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Costco Settles 'Fair Fuel' Lawsuit

NEW YORK, NY -- Costco last week agreed to settle a lawsuit over the sale of hot gasoline -- gasoline above 60 degrees that expands, but is not accounted for at the pumps, resulting in consumers receiving less gasoline than they pay for.

According nonprofit, nonpartisan organization Consumer Watchdog, Costco will be the first U.S. gasoline retailer to do so.

”This is fantastic news for consumers,” said Judy Dugan, research director of Consumer Watchdog. “Costco is taking the lead in offering drivers gasoline that has the same amount of energy in every gallon, living up to its reputation as a consumer-friendly place to shop.”

According to the group, for every 15-degree rise in temperature, 1 percent of the fuel is lost to expansion.

Costco will install temperature-sensing pumps that slightly adjust the amount of fuel to same energy content in each gallon. The agreement affects Costco motor fuel sales in Arizona, California, Florida, Georgia, Kentucky, Nevada, New Mexico, North Carolina, Tennessee, Texas, Utah and Virginia. The deal, if fully approved, would go fully into effect within five years.

The deal, if finalized, will remove Costco from national and state class action lawsuits by drivers -- and by truckers, who can lose hundreds of dollars to hot fuel each year.

Today's action is just the first big step toward a final settlement involving Costco, and will likely face ferocious opposition from oil companies and bigger name-brand refiners and retailers, said Consumer Watchdog. The fuel lobby this month pushed Virginia legislators into at least temporarily banning temperature-adjusted sales.

”Oil and fuel lobbyists who try to intimidate state and national regulators into stopping Costco will be trying to make fairness illegal,” said Dugan. “This is the rear-guard action of an industry that is already seen as completely untrustworthy.”

Listen to Consumer Watchdog's podcast about Costco's move here.