Net Vs. Gross In The Fuel Industry
Fuel volume can expand and contract depending on temperatures. This temperature-influenced expansion and contraction causes challenges for companies delivering gas. The amount delivered and the amount of fuel received can be different. This difference is referred to as net versus gross. With a formula that accounts for the expansion and contraction of the gross amount of fuel, we can determine the net gallons actually delivered. Wholesalers must also buy and sell fuel by net or gross gallons depending on the prevailing temperature in their region.
Challenges of delivering fuel
In the U.S., the volume of motor fuel is considered normal at 60 degrees F. As the temperature goes lower than 60, the volume contracts. As the temperature goes above 60, the volume expands.
In the hot summer months, the temperature of the gas at the delivery truck can be higher than the insulated tanks below. When the warmed-up gas flows into the tank, it hits the cooler temperatures and begins to contract. That contraction means that a delivered load of 1000 gallons will actually end up less than 1000 gallons in the tanks. The net fuel is less than the gross delivered.
In the cold winter months, the temperature of the gas at the delivery truck can be lower than in the insulated tanks below. When the cool fuel flows into the tank, it hits the warmer temperatures and begins to expand. That means the 1000 gallons delivered will end up being more than 1000 gallons in the tank. The net fuel is more than the gross delivered.
Accounting for the expansion and contraction of the gross amount of fuel and the net gallons actually delivered
The industry had to adjust how it measured gas to account for the fluctuations in volume. Using a thermodynamic formula, the industry calculates the size of the fuel’s expansion or contraction due to the difference in temperature.
In simpler terms, the number of gallons coming out of the delivery truck (the gross amount delivered) is adjusted up or down. This adjustment of the gross amount makes up for the loss in volume during hot weather and the gain in volume during cooler weather. This temperature-corrected calculation determines the “net” gallons delivered.
Are wholesale fuel purchases by net or gross gallons?
To make the gas purchase simpler, wholesalers buy and sell fuel by “net” gallons in the warmer southern states. Conversely, they sell by “gross” gallons in the north, where a cooler climate prevails.
If you have any further questions about net versus gross when it comes to fuel purchases, you can call The Kendrick Oil Company today at (806) 250-3991. You can also communicate with us through email by clicking on Contact Us. If you want more information about our company, read more About Us. We look forward to hearing from you.