The Oil Drum | Hot Gas is a Bunch of Hot Air

35 comments on Hot Gas is a Bunch of Hot Air

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mdsolar on July 23, 2007 - 10:54am

Thanks for you post.

I think your reliance on the average makes a little sense for estimating the amount of "over charging" but there are some inconsistencies in your other arguments. You are saying that storage tanks keep the temperature uniform but then say that they retain the delivered temperature. The latter is more likely to be true, as you say, for the high volume sellers. The delivered temperature can pretty easily be the air temperature and so selling gas at 90 F can happen whereas you suggest it can't.

I agree with you that compensation is a waste of time, but the size of a lawsuit could end up being large which makes this attractive as a class-action. One would hope that a warning lable will be sufficient remedy, or better, that physics be a required subject in schools so people can just realize that this has to happen.

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Robert Rapier on July 23, 2007 - 11:09am

The delivered temperature can pretty easily be the air temperature and so selling gas at 90 F can happen whereas you suggest it can't.

There are very good reasons not to deliver gasoline at 90 F. That would make for a blending nightmare as butane flashed off.

But I agree that you could deliver gasoline at 90. But when the NIST did their sampling, that's not what they found. I have heard that the average in California was higher than for the rest of the country, but that the sample size was very small. But I have never been able to dig up the raw data. That would be quite interesting.

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mdsolar on July 24, 2007 - 9:28am

Hi Robert,

I think the raw data is needed to make a better estimate. One want's to look at the temperature together with the selling price to see if prices are elevated together with temperature. If not, then the effect will average out at the level you cite, but if so, then the effect will end up higher. One also wants to look at the skew since if all the below average numbers are closely clustered but the above average numbers have a large range you can get oportunities for manipulation as well.

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Sunspot on July 23, 2007 - 11:20am

How is the delivered temp of the gasoline going to reach the air temperature??? It's delivered in huge tanker trucks, and often IN THE MIDDLE OF THE NIGHT! Even if the tanker truck has been sitting in 100 degree sunshine for a few hours I sincerely doubt the temp of the gasoline inside the truck would rise by more than a few degrees. And the temps from wherever it came from before it hit the tanker truck are certainly stable due to the volume of whatever it's pumped from.

I still say it's trivial to find out the truth. Pump some gas into something when it's 100 degrees outside and stick a thermometer in the liquid. Do the same thing when it's zero outside. Repeat in a few different locations. Then we'd know.

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jbunt on July 23, 2007 - 11:49am

jbunt

I retired from a large petroleum marketer. During a year, we averaged about $1 million a month in profits from hot gas. Zero during the winter and more during the summer to average $12 million year. We are located in the Southwest. When it is 100 degrees out, the fuel coming out of the refinery that we load is very hot. So, in a typically good transaction, our truck will load and pay for 7,200 temperature corrected gallons gallons and the actual physical quantity will be 7,500 gallons. That is 300 free gallons, and since taxes are paid at the rack (started about 10 years ago to prevent tax cheating), no federal or state taxes on the 300 gallons. The retail pump price charges both for the product and for the taxes, which taxes do not have to be paid because they were already paid at the rack. So at $3 gallon, we make an additional $900 or $.125 cents/gallon "extra" on each of the 7,200 gallons. And, most of the reason is that the 75 degree gallons, which are put in the underground tank, hold much of that temperature until sold. At a large volume station, it is likely that the fuel is sold within 24 hours.

Do you know the temperature that the fuel comes out of a refinery? I do not know such things, but I think that the temperature that we get with our purchase varies by the ambient temperature of the air, e.g., a 100 degree day, and the amount of time between the refinery run and our purchase. While working, I never did a study, but I think that the anecdotal comments were that fuel coming from a refiner's racks could be hotter than fuel coming from pipeline terminal racks.

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Robert Rapier on July 23, 2007 - 12:11pm

So, in a typically good transaction, our truck will load and pay for 7,200 temperature corrected gallons gallons and the actual physical quantity will be 7,500 gallons.

That's a difference of 4%, meaning you would have been getting fuel at over 120 degrees F. I won't say your recollection is incorrect, but that would have been a very, very odd situation. A blender who is making gasoline at 120 degrees is losing much more by the inability to put butane in there than you would be gaining with hot gas. But the NIST study certainly didn't find any temperatures in that neighborhood.

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Leanan on July 23, 2007 - 1:42pm

Wow. Maybe you ought to write us an article.

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csp97 on July 23, 2007 - 5:57pm

I just checked the temp in the tanks at the refinery where I work. Temp is 87F in one 84F in the other. These tanks are going to the onsite rack. This is a "Southwest refinery".

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Starship Trooper on July 23, 2007 - 1:34pm

Several points to be added (for this part of the world):

Gasoline is transported by pipeline to bulk storage terminals located near the pipelines. We have several locations in NC for the collection of bulk storage terminals (Selma, Wilmington, Greensboro, and Charlotte). The gasoline is stored in large internal floating roof tanks (and some external floaters that have been converted by coverage with a dome). Since most of those tanks are white or white and silver (except some Hess tanks...they like that distinctive green color). Local meteorological conditions, size of the tanks and turnover times affect the equilibrium temperature of the product in bulk storage. API has a fair amount of data for these characteristics. When I worked with EXXON a few years back, we kept daily records on gsaoline storage tank and loading rack conditions for each of the terminals.

From storage, they go through loading racks into multi-section tanker trucks (nominally 8,000 gallons per load in the standard oval shaped tank to designate a flammable liquid in transport). Depending upon time of transport, ambient temperature and the quantity of fuel in the truck as it runs its deliveries, the temperature of the gasoline dispensed into double-walled FRP tanks could change slightly. Only the stations at the end of a delivery run, with partial loads remaining in the tanker would be expected see the greatest change in gasoline temperature as the gasoline is transported from the bulk terminals.

As noted, there are a number of factors that influence what temperature change and how fast the gasoline in the UST comes to equilibrium with the ground temperature.

Finally, although the pump and the pump meter may start as "hot" or "cold" depending upon ambient conditions, it quickly equilibrates to the bulk temperature of the gasoline in the UST (unless, of course, your pumping rate is about a cc per minute, in which case it will be near the ambient temperature surrounding the meter and the pump. But then who wants to spend all day filling their gas tank in this manner). The rate of heat exchange from ambient conditions is not enough to "heat up or "cool down" the gasoline going through the metering system to make a difference. Above ground tanks for service stations(relatively rare except in DoD) can be a different matter.

Except for the very initial flow out of the pump and meter, this issue of hot or cold gasoline at the pump is a non-issue.

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Earthworm Jim on July 23, 2007 - 8:25pm

I think your reliance on the average makes a little sense for estimating the amount of "over charging"

Why not? As an overall nationwide picture, I can't think of a reason why it wouldn't be a good method, but maybe you have.

Locally, it could make a big difference. That is someone in the desert southwest could be getting hosed while someone in Alaska might benefit. At least in theory.

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mdsolar on July 24, 2007 - 9:17am

Jim,

Gasoline prices tend to track air temperature these days, so with higher prices when the gas is warmer you get more of an effect. The thing that is a little furstrating about the average is that it is not reported with a standard deviation so it is not possible to back out the range of temperatures measured. The main point of the original article, that prices will compensate if fuel temperature is taken into account is a good one. I think that some of these suits will succeed and then we'll either see temperature compensation or disclosure and that will be the end of it.

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