National Petroleum News (NPN) has been the independent voice of the petroleum industry since 1909 as the opposition to Rockefeller’s Standard Oil. So, motor fuels marketing and retail is not just a sideline for us, it’s our core competency.
Issue link: https://read.dmtmag.com/i/116555
RETAIL OPERATIONS BY BrIaNREyNOlDS, SIMMONS SIrVEY cOrPOraTION, rIcharDSON, TEXaS Where accounting for every single drop of fuel matters ThE NEW NORm T he electiOns are Over and the mOOd arOund the country appears to accept a mindset for a "New Norm." No matter how sentimental we are for the old days with oil prices that are in the $50 a barrel or less range and for fuel prices in the $1 to $2 dollar range. The "New Norm" appears to include an unstable fuel market with the ability to quickly peak at previously unheard of prices. However, there is a group of individuals in this industry that seem to be incapable of acceptance of any advertised price no matter how high or low and that is, the fuel buyer. Fuel buyers have the grit and the smarts to negotiate and bargain in order to get the best deals possible. When it comes to fuel buying, margins can pierce the boundaries of an actual penny and revert to points (100 points = 1 cent). Fuel buyers negotiate for below advertised prices and the discussion often reverts to a known index, such as OPIS minus. The best fuel buyers know how to lock in fixed contract prices and the prices will include the use of a point value less than 100. (Example: 50 points = ½ penny) So the point (a literary point, not a monetary point) here is that marketers routinely focus on negotiating for a few points that often represent a savings of something less than $50 dollars a full transport load. (50 points represents $ 0.005 X 8,500 gallons= $42.50 per load in savings). If $42.50 was a big deal, then why is it that there seems to be a complete acceptance of not accounting for every single drop of fuel purchased that is represented by the bill of lading (BOL)? The BOL is the basis for which a supplier invoice is accounted and billed from. A delivery is made and the accounting and EPA reconciliation should, in theory, match the supplier's BOL 100 percent. We have been trained to accept mediocre accounting principles for fuel deliveries. Even the EPA embraces an acceptable margin of error. (1 percent of throughput + 130 gallons total - Source EPA). This is the lowest common denominator for all 50 states in the U.S. as mandated by the EPA. Each state/municipality may have stricter guidelines. One percent of a typical 8,500 gallon transport load of gasoline is 85 gallons at $3 per gallon= $255.00. Yet the buyer that fought for 50 points per transport load only 26 March 2013 won an extra $42.50 per load (14 gallons worth!) There is a way to accurately account for this previously irreconcilable amount of fuel and that is with a concept called "continuous inventory monitoring." Technology is available today whereby sophisticated mathematical algorithms and software can in real-time not only reconcile over and short deliveries based Brian Reynolds hasbeen upon the BOL purchase amount, but apetroleummarketing professionalforover40 can actually detect for variations in tank years.Hebegancareer inventories to the precision of 1/1000th asayouthworkingina familyownedpetroleum of an inch. A typical manufacturer's tank marketingcompanyin chart will only convert gallon volumes Cisco,Texas.Hewas apioneerinthefieldof to 1 inch increments and a typical ATG highvolumesupermarket is setup with only 4 known points in its fuelingandthebusiness tank chart table. Continuous monitormodelinventedhasbeen oneofthemostcopiedin ing also will detect variations in dispenser highvolumepetroleum meters (called meter drift), discrepancies retailingforthepast20 years.Hewasalsopart between the POS and the dispenser, theft ofteamthatinventedthe and short deliveries and, of course, leaks. visiblerollbackfueldispenserforawardsbased At $3 a gallon fuel cost, for every discountedfueling.He 100,000,000 gallons of throughput, it currentlyworksforSimis expected that continuous fuel monimonsCorp,Richardson, Texas,asanaccount toring will identify 500,000 gallons of representativeleveraging hisexpertiseincontinuous product or approximately $1,500,000 of fuelmonitoring,regulatory previously irreconcilable fuel. environmentalcompliance How many of us would risk having a andautomatictankgauge operations. car wreck trying to capture a $20 bill on the side of the road? (Who do you know that actually backed up to pick up a $4 screwdriver sitting on the side of the road?) We use technology to guard our most valuable assets. We negotiate contracts like a heavy weight boxing champion for a small prize. Today it is now possible to literally place automated safeguards on 100 percent of fuel inventories and account for every drop of fuel that is paid from a bill of lading—representing millions of dollars in savings. Today the "New Norm" for the petroleum industry means accounting for 100 percent of the fuel that is represented by the bill of lading, because it is your money! NPN Magazine n www.npnweb.com