In Refined Fuels, Efficiency Is a Margin Strategy

A week can be a long time in the fuel business. In April, less than 24 hours after the Strait of Hormuz was declared open to commercial shipping, Iran reversed course and vessels attempting to pass through came under fire. Traffic fell again through a waterway that normally carries about one-fifth of global oil flows, forcing fuel suppliers to make commitments while the supply picture was still changing.

A recent DTN webinar looking ahead to the 2027 fuel market examined what happens next. Energy analyst Karim Bastati and the other panelists explained that even after crude starts moving, refined fuel supply can take longer to recover.

Volatility is part of the fuel business, and suppliers, marketers, distributors, and buyers have always had to manage markets that move. But periods of significant volatility are also a useful reminder of how quickly business economics can change and the importance of being able to respond.

We tend to think about efficiency primarily as a cost strategy: automate a task, reduce manual work, lower the cost of a transaction, or enable people to accomplish more with the same resources. Those are important outcomes, but in refined fuels I think the value of efficiency goes further.

When market conditions can change materially in the course of a week, or considerably faster, reducing the time between information and action can have a direct commercial consequence.

That makes efficiency a margin strategy.

Where Friction Becomes Expensive

Consider the series of decisions required every day to buy, sell, and move fuel. Market conditions change, a supplier needs to understand its position, a buyer needs a price, an allocation change or an order requires attention. In each case, people need to understand what is happening, decide what to do, and then execute that decision.

The friction between those steps is not always obvious. It can be information spread across systems, data that needs to be reconciled, routine decisions that require manual intervention, or employees spending time tracking down answers for customers. Individually, those delays may appear small. Across thousands of transactions and decisions, however, small inefficiencies can compound into a meaningful commercial issue.

Based on customer interviews, historical analysis, and pilot studies, DTN estimates that suppliers and wholesalers can lose approximately 2 to 6 cents per gallon through profit leakage at the micro-market level. Across the scale of the industry, that has a potential annual impact of roughly $4 billion.

“ Suppliers and wholesalers lose an estimated 2 -6 cents per gallon through profit leakage at the micro-market level.”

Those numbers help illustrate why efficiency needs to be considered at a more granular level. Two cents on an individual gallon may not immediately attract attention, but across significant volumes and thousands of transactions, pennies matter. The challenge is identifying where those losses are occurring and creating an operation capable of responding before small inefficiencies become recurring ones.

From More Information to Faster Action

The fuel industry has no shortage of information. The more useful question is whether businesses can turn that information into action quickly enough.

I think about that in three stages: seeing, deciding, and acting. First, how quickly can the organization establish what is happening? Having more data does not necessarily mean better visibility if employees still need to assemble information from multiple sources before they understand the situation.

Next comes the decision itself. This is where automation can be valuable, but the objective should not be to automate every decision. Experience, judgment, and customer context remain important in this business. The opportunity is to remove routine work so people can apply their judgment where it has the greatest commercial value.

“Better information only creates value when the business can do something with it.”

Finally, a decision must become action. That distinction is particularly important in industries built around physical goods. A commercial decision ultimately connects to fuel that must be bought, sold, allocated, lifted, transported, or delivered. Better information only creates value when the business can do something with it.

Seen this way, the question is how much time and friction technology can remove from the path between recognizing an opportunity or problem and responding to it.

Treat Time as an Economic Variable

The traditional business case for efficiency is productivity. If automation removes repetitive work or connected workflows eliminate unnecessary handoffs, an organization can accomplish more with the resources it has.

But there is another side of the equation. Responding faster to changing commercial conditions, resolving an exception sooner, giving a customer an answer without multiple internal handoffs, and giving commercial teams more time to spend managing the business all have potential economic value.

That execution gap extends well beyond refined fuels. Deloitte’s 2025 research on business transformations found that companies encounter their most significant challenges during execution rather than planning and design.

That doesn’t mean every second saved translates directly into additional margin. The more useful idea is that not all time has equal value. A delay connected to a routine administrative task has different consequences from a delay connected to a pricing decision, customer commitment, allocation issue, or physical movement of product. Leaders should understand where time matters most and focus their efficiency efforts there.

This is also where I believe the conversation about technology needs to become more practical. AI and automation are useful when they help a business identify an issue sooner, make a better decision, remove unnecessary work, or act faster. What matters is whether that technology translates into a meaningful improvement in how the business operates.

Focus on What You Can Control

No supplier, marketer, or distributor can predict what the oil market will do next with certainty. Plenty have tried. What businesses can control is how effectively they respond when conditions change: how quickly information becomes visible, how easily it moves across the organization, how much routine work sits between a signal and a decision, and how quickly that decision becomes action.

Volatility makes the value of that capability easier to see, but it matters in any market. That’s why I believe refined-fuels leaders should look at efficiency through a commercial lens and identify where time and margin are being lost in the workflows that matter most.

The most useful questions may be straightforward ones. Where are people waiting for information? Where are teams still reconciling or re-entering data? Where are customers waiting for answers? Where are a few cents per gallon disappearing because the business could not see or respond quickly enough?

In a market where pennies per gallon can become billions of dollars at scale, process questions become margin questions. And that is why efficiency should be treated not only as a way to lower the cost of doing business, but also as a strategy for improving how the business performs.