Practical thinking on
petroleum margin.

In three decades of petroleum industry work, I've reviewed the financials of operators ranging from single-site family businesses to regional chains running 50+ locations. The specific numbers vary. The patterns don't.

There are three margin leaks that show up consistently — not occasionally, not sometimes, but almost always. And in almost every case, the operator either doesn't know about them or has a rough sense something is off but no way to quantify it. Here's what they are.

1. The rack pricing drift nobody is measuring

Supply contracts get signed and then they get forgotten. The initial pricing looks reasonable. The relationship with the supplier is good. Nobody wants to start a difficult conversation. And so, quietly, over three or four years, your rack pricing drifts below what comparable operators in your region are achieving — sometimes by $0.02/gal, sometimes by $0.06/gal.

At 8 million gallons annually across a 12-site operation, $0.047/gal is $376,000. That's the gap we found in a recent engagement. The operator had no idea — not because they weren't paying attention, but because they had no benchmark data and no structured process for reviewing it.

2. The ERP that generates data nobody acts on

Most petroleum operators running an ERP like iRely i21 are using roughly 40–60% of what the system can do. The rest of the functionality was either never configured correctly, was configured for a prior ownership structure, or was implemented without the business process changes needed to actually use it.

The result: inventory shrink goes undetected for months before surfacing in financial statements. Margin by site is not visible in real time. Period close takes days of manual work when it should take hours. The system that was supposed to create efficiency has become its own source of overhead.

• Shrink rates above 0.3% that have never been investigated because no one has a per-site view
• Manual reconciliation consuming 15–25 hours/week across finance and operations staff
• Rack pricing not flowing correctly into margin calculations — meaning reported margin is wrong
• No automated alerting when individual sites drift outside normal parameters

The fix is usually not a new system. It's a configuration audit, a set of business process changes, and the reporting infrastructure to actually use the data the system is already capturing.

3. The compliance exposure that grows silently

Fuel tax is complicated. The rules vary by state, they change periodically, and the calculation depends on transaction data that flows through systems most operators don't fully understand. The result is that filing inconsistencies accumulate — sometimes for years — until they're discovered either in an internal review or, worse, an audit.

In a recent diagnostic engagement, we identified $84,000 in fuel tax exposure in an operator that had been in business for over a decade. The issue wasn't malfeasance — it was a configuration mismatch between their ERP and the state filing requirements that had never been caught.

None of these are exotic problems. They're operational. They're fixable. And in most cases, the combined impact of addressing all three is material enough to change the economics of the business. If any of these sound familiar, the first step is usually a structured diagnostic to put actual numbers on them.