On January 17, 2010, at 1506 mountain standard time, a Mooney M20S airplane, N782LU, was substantially damaged after catching fire during taxi for takeoff at the Cuchara Valley Airport (07V), La Veta, Colorado. The private pilot received minor injuries. The personal flight was being conducted under the provisions of 14 Code of Federal Regulations Part 91. Visual meteorological conditions prevailed at the time of the accident. The pilot stated he had just made a turn during taxi when he heard a “pop” and saw smoke and flames coming from the engine area. He stopped the airplane, shut down the engine, and exited the airplane as the fuselage became engulfed in flames. By the time the fire was extinguished the fuselage had been mostly consumed by fire. The engine compartment was intact and the engine was still attached to the airframe. The majority of the damage was located between the engine and the firewall. The rear portion of the engine compartment exhibited fire damage particularly in the area of the fuel flow transducer and the aft left lower section of the engine compartment. The firewall had a localized area of high temperature thermal damage where the firewall material had turned white. The area was located directly behind the fuel flow transducer. The fuel flow transducer (Mooney Part #880030) with a section of fuel line from both the inlet side and the outlet side was examined by the NTSB Materials Laboratory. The associated fuel lines were standard steel braided sleeved, rubber fuel hose. The inlet connector for the transducer was an AN-816 straight, pipe to tube adapter. The outlet connector was a MS 51508 45-degree, pipe to tube elbow (male pipe end). The transducer was x-rayed with the fuel lines attached to determine if there was any damage to the interior prior to tear down. There were no obvious defects found in the x-rays of the transducer. The fuel lines were then removed to inspect the interior of the fuel transducer. During disassembly, the outlet fuel line was found to be loose at the crimp of the fuel line connector where it attached to the outlet elbow. Upon removal, approximately 0.75 inch of interior rubber hose was found missing from underneath the steel braid as well as a portion of steel braid approximately 0.25 inch wide and 0.25 inch in length. The interior rubber hose that remained appeared to have thermal damage. The section where the steel braid was missing did not appear to have any thermal damage. The cause of the missing steel braid was not determined.