The Memorial Day weekend kicks off the dreaded “summer driving season,” when motorists from Eastport to Encino fuss about traffic and fume about the price per gallon. From now through Labor Day, kvetching behind the wheel is the national pastime.
So here is my modest contribution to the national rant: As the temperature rises, the amount of gas in a gallon shrinks. But it’s really just academic, so don’t get yourself too worked up about it.
I started thinking about the thermal properties of gasoline last week, as I refilled a rental car at the airport in Halifax, Nova Scotia. On that fine spring afternoon, I noticed a sticker on the pump advising that the amount of fuel for which I was charged would be volume corrected to 15 degrees Celsius, or 59 degrees Fahrenheit - which happened to be right around the air temperature that day.
Had it been a cold morning in midwinter, this adjustment would have meant that I'd be charged for more liters of fuel than actually entered my tank. Because fuel expands with temperature, the pump would be programmed to upwardly adjust the reported volume of fuel dispensed. Had it been a rare hot afternoon in Halifax, I would have been charged for less fuel than the volume that actually passed through the nozzle.
We don't often see such stickers in the United States. As noted in a 2007 congressional report, almost none of the 50 states volume adjust their gas (Hawaii adjusts its volume to 80 F), and Minnesota outright forbids adjustment at all steps of the supply chain (which prevents an upward bump in reported volumes, since Minnesota is a cold state).
If you put 15 gallons in your tank to start your holiday travels this weekend, you are likely to get less gas than when you put 15 gallons in the tank to drive to Grandma's house for Thanksgiving. Assuming the posted price is the same, the difference in dispensed volumes is effectively a hidden price increase. Or, for glass-half-full types, you could look at the price on a chilly Thanksgiving morning as being a hidden discount.
Similarly, if a station in Maine posts the same price as a station in Florida, the gas in Maine is probably a better deal. Since Florida is usually warmer than Maine, the typical station in Florida dispenses less gas, if we measure it by weight, than a station in Maine, even when the pumps report the same volume of gas delivered.
Of course, you could look at the matter from another direction, and recognize that prices in Florida are somewhat higher than prices in Maine, even when the numbers posted on the pump are identical. Price and volume are two sides of the same equation. Because the fuel’s energy content is proportionate to its mass rather than its volume, Maine drivers get a bonus either way you look at it.
Would consumers in warm states like Florida get a better deal if stations had to volume-correct their gas the way Canadian gas stations do - say to the wholesale standard of 60 F? The congressional report assumes the answer is yes. It frames the price difference by volume purely as a “premium” consumers pay in hot weather. This is not very realistic.
I live in Florida. My local Hess station usually offers the best bargain in my neighborhood, so it is often my first choice as a place to fill up. I buy some of my gas at Hess stations in New Jersey, too. New Jersey is generally colder than Florida, but I can’t pull out of my garage in Fort Lauderdale and fill up in Fort Lee. I suppose I could remove the rear seats in the minivan and install a big fuel tank instead, but that’s a trip down I-95 that I never want to make.
My Florida Hess station doesn't have to compete with a New Jersey Hess station for my business. It just competes against the other stations in my neighborhood. If the government forced all of them to adjust their reported volumes to account for warmer temperatures, Florida gas stations would simply raise gasoline’s price per gallon to compensate for the smaller volume that their pumps report selling. It's the same gas, after all. The pricing equation will not change, even if such a law is passed.
On the other hand, if gasoline prices are set by law - as they are in some parts of Canada - then, to make the laws meaningful, the government must specify the quantity in relationship to the price. That's what they do in Canada's five easternmost provinces.
From Ontario westward, where prices are unregulated, the typical adjustment to 15 C simply tends to inflate the reported volume of gas delivered outside the warmest months. It's a hidden price increase, but since it applies equally to all stations in an area, the difference is more or less academic.
So I’m not going to worry about my shrunken gallons when I hit the road this weekend. I’ve got plenty of other things to complain about. After all, no matter how you measure it, gasoline is still a pricy commodity these days.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book
Looking Ahead: Life, Family, Wealth and Business After 55.
Posted by Larry M. Elkin, CPA, CFP®
The Memorial Day weekend kicks off the dreaded “summer driving season,” when motorists from Eastport to Encino fuss about traffic and fume about the price per gallon. From now through Labor Day, kvetching behind the wheel is the national pastime.
So here is my modest contribution to the national rant: As the temperature rises, the amount of gas in a gallon shrinks. But it’s really just academic, so don’t get yourself too worked up about it.
I started thinking about the thermal properties of gasoline last week, as I refilled a rental car at the airport in Halifax, Nova Scotia. On that fine spring afternoon, I noticed a sticker on the pump advising that the amount of fuel for which I was charged would be volume corrected to 15 degrees Celsius, or 59 degrees Fahrenheit - which happened to be right around the air temperature that day.
Had it been a cold morning in midwinter, this adjustment would have meant that I'd be charged for more liters of fuel than actually entered my tank. Because fuel expands with temperature, the pump would be programmed to upwardly adjust the reported volume of fuel dispensed. Had it been a rare hot afternoon in Halifax, I would have been charged for less fuel than the volume that actually passed through the nozzle.
We don't often see such stickers in the United States. As noted in a 2007 congressional report, almost none of the 50 states volume adjust their gas (Hawaii adjusts its volume to 80 F), and Minnesota outright forbids adjustment at all steps of the supply chain (which prevents an upward bump in reported volumes, since Minnesota is a cold state).
If you put 15 gallons in your tank to start your holiday travels this weekend, you are likely to get less gas than when you put 15 gallons in the tank to drive to Grandma's house for Thanksgiving. Assuming the posted price is the same, the difference in dispensed volumes is effectively a hidden price increase. Or, for glass-half-full types, you could look at the price on a chilly Thanksgiving morning as being a hidden discount.
Similarly, if a station in Maine posts the same price as a station in Florida, the gas in Maine is probably a better deal. Since Florida is usually warmer than Maine, the typical station in Florida dispenses less gas, if we measure it by weight, than a station in Maine, even when the pumps report the same volume of gas delivered.
Of course, you could look at the matter from another direction, and recognize that prices in Florida are somewhat higher than prices in Maine, even when the numbers posted on the pump are identical. Price and volume are two sides of the same equation. Because the fuel’s energy content is proportionate to its mass rather than its volume, Maine drivers get a bonus either way you look at it.
Would consumers in warm states like Florida get a better deal if stations had to volume-correct their gas the way Canadian gas stations do - say to the wholesale standard of 60 F? The congressional report assumes the answer is yes. It frames the price difference by volume purely as a “premium” consumers pay in hot weather. This is not very realistic.
I live in Florida. My local Hess station usually offers the best bargain in my neighborhood, so it is often my first choice as a place to fill up. I buy some of my gas at Hess stations in New Jersey, too. New Jersey is generally colder than Florida, but I can’t pull out of my garage in Fort Lauderdale and fill up in Fort Lee. I suppose I could remove the rear seats in the minivan and install a big fuel tank instead, but that’s a trip down I-95 that I never want to make.
My Florida Hess station doesn't have to compete with a New Jersey Hess station for my business. It just competes against the other stations in my neighborhood. If the government forced all of them to adjust their reported volumes to account for warmer temperatures, Florida gas stations would simply raise gasoline’s price per gallon to compensate for the smaller volume that their pumps report selling. It's the same gas, after all. The pricing equation will not change, even if such a law is passed.
On the other hand, if gasoline prices are set by law - as they are in some parts of Canada - then, to make the laws meaningful, the government must specify the quantity in relationship to the price. That's what they do in Canada's five easternmost provinces.
From Ontario westward, where prices are unregulated, the typical adjustment to 15 C simply tends to inflate the reported volume of gas delivered outside the warmest months. It's a hidden price increase, but since it applies equally to all stations in an area, the difference is more or less academic.
So I’m not going to worry about my shrunken gallons when I hit the road this weekend. I’ve got plenty of other things to complain about. After all, no matter how you measure it, gasoline is still a pricy commodity these days.
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