Octane mislabeling may be cheating U.S. motorists out of $150 million/year, the General Accounting Office says.
The 1978 Petroleum Marketing Practices Act (PMPA) requires service stations to post the octane ratings of gasoline at the pump. The Federal Trade Commission and Environmental Protection Agency enforce the law.
But the GAO study, requested by Reps. Phil Sharp (D-Ind.) and Charles Schumer (D-N.Y.), said FTC and EPA have not carried out their octane testing and enforcement responsibilities under the act. Thus there are no federal controls to ensure that gasoline octane postings are accurate.
Sharp, chairman of the House energy and power subcommittee, plans to file a bill broadening states' enforcement powers under PMPA. He said GAO's estimates are conservative, and consumers may be paying $600 million/year-four times the GAO figure-for octane they do not receive.
"Although the vast majority of gasoline distributors and dealers are honest, the report shows too many instances of motorists being cheated for us to ignore," Sharp said.
SURVEY FINDINGS
GAO said the Motor Vehicle Manufactures Association surveyed gasoline quality between 1979 and 1987 in markets representing 90% of U.S. gasoline consumption and found that more than 9% of the gasoline sampled was mislabeled by more than one-half point below the posted octane rating.
Assuming that 9% of gasoline sold in 1988 was mislabeled by only one-half octane number, GAO estimated consumers could have paid about $150 million for octane they did not receive.
Data from 11 of the 20 states that currently test octane show mislabeling occurred on less than 2% of gasoline sold in 1985-88.
But GAO checked states without an octane testing program, and spot tests found in four states mislabeling ranged from 22% to 53%.
GAO said, "Although nationwide information on accuracy of octane ratings is not collected at the federal level, industry and state information indicates octane mislabeling is a problem in some states.
"While mislabeling may occur at any place in the gasoline distribution system, there is more potential for it to occur at distributors or retail stations than at refineries, pipelines, or bulk terminals because these latter locations are covered by extensive quality control programs that include frequent testing of octane ratings. Few distributors or retailers test octane ratings, mainly because of the cost." GAO said a testing laboratory would cost $1.6 million and gasoline octane tests $100/sample.
RECOMMENDATIONS
GAO recommended that Congress amend PMPA to include octane certification and posting requirements for gasoline/alcohol blends and other alternative motor fuels that may develop.
And it said Congress should allow states to use remedies other than those listed in PMPA to enforce octane posting requirements, such as allowing them to order a halt in sales of mislabeled gasoline.
It said FTC and EPA, which say staff and budget cuts have prevented their involvement, should develop an enforcement program and seek funds for it.
States with octane testing programs are Alabama, Arkansas, California, Colorado, Delaware, Florida, Georgia, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Missouri, New Mexico, North Caroline, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Virginia, and Wisconsin.
Michigan, New York, and Washington plan to begin programs soon.
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