When is gallon of gas not a gallon?

State officials work to standardize fuel measurement, eliminate confusion

Posted: Thursday, January 08, 2009

When it comes to fuel dispensed from trucks, there are two kinds of gallons.

Michael Penn / Juneau Empire
Michael Penn / Juneau Empire

"They have no idea," said Dan Breeden, the state director of measurement standards. "Everyone I run into, they don't know the difference, and it really is quite a confusing topic to people."

Breeden is in charge of the state's effort to standardize the gallon and eliminate the confusion.

Vendors of heating oil or aviation fuel can sell a "gross" gallon, the 231 cubic inches that comes to mind when picturing a milk jug.

Or they can sell a "net" gallon, which accounts for fuel's expansion or contraction by adjusting the size of the gallon according to the fuel's temperature. The reference temperature, where the two gallons are equal in size, is 60 degrees. Colder than that, and the net gallon is smaller than the gross gallon.

The trouble is when people want to compare prices, according to Breeden. And in cold weather, the difference grows.

Hypothetically: If fuel is $3.47 a net gallon from Vendor A, and $3.49 a gross gallon from Vendor B across the street, then at 60 degrees Fahrenheit Vendor A has the deal. But at 20 degrees, Vendor B would be $13.27 cheaper for the same amount of fuel on a 300 gallon delivery.

In that situation, having two different gallons is "simply misrepresenting the competition in the marketplace," Breeden said.

"The people who are doing this have legitimate reasons for wanting to sell smaller gallons," said Bob Logan, a Fairbanks economist. "The problem is that everyone who's buying them is ignorant."

The difference could be substantial for big fuel buyers' budgets, Logan said.

If schools, Alaska Native corporations, nonprofits or cities don't specify a type of gallon, the quote could be phrased legally in either, and it could be hard to compare bids.

A variant of that is true for the city of Juneau, which has about 80 heating oil tanks. The city bases the fuel price it will pay on a national benchmark, so that's not up for bid. But companies do bid on the delivery charge per gallon, according to Diane Andreson, who prepares the bid packages.

She doesn't specify which kind of gallon vendors should use because she didn't know there were two kinds.

"We do a fairly substantial volume," she said. "If I could do things better, I want to know."

In the interest of creating a fair marketplace, the state proposed standardizing gallons to the gross kind.

Breeden explained that it's the one most people think of. And it's always the same size, no matter the temperature - no calculations necessary and no net meters, which cost several thousand dollars.

But fuel vendors who sold by net gallons complained. So the state hired Logan to research the pros and cons of each gallon and recommend one.

Kirk Payne, chief operating officer of North Star Utilities Group, whose Delta Western heating oil gets to Juneau homes from Reliable Transfer Corp. trucks, explained he prefers net gallons because their precision takes guesswork out of pricing.

If he were selling gross gallons, he'd estimate the temperature at which he's going to sell the gas and base his price on that temperature.

"We're going to be conservative on that ... and it's going to adversely affect the consumer," Payne said.

He also said that mandating a gross gallon could promote less ethical practices among retailers.

"You've got distributors that could stick a truck in the garage, let it warm up, and then go out and sell product," he said.

In the winter, companies that sell gross gallons are selling gallons with more energy in them. That includes both aviation fuel companies in Juneau, Coastal Fuel and Aero Services Inc.

"We basically take a loss, because fuel's shrunk up," said Fred Bell at Coastal Fuel, which sells Jet-A out of trucks in Juneau.

Net-gallon meters on the trucks are expensive, but he said the company is looking into them.

"Maybe we put some mom and pop out of business because they couldn't afford to buy the net meter," Breeden said.

Standardizing fuel gallons is a debate nationally and beyond. In California, where the temperature averages above the 60 degrees, net gallons are allowed but retailers haven't adopted them, according to Logan.

But when Canada began allowing temperature-compensated fuel, more than 90 percent of retailers adopted them and started selling liters that were about 2 percent smaller.

"In a cold state, the vendors want to use temperature compensation (net gallons), and in a warm state they don't," Breeden said.

A number of states, mostly northern, have prohibited temperature compensation.

Here, people started to notice at $4 a gallon for heating fuel, Breeden said.

"I don't know if at $2.50 it will have the same impact or not," he said.

Gasoline consumers are known to go out of their way for a few pennies' difference at the pump. But not all fuel choices boil down to price, said Ed Kiesel, president of Ward Air.

Kiesel hadn't heard of net versus gross gallons. But then, his airline is a loyal customer of Aero Services; he doesn't comparison-shop.

The same goes for his house's 275-gallon heating tank, long filled by the same company.

"They do me a good deal," he said. "Who's to say how many gallons they're actually putting in it?"

• Contact reporter Kate Golden at 523-2276 or kate.golden@juneauempire.com.

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