$1.5 Billion 'Hot Fuel Premium' Hits Summer Drivers

June 7, 2007 — -- That tank of gas bought for a carefree summer road trip might not get you as far as you'd think. A congressional report released Thursday says consumers pay more than the advertised price for gasoline as the temperature climbs in the summer months.

Rising mercury means "consumers will pay a hot fuel premium in the range of $1.5 billion," according to a House Oversight and Government Reform subcommittee report. That estimate is based on the prediction that drivers will buy more than 500 million gallons of gas this summer that will be affected by the hidden hike.

Hot Fuel, Higher Prices

Drivers in warmer states like California and Texas could be hit the hardest, with each of those states showing a projected "hot fuel premium" greater than $210 million.

The reason behind the rise is simple physics: "As it warms, gasoline expands by volume but not by weight or energy content," said the report. In effect, hotter weather means consumers pay the same amount as they do in the winter, but drive away with less fuel.

One example in the report states that if the temperature is 90 degrees Fahrenheit, gasoline advertised at $3.50 per gallon ends up costing seven cents more a gallon because of its expanded volume.

The oil industry already accounts for differences.

"Since the 1920s, oil companies have taken into account temperature's effect on the volume of gasoline in transactions among one another at the wholesale level," the report says.

Wholesalers base prices on a standard of 60 degrees and adjust the cost if the fuel temperature is higher or lower than that mark.

"But the oil industry does not adjust for temperature in retail sales to consumers," the report says. "As a result, consumers pay a hot fuel premium when gasoline temperatures exceed 60 degrees, as they do during the summer."

Consumers Pay at the Pumps

The report points out that technology already exists for retail stations to adjust price to account for the temperature, and that equipment "has been accepted for near universal use in Canada."

But Jay McKeeman, executive director for the California Independent Oil Marketers Association said the temperature doesn't make that much of a difference.

"Basically it's about a tablespoon in three gallons of gasoline," he told ABC News.

The House Oversight and Government Reform's Domestic Policy subcommittee, chaired by presidential hopeful Rep. Dennis Kucinich, D-Ohio, will hold a hearing involving its report Friday, looking into what it calls "big oil's double standard for measuring gasoline."

The subcommittee invited the CEOs of Exxon-Mobil and Shell oil companies to testify, but the executives declined. Congressional staff are now trying to arrange a later hearing that will focus on testimony from the oil industry's top management.

ABC News' Tom Shine and Elisabeth Leamy contributed to this report.