The Tedious Task of Investigating Fuel Inventory Variances
Warren Rogers Precision Fuel System Diagnostics

PDF version: Investigating Fuel Variances May 2025 v2

Investigating fuel inventory variances remains one of the most labor-intensive and disruptive tasks for fuels compliance, maintenance, and accounting managers. Suspected inventory loss can consume days of follow-up, pulling resources away from standard operations to isolate the source of discrepancy. Much of this cost of doing business is off-the-books and uncalculated, consuming many extra hours of staff time and thousands of dollars of expense. The investigations also lead to long hours and other work not being done in a timely manner, if at all.

Fortunately, many companies today employ technology to assist with decreasing the fuel variances they see in their daily tank inventories and the frequent investigation of suspected losses. Those practices could involve:

• The employment of real-time fuel monitoring and inventory reconciliation, tracking fuel transactions and tank movement to ensure what leaves the fuel tanks match what is dispensed. When suspected discrepancies are recognized, system alerts occur, the operator is informed through various means, and the suspected variances are investigated.

• The key to good fuel inventory control also begins with a good foundation. That foundation would include precision tank charting to ensure that the product levels in the fuel tanks are accurately tracked. Incorrect tank charts can occur due to unknown tilt of the tank in the ground or deformation of the tank since the tanks were installed, leading to a change in the physical size and dimensions of the tank. Precision tank charting can recognize these changes and adjust for more-accurate measurement. Incorrect tank charts lead to fluctuations from day to day in inventories and excessive “noise” that exists only on paper. Precision tank charting can eliminate a large portion of fuel variances, often as much as 80-90%.

• Proper meter calibrations at the dispenser can also lead to more accurate fuel inventories, decreasing your variances when less fuel is “given away” to customers due to out-of-tolerance meters. Some more-advanced electronic monitoring solutions can help to isolate meter “drift”, allowing operators to target and adjust meters between regular calibrations or the once-a-year visit from state inspectors. Often, meters can drift for days or months before the next inspection, leading to hundreds or thousands of dollars in fuel loss and variance going undetected. Multiplied across dozens or hundreds of dispensers…well, you get the picture!

• With some fuel monitoring systems in place, fuel BOLs can also be compared to the physical product entering a fuel tank during a delivery. Variances can be noted related to delivery shortages and the loss related to temperature and travel time from the terminals. These physical losses or gains are inherent in the fuel business. Other variances can be traced to unintentional delivery shortages, driver theft, the placement of a particular product grade in the incorrect tank, or other anomalies.

However, in many cases, the fuel operator may lack the technical solutions available on the market and depend more on more traditional methods of fuel accounting. So, where do they start when a suspected loss has occurred?
The investigation typically begins with a fundamental question: “What is the root cause?” In many cases, there is limited initial data—only that internal reconciliation or statistical reports show several hundred or thousands of gallons of product unaccounted for at a specific location. Many times, the tracking could be as simple as an Excel worksheet.

The next diagnostic step is to determine whether the variance is associated with any alarms indicating a possible release. This includes checking for active tank or line leak detection alarms, failed sensor readings, or abnormal pressure changes. In the absence of alarms, a physical release of fuel is less likely, but if any indicators are present, escalation is required. This may involve isolating the affected system, issuing a shutdown of fueling operations, and initiating a site inspection. Followed by required reporting to state regulators of the suspected release and investigation, consuming more staff time and attracting undesired attention from regulators.

A proper field investigation typically includes a visual inspection of all accessible containment areas (e.g., submersible sumps, dispenser sumps, spill buckets), verification of sensor positioning and status, and pressure or line tightness testing as required under regulatory protocols. Third-party contractors or certified company maintenance technicians usually perform this work.

If physical product loss is ruled out, the variance may be attributable to non-physical anomalies—such as meter drift, undocumented delivery discrepancies, equipment calibration issues, or potential theft. At this stage, cross-referencing POS transaction data, delivery records, and tank charts becomes essential for narrowing the list of probable causes.


Here are a few additional steps to take during your investigation:

1.  Review of Daily Fuel Reconciliation Reports

• Pull data from automatic tank gauges (ATGs), back-office systems, or any wet-stock management software.
• Compare daily tank meter readings with actual fuel sales from the point-of-sale (POS) system.
• Look for volume discrepancies between deliveries, inventory, and sales.
Manual spreadsheets, back-office software, or wet-stock platforms can be good sources of data for your investigation.

2. Cross-Check Delivery Receipts

• Match fuel delivery invoices against your automatic tank monitor tank readings at the time of fuel delivery.
• Verify that the full load was delivered (no short deliveries or drops to the wrong tank).
Some challenges with this step are that delivery drivers don’t always scan in the BOL correctly into the tracking system, and inaccurate or missing BOLs (bills of lading) can complicate verification. An additional challenge with ATG readings is that fuel sales during the delivery time may be difficult or time-consuming to calculate with any accuracy. Your location may sell hundreds or thousands of gallons during a 30-to-60-minute fuel delivery, further clouding accountability. Some tank monitors can help to estimate this gap through optional modules, such as BIR, or Business Inventory Reconciliation.

3. Inspect for Equipment or Meter Issues

• Look into possible causes like dispenser meter drift, slow flow rates, line leaks, or faulty sensors.
• May involve dispatching technicians to test equipment or calibrate meters.
This can be time-consuming and costly if done manually or too late.

4. Investigate Theft or Shrinkage

• Look for red flags like fuel drawn outside business hours, frequent manual overrides, or unexplained drop-offs in inventory.
• Review security footage, driver logs, or transaction histories.
This often requires coordination between compliance, operations, and security teams.

5. Audit Historical Trends

• Check historical variance trends to identify recurring patterns by site, shift, or product grade.
• This step may help to identify chronic problems like leaky lines or systematic short deliveries.
This step of the process is still heavily reliant on spreadsheets unless a centralized dashboard or automation platform is in place.

Common Pain Points with many of the manual steps noted prior:

• Too many systems that don’t talk to each other
• Data entry errors or missing data
• Reactive vs. proactive problem solving
• Labor-intensive investigation process

How Automation Can Help (Big Picture):

• Real-time reconciliation with automated variance alerts
• Analytical or AI-based anomaly detection: The use of highly-capable analytical software platforms designed to detect anomalies between dispensed transactions and tank movement can alert the operator in more real-time and direct them more clearly toward the source of the suspected loss. This decreases the time of the investigation.
• Cross system integration (POS, ATG, delivery logs, etc.)
• Dashboard views across all sites
• Mobile alerts when thresholds are breached

In summary, fuel operators should assess the amount of soft costs, maintenance dollars, and staff time devoted to suspected fuel variances. Challenge your staff to track and measure your next several loss investigations to give you a better financial picture of what these investigations cost you in real dollars and profitability. Compare the costs and frequency against what the use of better monitoring technology might bring to the table. Being able to react faster to suspected losses can pay huge dividends, decreasing site downtime, environmental cleanup and maintenance costs, state reporting time, distraction to the business, staff overtime (often unpaid for salary positions), and ruling out the numerous things that have nothing to do with the actual loss. Each of these steps in the process can consume huge amounts of your profit in the meantime and better use of today’s technology may help decrease your costs dramatically.

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