Gasoline Column - October 13, 2006

“GAS-SAVING” DEVICES: FTC PROTECTS CONSUMERS FROM BOGUS PRODUCTS

Current Gasoline Market Conditions

Nationwide gasoline prices continued their slide, which began in mid-August. The Energy Information Administration reported that the national average price of regular-grade gasoline was $2.261 per gallon on October 9, down 4.9¢ from the previous week. Prices dropped the most in the Rocky Mountain states, with the average falling by 9.5¢ to $2.491. At $2.105 per gallon, Ohio had the lowest average price of any state.

Crude oil prices may portend additional drops in gasoline prices. The New York Mercantile Exchange price of crude oil closed on October 12 at $57.86 per barrel, slightly above the previous day’s $57.59 – the low closing price for 2006. This pricing indicates that the market was discounting reports that OPEC nations may cut crude oil production by 1 million barrels per day.

“Will This Gadget Really Save Gas?”

When gasoline prices go up, so does the volume of advertising for “gas-saving” products. The Environmental Protection Agency (EPA) has evaluated or tested more than 100 alleged gas-saving devices and has not found any product that significantly improves gas mileage. In fact, some “gas-saving” products may damage a car’s engine or cause substantial increases in exhaust emissions. Even for the few gas-saving products that have been found to work, the savings have been small. The FTC has brought a number of law enforcement actions through the years against companies for deceptively claiming that fuel additives and devices can dramatically increase fuel economy.

FTC Settles Federal Court Case for Permanent Injunction and $4.2 Million

On August 22, 2006, the FTC announced a settlement with the manufacturer of a magnetic device that was claimed to save fuel and reduce emissions but in fact did neither. International Research and Development Corporation of Nevada and its owner, Anthony Renda – together with marketers and resellers who were selling the “FuelMAX” and “Super FuelMAX” devices through spam e-mails – were charged in a federal court complaint with making deceptive claims about the products, which are supposed to be attached to a car’s fuel line. In the product packages, on websites, and in the promotional materials that they provided to their resellers, the makers of FuelMAX claimed that the product increased gas mileage up to 27% and reduced emissions. The FTC alleged that the devices achieved neither of these goals. One expert contacted by the FTC even stated that the claims for the product violated the laws of physics!

The FTC’s complaint was resolved through a stipulated permanent injunction that imposes a lifetime ban on the manufacture or sale of any similar fuel-saving or emissions-decreasing product, and also prohibits false or unsubstantiated claims about increased gas mileage or reduced emissions. In addition, the defendants will pay $4.2 million for redress to consumers who bought the devices based on the defendants’ false advertising claims. The FTC has established a hotline containing a recorded message (1-877-382-2020) for consumers who believe they are entitled to a refund. More information about the case is available at http://www.ftc.gov/opa/2006/08/savegas.htm.

This is only the latest in a long line of products that were supposed to save gasoline but instead have the effect of emptying consumers’ wallets. The Commission has brought other cases against companies that made implausible claims for various aftermarket devices, such as fuel-line magnets, air bleed devices, and other retrofit gadgets. In addition, the Commission has brought cases against deceptively marketed engine treatment additives. You can find more information about the FTC’s enforcement efforts concerning automotive products at http://www.ftc.gov/bcp/conline/edcams/eande/contentframe_fuel_law.html.

Tips for Saving Gasoline

Although there have been many bogus gas-saving products on the market, consumers can take important steps – at little or no cost to themselves – to combat high gasoline prices. The most important step is right at the gasoline pump. Under the FTC’s Fuel Rating Rule, all gasoline pumps must post the octane rating of the gasoline they dispense, and higher-octane gasoline costs more than lower-octane gasoline. Check your owner’s manual to determine the octane level for your car, and don’t buy a higher octane level than you need. Additional tips from the EPA to help consumers get better gas mileage include: (1) drive within posted speed limits; (2) avoid unnecessary idling; (3) remove excess weight from the trunk; (4) keep the car’s engine tuned; and (5) keep the car’s tires properly inflated. And perhaps the most important fuel economy decision a consumer makes is which vehicle to buy. For a consumer who drives 15,000 miles per year and pays $2.50 per gallon for gasoline, a car that gets 30 miles per gallon (MPG) will save the consumer $3,125 over 5 years compared to a car that gets only 20 MPG. Visit http://www.fueleconomy.gov for more information.