The Petrol Pump Story - How Petrol Pumps Operate

[Born 2 Be Wild]

Aplang brother i dont know which state you run a bunk in but in delhi a dealer short changing you bu 22 ml a litre is impossible. Also the evaporation data given by you is crazy.
For the month of may my loss stands at 146 litres!! That in a tank of 22 kilolitres.

Also my tank dipstick is accurate to +/- 20 litres!

Also gentlemen the permissible limit for variation is 25 ml + or - for every five litres dispensed. So usually dealers have the machine set at -10 ml for every 5 litres and then also if such variation is found the machine has to be restamped.

[supremeBaleno]

@Born2BeWild, since you own a petrol bunk, what is the story behind the tactic used by pump attendants here in Chennai where they cut the supply mid-way and start again ? Say I order for Rs1000 worth of petrol, they will start dispensing, then cut off supply midway and then start dispensing the remainder. How does this help deliver less than the quantity paid for ? This has been a long time doubt...

Originally Posted by StarrySky

He doesn't even gain anything when fuel prices go up because his margin per litre is fixed and is not a percentage of the MRP of petrol.

Yes, his margin/litre is fixed and so higher prices do not normally increase his profit. But there is a way it can - when they know that the prices are going to be hiked by midnight, they just put up a "No Stock" board and go home. When they sell their stock the next day, they make a neat profit (much more than their normal margin) on each litre. Do the math with the recent ~8 Rs hike for say 10K litres of petrol that was sold only the next day.

Originally Posted by StarrySky

this seems like a business where you can't make a decent living unless you cheat.

Unfortunately this is not the only business that "thinks" that cheating is the only way. Sample some from Chennai :

1) Cigarette vendors : Around Feb of every year, even before the FM of India has even thought of hiking taxes on tobacco products, the local vendors hike prices of all cigarettes in anticipation of hike in budget. Ofcourse the reason they cite is 'demand' and lesser supply from wholesaler. Pray, how come demand increases always in Feb and March ?
So, for a 10s pack of Gold Flake Kings that costs Rs55 pre-budget, they were charging upto Rs70!!! Can you imagine that kind of cheating over MRP ? And finally when the budget came and went, the MRP was only Rs58.

Calculate the amount cheated over the 2 months. Ofcourse the intelligent consumer will shun them and shift to the department stores (More / Spencer etc) where they will sell only at MRP.

Reality is that this many-thousand crores business is entrusted to temporary staff manning the outlets, who decide their own MRP for each product. For every 180ml bottle, they charge Rs2 more than MRP. For a 375ml bottle it is Rs5 more and for a 750ml bottle it is Rs10 more. If the brand is a little more upmarket, the extra charged increases. Beer is considered premium and a brand with MRP of say 70bucks will cost you 5-10 bucks more depending on availability and whether it is "cold" or not.

To give them benefit for action taken, after numerous complaints and newspaper stories, the Govt in its infinite wisdom determined that the reason for this was the odd pricing of the beverages. Eg. when you handover a 100 rupee note for a bottle that cost Rs88, they will return only a tenner citing lack of change. So, they rounded off all prices to the nearest 10 and the 88Rs stuff became 90. Not that this solved the problem - now the sales guys seem to have all the change in the world and return 8Rs after taking Rs2 extra as usual. Who is the loser now ? The consumer - instead of paying Rs2 extra earlier, he is now paying Rs4 extra.

[srishiva]

Originally Posted by StarrySky

He doesn't even gain anything when fuel prices go up because his margin per litre is fixed and is not a percentage of the MRP of petrol.

Does it mean that the bunk owner doesn't pay for the load that he receives based on the prevailing prices? The difference in price will add to the commission per litre.

Who profits for the old fuel present in the underground storage of the petrol bunk? the oil company?

[Sportygellar]

Losing out 22ml for every 1 liter is something huge,example if I'm filling petrol in my bike the capacity is 14liters,when ever i'm filling the tank Am I losing out 300+ml ?
Well I dont think this has happened with me where i have filled more than 14 liters from dry tank.
I guess the best way to check is completely dry out the bike tank and full tank it,if it is exceeding from the actual capacity of the fuel tank then that is the amount of fuel you are losing out everytime you refill the tank

[Born 2 Be Wild]

Originally Posted by supremeBaleno

@Born2BeWild, since you own a petrol bunk, what is the story behind the tactic used by pump attendants here in Chennai where they cut the supply mid-way and start again ? Say I order for Rs1000 worth of petrol, they will start dispensing, then cut off supply midway and then start dispensing the remainder. How does this help deliver less than the quantity paid for ? This has been a long time doubt...

Yes, his margin/litre is fixed and so higher prices do not normally increase his profit. But there is a way it can - when they know that the prices are going to be hiked by midnight, they just put up a "No Stock" board and go home. When they sell their stock the next day, they make a neat profit (much more than their normal margin) on each litre. Do the math with the recent ~8 Rs hike for say 10K litres of petrol that was sold only the next day.

The ploy behind the start stop technique is usually for unsuspecting customers where the attendant pockets the margin duped it does not always work though eg i ask for 1000 rs fuel he fills for 200 and stops i yell that i wanted 1000 rs worth he simply starts from there while someone else distracts you with saaarry sirr this sir that sir blah blah and so on the filler meanwhile stops at 800 and says ok done move your car someone who isnt aware will move on thinking that he got 200 rs worth earliar and 800 now so all is well. However the attendant would not have reset to zero again hence pocketing the 200 bucks.

Now when the prices rise the pump owners put out of stock boards reason being in the faracas that ensues you sell double triple what you normally sell Hence the margin they earn on stock that was bought at lower prices and sold at + 7.5 a litre would then again be invested in the inventory as i would then be purchasing it at a higher rate as well.

[girishglg]

Originally Posted by Born 2 Be Wild

Hence the margin they earn on stock that was bought at lower prices and sold at + 7.5 a litre would then again be invested in the inventory as i would then be purchasing it at a higher rate as well.

Am I missing something or does not the investing in the inventory happen for the next load? The bunk owner would still make profit for the previous stock by selling it at a higher rate the next day till stocks lasts.

[Pri2]

No matter how much fuel is being wasted, lost, evaporated and how much loss the dealer incurs, doesn't justify cheating customers who are paying their hard earned money. If I am paying for 1 liter of fuel, I expect 1 liter nothing less than that.

If you are buying any item from a grocery store by the kilo, would you go by the same explanation and get less than what you pay for? I am sure they too face the same losses (Goods destroyed by pests, leaks, evaporation, expiration etc)

Originally Posted by itwasntme

This is probably the reason why customers complain of LOWER mileage when filling up at Shell rather than PSU bunks. Shell (hopefully) dispenses full 1000ml instead of 900-978ml thereby lowering the tankful-to-tankful mileage calculations.

I am confused by your comments, If you are getting more fuel, Wouldn't that increase mileage? And why would anyone complain of less mileage if they are not getting cheated and getting what they pay for?

[Born 2 Be Wild]

Originally Posted by girishglg

Am I missing something or does not the investing in the inventory happen for the next load? The bunk owner would still make profit for the previous stock by selling it at a higher rate the next day till stocks lasts.

Well sir unless god almighty drops money from the high heaven above the dealer would have to arrange for the increased inventory cost on his own beg borrow or steal. So thats why some brave souls put up out of stock boards the real profit will only arise if the omc were to slash the prices they increased then inventory cost goes down hence a profit or increased working capital depending on what one wishes to do with that money.

[aplang1]

Thank you for your responses dear BHPians. I will refer you to this particular thread and especially the knowledge shared by Dr. Bhatti, a third generation petrol pump dealer.

http://www.team-bhp.com/forum/techni...-diesel-2.html (How to ascertain purity of Diesel)


I am sure you will find the information most useful.

On another note, it is time the Oil Marketing Companies started seriously thinking about installing vapour recovery systems at all outlets.

Cheers!!

[StarrySky]

Originally Posted by PatchyBoy

Ahhh. Now I understand why all the influential people (read politicians' kith & kin) have fuel pump businesses. First you are honest, you cannot make a profit, so you cheat to make a decent living. Then because you can cheat, you cheat more and more and then have a indecent living. Sounds about right.

What politicians' kith and kin do have nothing to do with whether a "normal" guy can earn by running a petrol pump. Politicians' kin may be cheating more, maybe his costs are less since the tanker driver does not dare to steal from him and authorities do not dare to ask a bribe.

Originally Posted by selfdrive

So if a petrol pump owner comes to my (hypothetical) clothes shop to buy a pair of trousers, is it ok that I sell him a pair one bilang short?

Again, bad analogy. Better analogy in your hypothetical case is that you will compensate by selling cheap/lower quality stuff at same price. Or same quality at higher price or better yet, cheaper quality at higher prices. That's kind of cheating too.

All I am saying is that in any business end customer always pays for whatever costs the ones above him in the chain incur. There's nothing exclusive here for petrol pump owners.

Originally Posted by supremeBaleno

Yes, his margin/litre is fixed and so higher prices do not normally increase his profit. But there is a way it can - when they know that the prices are going to be hiked by midnight, they just put up a "No Stock" board and go home. When they sell their stock the next day, they make a neat profit (much more than their normal margin) on each litre.

Originally Posted by srishiva

Who profits for the old fuel present in the underground storage of the petrol bunk? the oil company?

My understanding is that the dealer still earns only Rs.1.50 per litre, whether he sells his stock before midnight or after. This was mentioned in one of the other threads on price hike.

[SunilM]

Originally Posted by aplang1

Thank you for your responses dear BHPians. I will refer you to this particular thread and especially the knowledge shared by Dr. Bhatti, a third generation petrol pump dealer.
Cheers!!

Dr. Bhatti's posts are in depth and simply awesome! Can't believe I was the first one to "Thank" Dr. Bhatti Thanks for sharing.

[pratheekkunder]

I am posting this message on behalf of a friend, Tejas Barot, who operates a petrol pump in South Mumbai.

I've been on pumps for 3 years till now.
Facts are highly exaggerated
1. Only 5-10 liters Max is left after emptying the tanker. If noticed, the drain tap is way below the surface height of tanker.
2. Approx 100 liters of evaporation doesn't take place at all. The company makes proper reports after inspection to check levels of evaporation, and even for a privately owned pump the company undertakes repairs!
3. If at all fuel levels from the tankers are less, the tanker is returned back even for 100 liters. And it isn't possible to drive the Tanker to unknown routes for as they are monitered via GPS.

Yet a little of theft occurs at the company level while filling if the keeping the Manger of the pump involved.

Rest the figures are very well put up

[noopster]

Originally Posted by selfdrive

So if a petrol pump owner comes to my (hypothetical) clothes shop to buy a pair of trousers, is it ok that I sell him a pair one bilang short?

Originally Posted by StarrySky

Again, bad analogy. Better analogy in your hypothetical case is that you will compensate by selling cheap/lower quality stuff at same price. Or same quality at higher price or better yet, cheaper quality at higher prices. That's kind of cheating too.

It's a perfect analogy. We are not talking about quality at all here (am sure THAT will open up another can opf worms!) Giving a customer a bilaang less than he pays for is equivalent to filling in 22 ml short of a litre every time.

All I am saying is that in any business end customer always pays for whatever costs the ones above him in the chain incur. There's nothing exclusive here for petrol pump owners.

It's cheating, pure and simple. I wonder how anyone can rationalise it as passing on an injustice The fact that it isn't exclusive to these folks does not absolve them of the crime.

Originally Posted by Born 2 Be Wild

Aplang brother i dont know which state you run a bunk in but in delhi a dealer short changing you bu 22 ml a litre is impossible. Also the evaporation data given by you is crazy.

+

Originally Posted by pratheekkunder

I am posting this message on behalf of a friend, Tejas Barot, who operates a petrol pump in South Mumbai.

I've been on pumps for 3 years till now.
Facts are highly exaggerated

Good to have some alternative viewpoints here as well. I am of the opinion that while the vast majority of petrol pump dealers indulge in some form of skullduggery or the other (Short fuelling tricks (Short Fueling Tricks At Petrol Stations), anyone?) there are bound to be some honest dealers out there and hopefully these are the ones that customers reward by giving them their exclusive patronage. For example, except when I am travelling to a new place, I tank up exclusively at "trusted" pumps, Shell stations or COCO outlets, which from my experience cheat less or not at all. Hope for my sake that I'm right!

[Born 2 Be Wild]

Originally Posted by pratheekkunder

I am posting this message on behalf of a friend, Tejas Barot, who operates a petrol pump in South Mumbai.

I've been on pumps for 3 years till now.
Facts are highly exaggerated
1. Only 5-10 liters Max is left after emptying the tanker. If noticed, the drain tap is way below the surface height of tanker.
2. Approx 100 liters of evaporation doesn't take place at all. The company makes proper reports after inspection to check levels of evaporation, and even for a privately owned pump the company undertakes repairs!
3. If at all fuel levels from the tankers are less, the tanker is returned back even for 100 liters. And it isn't possible to drive the Tanker to unknown routes for as they are monitered via GPS.

Yet a little of theft occurs at the company level while filling if the keeping the Manger of the pump involved.

Rest the figures are very well put up

Exactly my point the initial post has a lot of data that is highly exxagerated. But one misleading post and everyone would pick up pitchforks
And chase the neighbourhood pump owner down lol

Your friend is absolutely right all tankers are fitted with a functional gps and max to max a tanker has +/- 20 litres while decanting.

Just a small example my evaporation loss for the month of may will be approx 160 litres for petrol!! So i fail to understand where those figures are coming from. If evaporation loss crosses the permissible limit of .6% the sales officer goes banans trying to figure out where your oil is going.

[selfdrive]

Originally Posted by StarrySky

Again, bad analogy. Better analogy in your hypothetical case is that you will compensate by selling cheap/lower quality stuff at same price. Or same quality at higher price or better yet, cheaper quality at higher prices. That's kind of cheating too.

Originally Posted by noopster

It's a perfect analogy. We are not talking about quality at all here (am sure THAT will open up another can opf worms!) Giving a customer a bilaang less than he pays for is equivalent to filling in 22 ml short of a litre every time.

Exactly my point. I am not talking about quality; whether anyone is givng me pure or adulterated petrol mixed with kerosene. that is a separate topic and your (@Starrysky) analogy would apply there.

Purely for quantity, maybe this equates to the old kirana waala attaching a magnet at the base of the side of the balancing scale where the goods are weighed (to decrease weight sold). If one would think that is not ethical, neither is this.

Maybe in today's fraud infested world, the petrol pump owners console themselves by saying this is only a small fraud compared to the gazillions siphoned away by others. This sort of thinking process, if in place is totally unfortunate and can only lead to anarchy. ie, If we are not yet there.

Originally Posted by Born 2 Be Wild

If evaporation loss crosses the permissible limit of .6% the sales officer goes banans trying to figure out where your oil is going.

One of my friends has a petrol pump owner in his extended family. He told me once that the trucks delivering petrol are fitted with a GPS tracker thingy to supervise if they stop somewhere in an unscheduled/ uninformed manner. This is to monitor if the drivers may be selling off some fuel enroute and passing it as evaporation. However this information is dated by a year or so, so not really sure if it is still the case or is followed by all bunk owners (with their own truck fleet)