Identifying and minimizing all sources of variance within a fueling operation clarifies a company status at any time
What is Fuel Variance?
A fuel variance is the difference between the amount of fuel available in a tank at any given time, according to recorded deliveries and sales, and the actual amount of fuel available in the tank. Fuel variances can be positive or negative.
Why is it so important to understand variances?
There are two overarching sources of variance:
Physical fuel losses that happen during incidents within a fueling system
Adjusted losses that are due to poor or inaccurate data.
Variances caused by physical fuel loss are a loss of inventory which can have a major impact on a retail fueler’s profitability, and depending on the exact cause could result in fines or notice of violation. Alternatively, variances caused by accounting errors can create additional liabilities and tax implications for a business, all while masking real fuel losses.
The importance of minimizing variance
Identifying and minimizing all sources of variance within a fueling operation clarifies a company’s inventory, compliance, and financial status at any given time, drives down its liabilities, and eliminates waste. Additionally, the tighter the margins are on fuel, the more each gallon of fuel lost will cost your business to recover.
What are the primary sources of physical fuel loss?
1. Delivery Discrepancy
Do you know—without a doubt—if all the fuel in the delivery truck made its way into your storage tank?
What is your process for confirming bill of lading accuracy?
Deploying the right technology to protect your fuel assets and ensure you’re getting what you pay for is crucial for reducing fuel loss from delivery discrepancy.
2. Meter Drift
You rely on your fuel meters to accurately measure and charge for the amount dispensed, but normal wear and tear can impact these meters, prohibiting them from performing accurately between calibrations.
With the growing number of contaminants from today’s cleaner fuels, recalibration and maintenance are needed more frequently, compromising the accuracy of your meters and likely giving customers more or less fuel than they have paid for.
From dispenser tampering to 600 gallons of fuel missing from delivery trucks—theft eats away at your profits. Thieves can be creative and often find ways to siphon fuel straight from underground storage tanks, bypass dispenser meters, and drive off the forecourt before paying.
4. Evaporation / Temperature Loss
Fuel expands or contracts depending on temperature. This can occur both in the delivery truck and the underground storage tank. If it is cold outside, the fuel could contract in the truck before delivery occurs, causing a variance between the actual delivery and the bill of lading.
Alternatively, if the outside temperature is warmer than the temperature below ground, a fuel delivery may contract inside your tank, resulting in the appearance of loss without any delivery discrepancy.
5. Storage Tank Leaks
Storage tank leaks are likely the most straightforward source of fuel loss, but also the most urgent. Aside from the hazardous environmental and regulatory repercussions of a storage tank leak, profits also take a hit when a leak is present. Fortunately there are a variety of solutions available to detect and prevent storage tank leaks, from automatic tank gauges to alarm management services.
How do adjusted losses accrue?
Measurement & Accounting Errors
At every custody transfer there is potential for error in reporting the amount of fuel delivered or received. Reconciling a fuel site’s deliveries and sales is difficult, especially when the bills of lading, delivery confirmations, automatic tank gauges, and point-of-sale equipment may all supply a different record. Contributing to the issue are tank charting and equipment errors which can mask any actual fuel losses.
What steps can you take to establish a baseline understanding of your variance?
1. Confirm that the equipment at your fuel site is maintained and operating correctly, and upgrade your equipment as needed.
2. Ensure that you have accurate tank charts for your site. This can be done using the AccuChart feature within Business Inventory Reconciliation.