Frontpage Slideshow | Copyright © 2006-2012 JoomlaWorks Ltd.

The Great Fuel Mystery: Minimize Fuel Variance to Optimize Your Margins

1 1 1 1 1 1 1 1 1 1 Rating 77%
User Rating:  / 1
PoorBest 

Most fuel retailers lose some amount of fuel during the journey from origination to delivery or through the process of dispensing the fuel. However, it can be very difficult to tell exactly when and how the variance occurs. During a recent webinar, Ryan Mossman, senior director of managed services, and Dale Spence, marketing director for the global ATG platform, discussed this pain point and shared ways to help minimize the causes of variance in order to optimize fuel margins.

 
Ryan and Dale examined the NACS 2014 Fuels Report and found that gross fuel margins averaged 17.1 cents per gallon last year. When you compare that against the fact that expenses to sell that gallon averaged 12-16 cents per gallon, you see why only 36% of profit dollars are related to motor fuels!  As discouraging as these numbers seem, there are opportunities to reduce fuel variance and understanding the sources of variance is probably the best place to start. 

So, let’s talk about a few sources of fuel variance: 

  • Storage Tank out of Calibration – Utilizing a tank strapping chart can help you pinpoint tank chart error or “noise” to find out what is masking true fuel loss. These types of errors can occur through tank tilt, diameter error, probe offset error and other calibration issues. If your underground storage tank is not properly calibrated, you can’t see the variance. 
  • Theft and Fraud – From credit card fraud to 600 gallons of fuel missing from delivery trucks – theft eats away at your profits. Crooks can be creative and often find ways to remove fuel from storage tanks by defeating theft protection mechanisms on dispensers, bypassing dispenser meters, or leaving the forecourt before paying, further reducing profits. 
  • Discrepancies in Delivery – Another source of variance is delivery discrepancy. What is your process for confirming bill-of-lading accuracy? Protecting your fuel assets and deploying technology is crucial to ensuring that the fuel delivered actually made it to your underground storage tank.
  • Meter drift – ¬Even with a single meter out of calibration, it can have a significant impact on your profitability. If it occurs more frequently or on multiple meters, it can have a huge impact. Managing your meters to ensure they are fully calibrated will give you better control of your variance and fuel assets and costs. 
  • Evaporative/Temperature Loss ¬– This is a natural phenomenon that occurs as air gets into your storage tank producing a chemical reaction that leads to this variance. This type of variance cannot be eliminated but it can be accounted for. The important thing to remember is that all forms of variance need to be categorized and taken into account.  This will allow you to focus on meter drift, delivery discrepancies, tank calibration and any theft that occurs at your sites.

 

No matter what the cause, detection and measurement of variance with the proper technology is key to minimizing this and protecting your fuel margins to improve your overall business. 

You can view the full webinar and hear more about minimizing fuel variance by visiting our Resource Center.


rss Follow Us On Twitter linkedin

Categories

Blogs We Like

Connect with the Authors

Cheryl Gilson This email address is being protected from spambots. You need JavaScript enabled to view it.
Bubba Lange This email address is being protected from spambots. You need JavaScript enabled to view it.
Ryan Mossman This email address is being protected from spambots. You need JavaScript enabled to view it.
Steve Shannon This email address is being protected from spambots. You need JavaScript enabled to view it.  
Greg Salverson This email address is being protected from spambots. You need JavaScript enabled to view it.
Matt Tormollen This email address is being protected from spambots. You need JavaScript enabled to view it.
Rich Witmer This email address is being protected from spambots. You need JavaScript enabled to view it.
David Zahn This email address is being protected from spambots. You need JavaScript enabled to view it.