Fuel loss prevention and military strategy have a few things in common.
By Brian Reynolds
Born around 544 B.C., Sun Tzu was a Chinese general who wrote “The Art of War,” which is required reading at many military institutions. His tactics have inspired the leaders of most major battles won since the American Revolution. One of the most widely known concepts taught by Sun Tzu is to work smarter, not harder.
Beyond battle-winning strategies, insights from “The Art of War” have been repackaged by football coaches, sales managers and, in this article, fuel operators!
With increasing oil prices and a predicted harsh winter, the temptation to steal diesel fuel is rising because it can be quickly sold as black market heating oil. Minimizing fuel shrink is a tactical opportunity for operators to maximize profits. So let’s apply Sun Tzu’s ancient concepts to fuel loss prevention.
“To know your enemy, you must become your enemy.”
In this case, the enemy is the fuel thief. How is your enemy stealing gas, and why is the theft so hard to detect? Like any good caper, the juice needs to be worth the squeeze. Most fuel thefts involve 500 to 1,000 gallons or more per event. If fuel dispenses at eight gallons a minute, it would take approximately two hours to steal 1,000 gallons.
One method for procuring 1,000 gallons of fuel undetected is to masquerade as a service technician. A knowledgeable “technician” nonchalantly goes about servicing forecourt equipment. Generally, this crime is performed in broad daylight at a busy gas station. The busier the better, because the automatic tank gauge (ATG) gets confused with normal sales and can’t identify a rapid loss, which would indicate a catastrophic failure, such as a leak or a theft.
With diesel prices approaching $5.00 per gallon nationwide, $5,000 for a daylight robbery is not bad, especially when the victims don’t even realize it happened.
“Quickness is the essence of the war.”
So how do you become vigilant without making life difficult or dangerous for customers and employees? One way is to monitor dispenser operations at real-time speeds.
It takes a couple of hours to make a theft worth someone’s time and energy. Sophisticated wetstock technology can record and time-stamp every moment of any activity during the fueling process. With a transport load of fuel approaching $40,000 a load, wetstock theft detection for the forecourt should be as common as a squeegee and a fire extinguisher.
Even if a dispenser is in stand-alone mode or if product is being pumped directly from the tank, a sophisticated wetstock technology will be able to process, detect and alert a dedicated analyst in under five minutes. Today, this is a reality in the high-tech world of wetstock management. The most profitable operators use this technology in their daily operations.
Having wetstock technology coupled with surveillance footage on the forecourt will detect theft and provide a powerful tool for apprehending the culprits.
“He who is prudent and lies in wait for an enemy who is not will be victorious.”
How often do you reconcile a bill of lading (BOL) with the physical delivery so that you know you received what you paid for? It is commonly believed that if gallons are missing upon delivery, the culprit is the temperature during transportation. It’s easy to see why this myth exists—the concepts of net and gross gallons and of the temperature adjustment to 60 degrees are abstract and hard to understand. It’s easier to blame a loss on something nobody will ever make you prove, such as thermodynamics.
Further, there is not truly an industry standard for acceptable loss. The EPA understands this, too; it allows an acceptable margin of 1% of the delivery of +/- 100 gallons. But if I did have to determine the standard, many operators use 100 gallons as the threshold, with anything over 100 causing concern.
Now, let’s bust the myth. Temperature losses are generally less than 10 gallons! So if 100 gallons were lost, where did the other 90 gallons go? A wetstock fuel loss analysis can provide the answer and can do so using net and gross gallons from the BOL as part of the investigation and mathematical algorithm.
The probable cause for fuel loss could be an error during delivery or could be an issue at the terminal. If the BOL is good enough to generate an invoice, then it should be good enough to use advanced analytics to determine how much of the fuel load made it to the tank. And yes, with wetstock, it can be precisely determined how much was dispensed during delivery.
“Great results can be achieved with small forces.”
By using a wetstock management service with trained analysts, an operator can reconcile their daily gallons of throughput or identify the causes of variances. Operators found that, for every 100 million gallons of throughput, a sophisticated wetstock solution is expected to identify 500,000 gallons of lost fuel. That equates to approximately $2.5 million of lost fuel at $5.00 per gallon. The numbers speak for themselves. And as Sun Tzu would teach, that’s working smarter not harder.
Brian Reynolds began his career working as a teenager in his family-owned jobbership in Cisco, Texas, and was at the forefront of many industry milestones. He works for Dover Fueling Solutions.
