Getting a grip on the complexities of fuel management
According to the 2022 National Retail Petroleum Site Census published by Kalibrate Canada Inc., as of December 31st, 2022, there are 11,893 retail gasoline stations operating in Canada. A recent study from IBIS World finds that among that number of gasoline stations, there are 5,442 gas stations with c-store businesses as of 2023, with Ontario (3,414), Quebec (2,038) and British Columbia (1,520) having the most number of gas stations with c-stores.
So, it should not come as a surprise to most that fuel sales and fuel management are an important part of those operations that sell gasoline and have a c-store component. Now, most may think that fuel management is a simple affair. You make sure you have fuel in your tanks for customers, pumps to dispense the fuel and a way for a customer to pay for that fuel, either at the pump or in the c-store.
The reality is, in fact, more complex, and knowing the various parts of fuel management and how to effectively manage them will add more profits each time someone pumps at your operations.
What is fuel management?
Brent Hamby, senior director of product management with Invenco by GVR, says that at its most basic level, fuel management is “anything that encompasses the ability to procure and to sell fuel to the customer.” That includes everything from the tanks, lines and sensors that monitor the fuel in the tanks, to the pumps and payment systems the customer uses, as well as the systems that allow one to monitor to reconcile fuel sales, payments, taxes and the ordering and delivery of fuel to the operation in a timely manner.
By working together, all those systems can help a gas station operator keep a closer eye on their fuel usage, reduce costs and aid in profitability.
Rob Hoffman, director, government and stakeholder relations with Canadian Fuels Association, says good fuel management begins with inventory management, which is knowing how much fuel is going into and out of your storage tanks. “The key thing for that is the integrity of your storage system,” he continues. “It has to be whole and complete, meaning you want to guard against such things as leaks that can create, over time, huge headaches and challenges for the fuel retailer.”
This is where it is important to have in place accurate fuel measurement systems to help guard against what in the industry calls ‘fuel shrinkage’—when the amount in the tank doesn’t match what’s supposed to be there.
Scott Negley, senior director, product management at Dover Fueling Solutions, explains, “Fuel shrinkage, where the quantity of the fuel decreases between the point of storage, transportation and point of sales, is typically due to factors such as leakage, theft or measurement inaccuracies.”
What can cause such inaccuracies? There are a variety of reasons, such as, daily deliveries and frequent dispensing activity means the fuel level within the tank is constantly changing; ripples in the tank from deliveries and tank tilt; as well as inaccurate measurements of what fuel was to be delivered. The list can be long.
Combating shrinkage
Some gas station operators continue to use the old manual methods of checking the tanks, which involves taking a dip stick to measure what’s in the tank and trying to reconcile these numbers with hard copy delivery reports or daily sales. While a manual check is certainly inexpensive, manual checks do not provide fully accurate measures of fuel going into and out of the operation, all of which have considerable consequences.
“For retailers striving to remain profitable, losing even a small amount of their most valued product can result in significant repercussions,” says Negley. “Additionally, environmental compliance requirements have become more stringent in recent years, with agencies conducting inspections and issuing fines for leaks or non-compliant technologies. Each of these factors underscores the necessity for enhanced and effective fuel management technology.”
‘For retailers striving to remain profitable, losing even a small amount of their most valued product can result in significant repercussions’
Technology enables up-to-date accurate fuel measuring. For instance, Dover Fueling Solutions has sensors and systems that allow for accurate measuring of what is in the tanks, including its 3D Laser that is made to accurately determine the exact volume of liquid in fuel tanks and to automatically provide a precise strapping table, which can then be sent to an automatic tank gauge (ATG), and thereby provide an accurate reconciliation report of fuel stock. In addition, the Veeder-Root TLS4 or TLS4B ATGs—which can be upgraded to the TLS-450PLUS—eliminates the need for manual dipping, while providing more accurate fuel measurement.
The technology also helps with reconciliation, one of the most important parts of running a gas station. Ensuring that it is done consistently and accurately helps to reduce theft; identify if storage tanks or the lines delivering fuel to the pumps are leaking; or, if there is any faulty equipment. Plus, the technology ultimately helps to ensure that margins are calculated correctly.
Accurate measurement for more accurate ordering
By having accurate measurements of what goes into and out of the storage tanks, gas stations can then tie those measurements into today's advanced computer-based fuel management systems, which allows for more accurate ordering of fuel. This is critical, as gas stations operate on tight margins and knowing when to order fuel to meet demand, and to price the fuel at a competitive rate, is critical.
Technology has advanced to such a degree that one can collect real-time information on daily fuel consumption by customers, which helps produce accurate historical forecasts of fuel sales. In turn, operators can use this information to adjust fuel orders to meet peaks and troughs in demand.
In all cases, fuel management solution providers build into their systems tools that will automatically order more fuel from the gas station’s fuel provider when it finds fuel stock running low or if, for example, an anticipated sales peak is approaching.
Doing this also helps in reconciliation as well.
Hamby says that Invenco’s fuel management system brings all that information together, from inventory readings, forecasts, historical sales and consumption data, even weather events impacting fuel sales at the pumps to “accurately see what is going on. This deep understanding then allows you to make decisions as to when it is the best time to buy fuel—is it right now, later; is it best to buy from Terminal A or Terminal B—and by balancing all them together you [can] be more accurate with your reconciliation.”
Hamby adds that more accurate reconciliation has a direct impact on customers as well, by ensuring that fuel is available when they arrive to fill their tanks, and that the fuel is priced competitively.
The AI revolution
Reconciliation and fuel management is poised for a major shakeup, with AI systems tied to advanced video monitoring and an ever-growing number of sensors providing real time information about customer behaviour, fuel consumption and fuel stock inventories and usage, according to Jason Chiu, professional services group manager, Canada, with Axis Communications.
“The capability to integrate data from multiple disparate systems and present it in a meaningful way—for example, fuel inventory, prices, time spent at the pump, time spent in the c-store, traffic patterns outside and inside the c-store—can yield insights into consumer behaviours,” he adds.
These insights can be used to create targeted advertising to lure fuel customers into the c-store: Coffee for the morning commuter; ready-made meals for tired and hungry travellers; or even real-time weather information that then promotes relevant products, such as windshield washer fluid.
Dover Fueling Solutions’ The Future of Fueling Report: Innovation at the Pump 2023 finds that ads at the pump are catching the attention of younger consumers and helping drive c-store foot traffic.
According to the report, “more that more than half (51%) of consumers ‘always’ or ‘often’ notice advertisements on or around a fuel pump, but consumers have mixed opinions on their effectiveness. Close to one-third (32%) say fuel pump commercials or ads have convinced them to enter a convenience store, with age also playing a factor in that decision. Gen Z and millennial consumers are more likely to be swayed to go into a c-store based on ads at the pump, and nearly half of them (46%) say those ads influenced their purchasing decision.”
Perhaps this is why, in early 2023, Dover launched, as part of its DFS Anthem UX platform, the DFS AX12 enhanced fuel pump that supports a 12-inch touchscreen display, which allows for the display of ads and other promotional content designed to drive people into the c-store.
Fuel management and c-store management go hand in hand. With today’s increasingly advanced technologies, operators and their customers can now expect more from each fuel fill at the pumps.
This article first appeared in the March | April 2024 issue of Octane magazine.
