Waxman Power!

ExxonMobil and Shell Answer Questions About Hot Fuels

Senior executives from two of the largest oil companies with operations in both the U.S. and Canada will testify at a Domestic Policy Subcommittee hearing on “hot fuels” and what appears to be a double standard in the way they measure gasoline.

The oil industry has known for 100 years that gasoline expands with temperature. As it warms, gasoline expands by volume but not by weight or energy content. Since the 1920’s, the oil industry has taken temperature into account for wholesale transactions, and uses a 60 degree Fahrenheit standard when measuring gasoline at wholesale. However, retail sales are not temperature adjusted. As a result, consumers pay a Hot Fuel Premium when gasoline temperatures exceed 60 degrees, as they do throughout the country during the summer.

In Canada, the oil industry moved quickly to adopt Automated Temperature Compensation at the retail pump. But in the U.S., where temperatures are often considerably warmer than the industry standard of 60 degrees, the oil industry has resisted equipping gas stations with temperature compensating technology.

When the subcommittee held its first hearing on this topic on June 8, 2007, ExxonMobil and Shell refused to testify. Both companies have a large presence in the United States and Canada retail gasoline markets. Since that hearing, Chairman Kucinich requested a subpoena for those witnesses. On June 22, 2007, full committee Chairman Henry Waxman (D-CA) wrote to ExxonMobil and Shell, requesting their voluntary appearance at a hearing of the subcommittee to avoid the necessity of a subpoena.

The purpose of the July 25 hearing is to examine the views of ExxonMobil and Shell on two critical questions: 1) How do they justify opposing temperature compensation at retail, while conducting wholesale transactions with temperature compensation? and 2) How do they justify opposing temperature compensation for retail sales in the United States, while universally embracing temperature compensation at retail in Canada?Witnesses for the hearing include:

Panel I

Mr. Ben Soraci, U.S. Retail Sales Director, ExxonMobil Fuels Marketing Company

Mr. Hugh Cooley, Vice President and General Manager, National Wholesale and Joint Ventures, Shell Oil Company