Three Keys to Profitable Fuel Selling

Imagine looking through a knothole in a fence and seeing the home plate of a baseball diamond. Your window provides a clear view of a runner scoring. But it’s still just one part of what’s happening in the game at that moment. There’s information beyond your focal point that’s influencing what you see. Only by stepping outside to view the other factors can you see the full picture.

Selling fuel in the energy industry presents a similar scenario. In the slim margins of refined fuels marketing, one or two data sources aren’t enough — even if the data is accurate. You could still end up losing money without these three things.


1. Accurate demand insights

“Who wants what I have?” is the most critical question a supplier of any good or service must ask. Only by knowing where demand is can you be sure you’ll turn over your inventory at a profit. PADD data by itself isn’t enough; many factors can affect demand within a market. A combination of rack city prices, PADD data, and local historical data can help you ignore outlying prices and better anticipate profitable situations in time to benefit.


2. Accurate pricing data

Once you’ve established which market has the demand for the product you need to move, does the market agree with your price? What are your competitors paying for fuel in that market? You need to know all of the price movements happening in the area. Getting a price from one source won’t help — it could be an outlier. On the other hand, knowing the spot price and rack price of the product in question provides a clearer picture. Lastly, stay on top of that market with real-time price alerts, wherever you happen to be, so you can act quickly.


3. Accurate product volume information

There is another important consideration: the temperature of the fuel itself at lifting. By only using a measurement like the ambient air temperature, you’re not accounting for several other factors that influence fuel temperature, including relative humidity, the tank’s insulation efficiency, and solar radiation. A lack of this information can contribute to an estimate several degrees off from the actual fuel temperature. Since warm liquid fuel grows in volume and shrinks when it’s colder, you could be giving away product if you rely on estimated temperature data.


Protect your profits

Selling fuel requires precise, reliable intelligence. When your margins are fractions of a penny, guesswork just doesn’t cut it. If you address all three of these concerns in your fuel pricing strategy, you can be more confident in your decisions.