Are you managing your fuel correctly?

Dan Armes, Founder of ServoPro, offers insight into having a preventive approach to wet stock management.

Fuel is the most expensive and high risk product service stations offer, yet many fuel retailers fail to put a system in place to ensure that their investment is protected. Fuel is also one of the smallest profit margin products, so even small losses can have a big impact on the bottom line of the business.

Managing your wet stock (fuel stock) not only makes good business sense, but it also is a regulatory requirement in Australia to monitor Underground Petroleum Storage Systems (UPSS) for losses. It is illegal to allow or ignore contamination resulting from leaking or faulty UPSS.

Loss monitoring has been mandatory for all new UPSS since 1 June 2008 and for old systems from 1 June 2009.

Petroleum has toxic components such as toluene, xylene, benzene, and ethylbenzene that can cause serious risks to humans and the ecosystem if they are released into the environment. Any undetected fuel leak from a UPSS can pollute the petrol stations surroundings including air, water, groundwater, and soil.

At ServoPro, we always advise our members that they are far better off having a preventive approach to wet stock management.

If a leak occurs from a UPSS, cleaning the contaminated surrounding (groundwater and soil) can cost anywhere from $100,000 to more than a million dollars. The UPSS owner can suffer economic losses from wastage of the fuel and may be liable for third-party damages for nearby contaminated sites.

It becomes business critical to involve a specialist in wet stock management to regularly monitor UPSS and detect any fuel leaks.

Many petrol station operators don’t have any controls to record their site’s deliveries, dip readings and sales. As a result, you could be facing fuel loss without any alarm bells.

While some petrol station owners prefer to do their own loss monitoring, at ServoPro we recommend the use of a third party for SIRA. These specialist companies use inventory data and statistically analyse it to report the smallest leaks possible. This becomes essential at sensitive sites where a minor leak can impact the environment significantly.

The most common area where fuel losses are identified is in the sales process because of the poor calibration of pump meters. While individual meter miscalibrations may appear to be small and insignificant, these can result in the loss of significant profits aggregating over time.

If your pumps are over delivering, your customers will appreciate it, but it’s definitely not good for business. Wet stock monitoring reports can detect these miscalibrations and ensure this doesn’t happen.

Some petrol retailers choose to reconcile their wet stock manually via a written book or spreadsheet. The dangers of manually reconciling your wet stock include human error, data entry errors, formula errors and miscalculations. In many cases, these manual forms of reconciling wet stock are not only inaccurate but are also non-compliant. While the fuel retailer might think they are making an effort to detect leaks, if the EPA was to audit the site, they may not be deemed compliant.

The benefits of using an external company for SIRA and wet stock management includes but is not limited to, delivery validation, identification of contaminants, dip data functionality, identification of pilferage, and specialist advice if there is an issue found.

Common issues that are found using a specialist SIRA company and reporting include incorrect fuel deliveries, leaks from fuel pipelines and tanks, and the accuracy of dispensers and meters.

The EPA conducts random audits of service stations nationally. It is important that all fuel retailers are aware of their obligations around compliance.

When you receive a delivery from your fuel wholesaler how do you know if the correct amount of fuel has been delivered? There have been cases of theft while fuel is in transit. Third party wet stock monitoring will allow you to know in real time if you have received a short delivery. With small margins, fuel retailers cannot afford to be receiving short deliveries.

There was a case where a truck with a false floor and a fuel tank was parking over the fill point of underground fuel tanks and was pumping fuel out of the tanks. Without a system for reconciling fuel, the site operator would have never been able to detect such theft.

When an abnormality is found in a site’s wet stock reconciliation, it is important that the site operator gets specialist advice to find the problem as soon as possible. It may be as simple as having the dispensers calibrated or worst case scenario there is a leak in an underground tank. Either way, the issues must be identified early and fixed immediately as this can have a direct impact on the bottom line.

There have been cases of the wrong type of fuel being delivered into a tank resulting in customers receiving the wrong type of fuel for their vehicle. If the site operator is using third party wet stock monitoring, this will be detected far quicker than if no reconciliation is being done.

Reconciling your wet stock will also pick up if you have water entering your tanks either via a leak or build-up of condensation. The extra volume of water will be picked up during the data analysis.

Make sure that all staff members are trained adequately to avoid any data entry errors. The integrity of dipsticks should also be checked on a regular basis as warped or hard to read dipsticks can result in inaccurate data being entered resulting in incorrect analysis.

All service station operators should be submitting reliable data to a third party vendor of choice every day and be reviewing reporting data weekly. To be able to manage fuel inventory effectively and efficiently correct analysis and reporting needs to be easily accessible.

For a small monthly fee, it makes good business sense to use a specialist company for your wet stock management and SIRA compliance. No service station owner who wants to run an environmentally responsible, profitable business and have peace of mind can afford to ignore this.

At ServoPro we have a range of partners who specialise in all areas of compliance including SIRA and environmental regulations including special rates for members. If you need any help and advice, feel free to contact us directly.

This piece was written by Dan Armes, Founder, ServoPro, for the August/September issue of C&I Retailing Magazine.

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