GROSS vs. NET – When is a gallon not a gallon?

GROSS vs. NET – When is a gallon not a gallon?
We just updated this post to include a much requested feature, a Gross Net Calculator! Scroll to the bottom to see it. You’re welcome!

You’ve seen it before: You order a load of fuel and they deliver it as ordered, or so you thought. You look at the BOL and wonder why the gallons are listed in both gross and net amounts, and why the number of gallons invoiced is lower or higher than you ordered. If you’ve ever thought the total gallons you pay for seems to change with the weather, you’re not that far off.

“Why the Difference?”

Like most substances, motor fuel expands or contracts depending on its temperature. In the U.S., 60o Fahrenheit (about 15o Celsius) is recognized by the fuel industry as the zero-point on the temperature scale where fuel is considered “normal” in energy content, weight, and volume—the actual space it occupies. So, at 60oF, a normal gallon of fuel will occupy 231 cubic inches of space, but that same gallon at 80oF would expand to 233.7 cubic inches, and at a colder 40oF, would contract or “shrink” to 228.3 cubic inches.

When is a gallon not a gallon?

In a perfect world, if you ordered a typical 8,500-gallon load of unleaded, you could count on the fuel’s temperature at the rack being equivalent to the temperature inside your tanks, and you would be sure to end up with exactly the 8,500 gallons you paid for.

But, back to reality. In hotter regions of the country, the warmer, at-the-rack temperature of your 8,500-gallon load is going to hit your cooler, insulated tanks and shrink, sticking you with something less than the 8,500 gallons you paid for. On the flip-side, in Minnesota, for example, those 8,500 glacial gallons will expand as your tanks warm them, giving you more fuel than you paid for, while causing your supplier to suffer a loss about the size of your gain.

So, since you can’t change the laws of science, about 100 years ago, the fuel industry changed how it measured fuel to account for its fluctuating volume as it’s transferred from one temperature to another.

“BUT HOW DOES THAT TRANSLATE ON MY BOL?”

Note: What is a BOL? Read the wiki article.
Today, a thermodynamic formula is used to calculate the size of fuel’s expansion or contraction caused by the difference in temperature, if any, between the fuel at the rack and the 60
oF benchmark. The number of gallons dispensed at the rack—the “gross” gallons—are automatically adjusted up or down to make up for the expansion or contraction of fuel above or below 60oF. The result of that calculation produces the temperature-corrected “net” gallons.

For example, this chart shows how these volume adjustments would play out on 10,000 gallons of fuel as its temperature changes by ten-degree increments above and below 60oF.

Gross GallonsTemperature
Fahrenheit
Net GallonsDifference
+ or –
10,00030oF10,207+207
10,00040oF10,138+138
10,00050oF10,069 +69
10,00060oF10,000  0
10,00070oF  9,930 (-70)
10,00080oF  9,861(-139)
10,00090oF  9,790(-210)

“IS THIS JUST A COMPLICATED WAY OF TELLING ME I’M NOT GETTING WHAT I PAY FOR?”

The answer is, no. In fact, the gross-to-net conversion is designed to ensure that you do get what you pay for—no less and no more. As noted above, without temperature correction, if you purchased warmer, expanded fuel, you will have paid for what may appear to be a certain amount of fuel, but which will later shrink in your cooler tanks, sticking you with less fuel than you paid for. Conversely, purchasing colder, shrunken fuel, without adjusting for its eventual expansion in your tank, will gift you with the extra fuel that filled the space created by the contracted, colder fuel which, upon expansion, would give you more fuel than you paid for. Good for you—bad for your supplier.

For these reasons, to ensure both buyer and supplier get what they bargain for, the wholesale segment of the industry generally buys and sells fuel by net gallons in the predominantly warmer southern regions of the country, and by gross gallons in the north, where a colder climate prevails. Which is why Desert Fuels’ customers in Arizona, New Mexico, Texas, and the greater southwest generally pay for net gallons, while our business in Michigan, Illinois, Indiana, and the colder north, trade in gross gallons.

KEEPING THEM HONEST“How are the Measurements Verified?”

In the U.S., a state’s weights and measures agency typically certifies the accuracy of the devices used to measure fuel transported from the rack to you. As fuel is pumped from the rack into carriers, a highly precise temperature meter automatically calculates the gross and net gallons dispensed. As long as the conversion equipment is maintained, and the integrity of the measures is confirmed, the system ensures both accurate delivery and honest billing… regardless of the weather.

Gross/Net Calculator for Gasoline and Diesel

We have created a calculator to make this complex calculation more simple. You can see it below (it is a google sheet) or you can view it fullscreen here.

View Gross/Net Gallon Gas & Diesel Calculator


27 Responses to GROSS vs. NET – When is a gallon not a gallon?

  • Dave
    Mike,I have struggled with a decision by a company that I believe is unethical and illegal. I am hoping you can answer a question for me, is it illegal for a jobber to purchase gasoline from refinery/terminal at Net gallons and sell it to the dealer as Gross gallons? They are also collecting the Federal taxes from the dealer on Gross gallons but only paying the Net gallons.
    • J.J. Mancini
      Dave, That is a tough scenario. We would need a little more info in order to give you our suggestion. But in general, the state will mandate whether fuel should be sold at Net or Gross. If the state does not mandate and the supplier/jobber keeps changing (not with the weather), then chances are they may be doing something unethical. Feel free to call or email us via the contact form and we can get more of the details.
  • pete
    Who determines weather to bill the retailer "net or gross"?
    • J.J. Mancini
      Pete, Great question! Generally the state determines whether or not suppliers bill via gross or net. Unfortunately the retailer (or the person buying the fuel) does not get to "choose". But as always there is an exception to the rule. When you export fuel from one state to another, and the receiving state is different than the selling state, the supplier can use their discretion on whether to use gross or net. But that is a very rare scenario. Hope that helps!
    • Mike
      As a gas station owner in San Francisco we have to elect yearly if we want to be billed gross or net. Everybody always says take net do you agree.
      • J.J. Mancini
        Good question. The bigger question is are there more cold days or warm days in San Francisco. Because you are on the ocean it does have a moderation effect on the climate. Thus I would agree that Net is the better option. But make it a science. Take a look at your BOL's over the past year. Add up the Gross numbers then add up the Net numbers for the entire year. Which one was greater? You want the one that gave you more gallons for what you already purchased.
  • Dwayne
    Wonderful Article Mike, I always like seeing the numbers put to paper
  • Don Demkod
    Great insight.6/12/12 my 1ST jobber billed me gross on the fuel and net on the taxes. Temp was 74 to 75 deg f i.e. 4 partial loads Spec gravity 37.5 He charged me $2.6956 for the fuel + .04485 freight and added $3,195.99 taxes, etc.6/14/12 my 2nd jobber BOL is net on everything Temp 79.4 f SG 36.8 Fuel $2.6983 + .0335 freight + $3.103.75 tax, superfund, etc. both ULSD Why is one net on everything, the other net and gross and does this add up? Thanks Don Demko
  • Mark Hines
    What is the mathmatical formula for calculating the NET value from the Gross value..???
    • J.J. Mancini
      Mark, unfortunately we do not have a calculator for NET vs. Gross calculations. If we decide to create one we will notify you. It is a great idea!
      • Mark Hines
        Please do. Thanks
      • Mark Hines
        Hi JJ..The values used in the examples above I assume are for auto gas. What values can I use for Jet A Fuel..??? What factor do I use to divide my volume by at each degree F to get my net volume..???Thank you.
        • Mark Hines
          It appears that you are using 69 as a factor for every 10 degrees.Would 69 also be used for Jet A fuel..???
  • Dacia
    I’m not that much of a internet reader to be honest but your sites really nice, keep it up! I'll go ahead and bookmark your site to come back down the road. Cheers
  • Rex
    Hi Mike, is there a formula to convert propane gross gallons to net gallons?
    • J.J. Mancini
      Rex,Unfortunately we have not found a calculator anywhere for propane. Sorry we can't be of more help.
  • Maria
    We get propane loads from Canada and they typically use liters that we have to convert to gallons. If they give gross liters and temperature corrected liters (net) can the conversion rate from liters to gallons (.26714) be used to get net gallons or is there another factor involved? It seems some Canadian companies use a conversion factor of .2647, which is correct?
    • J.J. Mancini
      Maria,Unfortunately we are not in the propane business and it obviously works a little different than gasoline and diesel. I'd love to be more help, but I would recommend asking that questions to both of the companies that Company X uses .26714 and Company Y uses .2647. Make sure they can back-up their number. As they are incentivized to skim a little off the top.
  • […] GROSS vs. NET – When is a gallon not a gallon? […]
  • marlon
    we have 5000 gal diesel tank it is same computation in 10000 gross gallon?
    • J.J. Mancini
      Marlon,No. 5,000 gal diesel tank is not the same as a 10,000 gross gallon tank. Tanks are measured in gross gallons, NOT net. Depending on the temperature, hypotehtically a 5,000 gallon (gross) tank can hold a little less (4,700) or a little more (5,300) net gallons (at 100% ullage which is never recommended). Hope that helps.
  • marlon
    we have 5000 gallon diesel tank daily increase loss and our temperature 110 °F. i receive 22,523.40 imperial gallon and i issue 20,3230.00 and balance 2,199.80 the actual balance on tank is 1,554.50 the difference is 645.30 gal. in 30 days. Can you please help me how it happen?
    • J.J. Mancini
      Are your tanks below ground? What is the temperature of you fuel after 2 days of being in the ground? If it is like us, the temperature below ground even on hot days is around 75 degrees. So if your fuel being delivered is truly 100 degrees (which is VERY hot) then as it cools it will take up less volume. So yes you would be possible to "lose fuel" as the temperature cools. This is why the terminal gave you net gallons taking into account the temperature difference. Otherwise you would be getting ripped off. A couple of questions to ask: Look at your BOL. What was the gross and net gallons. Look at your tank monitor, what was the delivered amount net and what was the temperature in your tank? Do your carriers use vapor recovery when delivering your fuel? Also feel free to contact one of our fuel experts at 1-888-750-3835 and they can help you understand this a little more.
  • Bryan Rivers Jr.
    Hi JJ I was thinking of getting into the industry I'm glad I landed here. Seems you all know a lot and care about the customers!
    • J.J. Mancini
      Thanks Bryan! We wish you the best. This industry can be difficult but it also has it great days. It has a HUGE learning curve so make sure to make mistakes small and learn quickly. What part of the industry are looking to get into? Open a Cstore? Fuel delivery? Wholesale fuel sales?
  • Prakashkumar
    Dear Mike Very good article. It will be more useful if you provide the chart to convert from Gross to Net. I'll be thankful.
    • J.J. Mancini
      Great news Prakashkumar! We just added a calculator to the post. Hope it helps!

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