Fuel allocation is when your supplier puts a cap on how much fuel you can buy in a set period, usually a day or a month. It happens most often when supply is tight. Your supplier looks at how much you bought in the past and gives you a limit. When you are on allocation, you have to choose which customers get fuel first.
What fuel allocation is
Allocation is a buying limit set by your supplier. Instead of selling you all the fuel you want, the supplier caps your volume at a terminal or across terminals. The cap can be a set number of gallons or a percent of your normal purchases. It can last a few days, or stretch on for weeks during a real shortage.
Why allocation happens
Allocation shows up when there is more demand than the system can supply. Common causes:
- A refinery goes down for repairs or trouble.
- A pipeline problem slows the flow to a region.
- A storm or hurricane disrupts supply, often before and after it lands.
- Demand spikes, like a holiday weekend or a deep cold snap.
- A price gap pulls extra buyers to one terminal and drains it.
When supply gets tight, suppliers ration it so a terminal does not run dry.
How a supplier sets your allocation
Most allocation is based on history. The supplier looks at your past lifting, often the same month last year or a recent average, and uses that to set your share. This is sometimes called your allocation baseline. Buy steadily over time and your baseline holds up. Let your volume slide and your future allocation can shrink with it. That is why some jobbers keep lifting through soft periods, to protect their baseline for when it counts.
What allocation means day to day
On allocation, the fuel you can buy is capped, but your customers still need fuel. You have to make calls:
- Which accounts get filled first.
- Whether to pull from a second terminal, even at a worse price.
- How to stretch your gallons across the week.
- What to tell a customer you cannot fully supply.
These choices hit your margins and your relationships at the same time.
How to ration short supply and keep your best customers
A short supply tests your judgment. A few rules help:
- Fill contract accounts first. If you signed a supply deal, honor it.
- Take care of your steadiest, highest-volume customers. They carry your year.
- Communicate early. A heads-up that you are tight beats a surprise empty truck.
- Spread the limited gallons fairly across smaller accounts so no one feels singled out.
- Run the second-terminal math. A pricier load can still be worth it to keep a key account fueled.
- Keep records of what you allocated to whom, so you can explain it later.
Handled well, an allocation period builds trust. Customers remember who kept them running.
How software helps during allocation
When supply is tight, good back office software gives you a fast, clear view: how many gallons you have, what each account needs, and where your baseline stands. It can apply your rationing rules the same way every time, so your calls stay consistent and you can show your work. PUP is built to give jobbers and petroleum marketers that view when the pressure is on.
Common questions
What is fuel allocation?
Fuel allocation is a cap your supplier puts on how much fuel you can buy in a set period. It usually happens when supply is tight, and the cap is often based on your past purchases.
Why do fuel suppliers put buyers on allocation?
Suppliers use allocation when demand is higher than supply, such as after a refinery outage, a pipeline problem, or a storm. Rationing keeps a terminal from running dry.
How is my fuel allocation calculated?
Most suppliers base your allocation on your buying history, such as your volume in the same month last year or a recent average. Steady buying helps protect your future allocation.
How should a jobber handle short fuel supply?
Fill contract and high-volume accounts first, communicate early with customers, spread limited gallons fairly, and keep records of what you allocated. Weigh a pricier second-terminal load when it keeps a key account running.