Motor Fuels Tax Minute, Episode 42: Net Billed or Gross Gallons

April 9, 2024

In this week’s episode of Motor Fuels Tax Minute, our hosts go back to the basics with net billed or gross gallons.


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Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 42

Leanne: Welcome to Weaver’s Motor Fuels Tax Minute, the vlog where we talk all things motor fuel. This week Kelly is going to go back to the basics and talk about net billed or gross gallons.

Kelly: All right. Well before we go too far back into the basics, we’re going to get a little technical to start off because this gets a little bit scientific. We’re going to talk about a law of nature known as thermal expansion.

So gross gas volume refers to what leaves the rack, and the net volume refers to the amount of gas the customers receive, which is temperature corrected to 60°F. So why does that matter? Well, you can see on our little graphic that when fuel moves from a tanker truck, that might be at above 60 degrees, into a storage tank that is at a lower degree, our fuel will shrink. Now we can all think from a marketing perspective, as the customer, you’re probably not too thrilled with that at this point. But on the flip side, when we move from a cooler truck into a hotter storage tank, our fuel will expand. So probably right now as a supplier, you’re not happy because your customer is going to get more or less based on the temperature control.

So, here’s where we get a little bit back to the basics with fuel tax. Where it matters for our purposes, outside of the marketing realm, is that states will require you to report based on net, gross, or billed. Billed will be whatever you bill to your customer, whatever’s on the invoice. That could be net or gross, but you’ll want to make sure that you report the correct gallons so that you are reporting the correct tax to the state. That can also result in some gain or loss that you could see a little bit of savings from or even a little bit of a loss from. So, it is going back to the basics, but we do get technical here.

Emilda: That’s true, Kelly. And I don’t think that a lot of people know this, you hear the term gross net difference, they don’t really apply that in certain regions in the United States. There are certain regions that are hotter, then in other regions it’s colder so you always have that fuel expansion going on, and so there is a gross or net variance with inventory. So, good point.

That wraps up this week’s Motor Fuels episode. Join us next time.

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