What’s All This Then!

I believe that competition between companies is a good thing. It’s especially exciting when you see the Davids of an industry kick the butts of the Goliaths. Dinosaurs died out for a reason, kids. Of course, it’s just as rewarding to watch a company that has been cheating you out of your money, lose out to a business that works hard to earn your respect and dollars. Sometimes in those cases, the stronger will merge with the weaker, capitalizing on the few strengths of the lesser company while weeding out the flaws. In the end, we as a consumer are the ultimate winner.

You would have thought this was going to be the case with the merger between XM and Sirius satellite radios. XM (trading at over $8 a share) had many more subscribers because of its unique range of radio stations and its adherence to the motto “commercial free radio.” Sirius, on the other hand, plugged away with commercialized channels that broadcasted only what it thought the mainstream of listeners wanted. Gee, I wonder why it was trading at $0.25 a share?

On November 12th, I turned on my XM satellite radio and listened to the first day results of their merger. XM changed the format of its new broadcast — not to commercial free, unique channels — but to the Sirius style of commercial-filled, mainstream, AM/FM type stations. Also surprising was the news that XM had just fired 80 popular radio personalities and removed their channel or morphed those stations into perverse Sirius counterparts. If you are a big fan of jazz fusion and of “Beyond Jazz”, you know what happened.

I’ve been reading various blogs over the past few days about XM’s switch over. The comment “have canceled my subscription” appears more times than I think Sirius has had subscribers. If you are a little upset by this changeover, here’s a couple of e-mail addresses for you send your gentle thoughts to:

jon.zellner@xmradio.com
sgreenstein@siriusradio.com

At the moment, I am contemplating my subscription. If I wanted to listen to AM/FM stations, I would not have subscribed to satellite radio. I think someone got a little greedy with their short-term thinking …

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You probably heard one of the ways to increase your gas mileage is by filling your vehicle during the coolest part of the day. I thought about this as I stood in 107° heat, feeding my car’s nasty gasoline habit, looking at the State’s calibration sticker on the pump and trying not to go into a heat-induced delirium. Or maybe I did because it occurred to me that the State had certified that that I should be getting a gallon of gas. Yet gas changes its density with temperature. High temperature, less gas per volume. So how can the State say that my gallon of gas is in fact a gallon of gas?

This question became like a bad song stuck in my head. It intrigued me enough that I had to do a little research. Apparently, a gallon of gas has been standardized at 231 cubic inches at 60°F since the 1920s. The thing about gasoline is that it expands as the temperature rises. As the temperature goes up, there’s less gasoline in that cubic inch. The reverse is true as well. The colder it gets, the more gasoline energy is available in that cubic inch. So if you are the owner of a gas station, you got to love those hot summer days when mother nature helps you overcharge for a gallon of gas without you having to do a thing. Of course, if you live in a generally cold climate, the consumer is the one reaping this benefit. This explains why gas pumps in Canada have temperature adjusting devices. We can’t have oil companies and gas retailers losing money during those cold months, now can we.

What about Canada’s warmer neighbor to the south? I learned that while the gas industry routinely makes price adjustments to its wholesalers based on the temperature fluctuations, the consumers see none of this. But don’t worry. It looks like a few other people have wondered about this discrepancy too. I learned that more than 20 lawsuits have been filed in seventeen states by truck drivers and motorists. These lawsuits seek to have gas pumps fitted with temperature compensation equipment so that when you pay for a gallon of gas, you get a gallon of gas regardless of how warm or cold it is. The response from the fuel industry is … it would cost them too much. I guess it would. It’s as if you bought five apples from someone and they can get away with giving you just four apples. Of course it would “cost” them money if they were forced to give you what you paid for in the first place.

As I read more about this gas cost verses temperature, I wondered if there might be a balancing of costs between gas stations and consumers over the course of a year. If you bought the same dollar amount of gas every day for one year, who would come out ahead? You or the gas station? So here is a picture that shows the average yearly temperature in the US during 2001. The red line shows our 60°F demarcation line.

In our little scenario, if you were buying gas north of the red line everyday, it looks like you’d benefit. If you were selling gas south of the red line, then you would be benefiting at your customers’ expense. Of course, this picture and our little scenario are misleading. I’ve lived in places where where it has been 40° in the morning and 70° by the afternoon. And there are studies that there’s much more traveling done in the summer than in the winter. So I guess it can’t really be argued that there is a balancing in cost between gas stations and the customers.

Until the courts sort this out, I don’t know what you and I can do about it. For now, all we can do is gas up during the coolest part of the day. And yesterday started out at 80° for me … maybe I should just move to Alaska.

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