Refiners pay $21.6 million to settle "hot fuel" suits
NEW YORK |
NEW YORK (Reuters) - ConocoPhillips (COP.N), ExxonMobil Corp.(XOM.N) and four other oil companies have agreed to pay a total of $21.6 million to resolve allegations they knowingly overcharged for fuel oil by failing to adjust prices to account for changes in volume caused by summer temperatures.
Gasoline is sold by volume, but as outside temperatures climb storage tanks heat up and fuel volume expands, diluting the amount of energy delivered per gallon.
Several of the refiners had previously announced they had reached a settlement in principle in the case, which combines more than 50 separate lawsuits filed against oil producers and retailers over their so-called 'hot fuel' practices.
The proposed settlement filed Friday in U.S. district court in Kansas reveals the financial details of the deal, reached after more than five years of litigation.
ConocoPhillips, ExxonMobil, Shell Oil Products US and two subsidiaries of BP PLC (BP.L) - BP Products North America Inc and BP West Coast Products LLC - will pay $5 million each, according to court documents. Citgo Petroleum Corp PDVSAC.UL and Sinclair Oil Corp will shell out $800,000 apiece.
The funds will be distributed among retailers and wholesalers in the 29 U.S. states and territories where the hot-fuel suits were filed.
Valero Energy Corp (VLO.N) will not pay into the general settlement fund, but will provide up to $4.5 million in attorney's fees, according to court papers.
A spokesman for ConocoPhillips confirmed the settlement and declined further comment. Representatives for the other refiners did not immediately respond to requests for comment.
Gas retailers in the U.S. peg their sales at a wholesale level to an industry standard of approximately 60 degrees.
Technology to monitor temperature at pumps has been used for decades in Canada, where the oil industry pushed for the law.
Conversely, in the United States, consumer watchdogs say the oil industry has lobbied against such a measure despite record high earnings and the relatively modest cost of $800 to modify an existing pump.
(Reporting by Jessica Dye; Editing by Joseph Radford)
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