legislature, 2007-2008 Legislative Session, Enter H.480, click Display Status

West Virginia Legislature, Senate, 128

West Virginia Legislature, House, 3142

New York State Assembly, A06219

State of New Jersey, 212th Legislature, Assembly No. 3956

The Tennessee General Assembly, HB3912/SB4109

Contact State Legislators to register your support for this pending legislation.

2007 Legislative Sessions

Hawaii State Legislature, House of Representatives, HB658

Hawaii State Legislature, Senate, SB846

Oregon 74th Legislative Assembly. Senate Bill 383

New York State Assembly 2007-2008 Regular Session, Enter A06219

Commonwealth of Massachusetts, House of Representatives, HB3377

Connecticut General Assembly, HB6450 

Connecticut General Assembly, SB No. 1005

State of Washington, 60th Legislature, 2007 Regular Session, Senate Bill 5991

New Hampshire General Court, HB681 (Enter Bill No. HB681, click Docket, then Bill Status)

New Jersey 212th Legislature, Assembly, (Enter Bill No. A3956)

State of Rhode Island General Assembly, January Session A.D. 2007 - HB5435

State of Rhode Island General Assembly, January Session A.D. 2007 - HB5709

Georgia General Assembly HB293 (See PDF Version, pg. 12 of 35, Section 48-9-3)

The State of Vermont Legislature, 2007-2008 Legislative Session, Enter H.480, (scroll to Bill Text:)

Contact State Legislators to register your support for this pending legislation.

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     The thoughts expressed on this Web site have nothing to do with the price of gasoline or diesel fuel sold in Arizona.  Americans do not have a birthright to purchase cheap motor fuel.  It is a non-renewable resource that all too soon will be depleted, therefore, should be taxed at levels comparable to those in other developed nations.   Rather, concern centers on the appropriate application of technology.  The technology exists to price retail sales of gasoline and diesel fuel in Arizona based on a standard U.S. petroleum gallon but has not been applied.  Technology has been inappropriately applied, thus giving motorists mistaken confidence regarding the accuracy with which the gasoline or diesel fuel purchase price has been calculated.   Price/gal. and gallons delivered, each expressed to a 0.001 level of accuracy result in a product accurate to 0.000001, however, dispenser computers are not even programmed to apply commonly accepted mathematical rules for rounding.

     The word global (economy, financial crisis, -ization, marketplace, network, population, village, warming, etc.) has increasingly become part of our everyday rhetoric.  While we Americans comprise less that five percent of the world's population, our way of life is having a profound effect on our planet.

     Americans account for about 25% of total world oil consumption.  Per capita, we consume over five times the world average, over 25 times the oil consumption of our global neighbors in Africa and over 11 times that of our Asian neighbors.

      Almost every aspect of American life encourages the profligate use of non-renewable resources.  Consider the comparative price of gasoline shown in the following figure.  Our unwillingness to tax gasoline at a level even close to that of several European countries encourages the popularity of less fuel efficient vehicles such as sports utility vehicles and pickups.  The price of bottled water, a renewable resource (the water, that is, not the plastic container), at one local supermarket ranged from 51¢ to $6.53 per gallon, depending on container size & brand.

     A position paper by the American Petroleum Institute titled 'Oil Supplies - Are We Really Running out of Oil?' states in part, "Taking into account probable future oil discoveries, the U.S. Geological Survey (USGS) estimates that between 1.4 trillion and 2.1 trillion barrels of oil remain to be produced worldwide. This amount of oil would sustain the current rate of consumption between 63 to 95 years.  To be more specific, there is a 95-percent possibility that the world's remaining oil resources could last 63 more years and a 5-percent chance that the world's resources will last another 95 years at recent rates of consumption."

     Suppose that all countries in the 'global village' enjoyed an economy comparable to that of the U.S. - a supposition resulting in a global marketplace that would delight most economists and politicians.  Rather than a disproportionate use of global oil resources by a chosen 5%, the other 95% of global villagers would then be able emulate the oil consumption of their American counterparts.  The 6.789 billion barrels of oil consumed by the U.S. in one year would thus increase to 135.78 billion barrels for the entire global village, once the playing field had been leveled as far as oil consumption is concerned.  Suddenly, known world reserves of petroleum would be exhausted in 15 and one-half years.

     In 1859, the first commercially productive oil well was drilled in Titusville, PA. A non-renewable natural resource that took many millions of years to form will have been totally depleted in a geological blink of an eye.