Fernando Flores
Director General
Green Energy Fuels / SIFRAP
/
Expert Contributor

Self-Service Fuel Consumption: A Path to Recovery

By Fernando Flores | Wed, 01/06/2021 - 13:25

The self-service consumption of oil products is a practice in Mexico that can save time and improve the economic performance of transportation companies. According to data from the SCT, Mexico City followed by Nuevo Leon and Jalisco are the states with the most diesel vehicles, with approximately 176,000 units using this type of fuel in those states combined. This high consumption benefits the fuel value chain, from import to the service stations that are the last point of contact with the final customer. In the country, there are approximately 438,000 vehicles using this fuel.

As we well know, the Energy Reform in 2014 brought with it an opening for new competitors to participate in the value chain of fuel commercialization, giving way to free competition. The final customerwould benefit economically by having the possibility to choose from among fuel suppliers based on performance, quality and price.

For this purpose, secondary standards and laws were established to ensure that the quality of both the product and the service were correct and that these benefits were obtained. One of these laws is NOM 016-CRE, which establishes the fuel quality specifications for the entire supply chain, as well as the testing and sampling methods, all of which provides certainty to the end user that he is receiving quality fuel for his units. Motor transport that mostly uses diesel as a fuel represents 5 percent of GDP and moves approximately 50 percent of the national load. This must be done under the best conditions, using the best fuel at attractive prices to ensure optimal performance.

Another action that transport owners should consider is the control of the fuel tanks of the units because these lend themselves to syphoning by drivers. There are many companies in the country that offer various mechanical and electronic means of controlling tank access so that it does not become a source of leakage for the owner, since all this impacts on the economic operation of the carrier, leading to higher costs.

Another situation carriers face is refueling at service stations, where two things can happen: the provided liters are not full liters or there is an agreement between the driver and dispatcher to not fill the tank or to put the fuel in a different container from the unit’s tank and then sell it. In general, these two unfair activities negatively impact the transport owner’s economic performance and affects the owner’s costs. The case of the shortchanged liters is common in our country. End users have complained and the authorities have carried out operations to detect it. Much has been said about the actions carried out by service stations using the famous spider (a device placed in the pumps) to shortchange liters, but the most worrying aspect of this issue is what is mentioned in the federal law to prevent and punish crimes committed in the field of hydrocarbons that was published in 2016. Article 16 mentions the following:

A prison term of five to eight years and a fine of 5,000 to 8,000 times the value of the current Unit of Measurement and Updating shall be imposed on whoever,

I. Sells or supplies gasoline or diesel fuel with the knowledge that he is delivering an amount lower than 1.5 percent of the amount recorded by the measuring instruments used for its sale or supply.

In effect, the law allows a service station a margin of error of 1.4 percent of the supplied fuel; for example, a truck driver who pumps 1,000 liters of Diesel could receive only 986 liters, which is inside the margin of error outlined in the law. Considering the price of this fuel at the moment, which is on average MX$18.30 at a gas station, this user would be legally overpaying more than MX$256.20 per load. A gas station that sells 2 million liters per month could be making an annual profit by not delivering a complete liter of approximately MX$6 million pesos a year, directly impacting the economic standing of the end user. 

Another of the actions resulting from the Energy Reform is that it gives the option for the end user to receive his gas at a self-consumption service station. This allows the end user to install their own tanks and pumps for the self-supply of fuel, which gives them the certainty that they avoid the above-mentioned tactics, such as not obtaining proper liters. This activity of self-service consumption is regulated by the authorities and must have the following:

  • Risk analysis
  • Soil mechanics
  • Topographic survey
  • Preliminary project elaboration according to NOM-005-ASEA-2016
  • Elaboration of the executive project according to NOM-005-ASEA-2016
  • Building permit
  • Preventive report
  • Social impact
  • Permission from CRE

The infrastructure, such as tanks, service pump, civil works and other infrastructure that serve to control access to the cargo area, must also be considered. Considering the costs of the above, many companies believe their consumption is not enough to justify such a high investment. They assume that they can continue to load their fuel at service stations and run the risk of losses that we mentioned in this article. Installing a self-service station may provide the following benefits:

  • Control of access to assure complete liters
  • Preferential prices per liter
  • Eliminate fuel theft

In order to avoid the expenses involved in the investment of these self-service stations, there are supply companies that do it for the final customer. Since the end user is dedicated to transport and does not know much about the regulatory framework, these supply companies offer the possibility of better prices and the necessary infrastructure and software services without the end user having to invest his own capital.

Self-service consumption, as we can see, has many benefits, including the elimination of theft. It also allows for more control and provides economic benefits related to getting better prices in the market, while also offer the transport owner the option to invest in the installation themselves or to hire a company that does it for them, still providing the same control.

Photo by:   Fernando Flores