A jobber buys fuel at one price and sells it days later at whatever the market has moved to. When the rack price falls before you sell what you already bought, every gallon in your tanks and on your trucks is worth less than you paid for it. Price protection is a credit from your supplier that covers that gap on the fuel you bought before the drop. Branded jobbers usually have it written into their supply agreement. Open-market buyers usually do not.
What it is
Price protection, also called price-down protection or downward price protection, is money your supplier credits back when they lower their price while you are still holding fuel you bought higher. You committed to buy at the old price in good faith. The supplier dropped the price the next day. Without an adjustment you would lose money on that inventory through no fault of your own. The credit brings you back close to whole on the gallons you had not sold yet.
Why a falling market costs you money
A jobber is always holding fuel somewhere. There are gallons in your bulk plant, gallons in the tanks at your dealer and DTW sites, and gallons in transit on a transport you have already paid for. Add it up and a mid-size jobber can have a few hundred thousand gallons in the system at any moment. If the rack drops three cents overnight, that inventory loses three cents a gallon of value while it sits. On 300,000 gallons that is $9,000 gone, and fuel margins are thin enough that a couple of swings like that can wipe out a good month. Price protection exists because suppliers know this and want marketers to keep buying instead of waiting out every dip.
How the credit is figured
The math is usually the price drop times the gallons you are protected on:
- Take your old delivered cost and the new lower price.
- Find the difference per gallon.
- Multiply by the protected gallons your supplier agrees to cover.
Say you bought at $2.70, the price drops to $2.66, and the supplier protects 180,000 gallons. That is four cents on 180,000 gallons, or $7,200 credited back. The credit lands on a later invoice or statement rather than as cash, but it is real money against your cost.
What actually gets protected
This is where the fine print lives, and where jobbers lose money they were owed. Protection almost never covers every gallon you hold. Suppliers cap it, usually one of a few ways:
- Inventory on hand at a snapshot time, often measured the moment the price change takes effect.
- Fuel in transit that you hold title to but have not yet received.
- A days-of-supply limit, so they cover a normal stock level and not a tank you topped off to gamble on the market.
You have to report the protected inventory, and you have to report it accurately and on time. If your gallon count is a day stale or misses the fuel sitting at a consignment site, the supplier credits you for fewer gallons than you actually held. That difference is money you simply do not get back.
Branded vs unbranded
Whether you get price protection at all comes down to how you buy. Branded jobbers who sign a supply agreement with a major usually get it as part of the deal, because the brand wants them carrying inventory and holding street prices. Open-market and unbranded buyers usually get nothing. When you buy on the spot market you own the risk both ways: you keep the gain when prices rise and you eat the loss when they fall. That trade sits at the center of the branded versus unbranded decision, and price protection is one of the quieter reasons some marketers stay branded.
How to claim every gallon you are owed
Every cent of price protection rides on one thing: knowing exactly how many gallons you were holding the moment the price changed, and where. That means live inventory across your bulk plant, your in-transit loads, and every dealer and DTW site, with a timestamp you can stand behind. Shops that run this on a spreadsheet updated once a day tend to under-claim, because the numbers go stale and the consignment gallons get missed. FastDragon tracks gallons in every tank and load as they move, so when the rack drops you can pull an accurate snapshot for the exact hour and claim the full credit you are owed.
Common questions
Is price protection the same as a temporary voluntary allowance (TVA)?
They overlap but cover different things. Price protection makes you whole on inventory you already bought when the price drops. A temporary voluntary allowance, or TVA, is short-term support a supplier gives so you can lower your street price to meet a nearby competitor. One is about the fuel in your tanks, the other is about the pump price down the road. Both put money back, and both depend on accurate volume reporting.
How fast do you have to report inventory after a price-down?
The window is usually short, often the same day or the next business day, and it varies by supplier. Some brands pull your inventory automatically from the tank readings you report at the time the change takes effect. Either way, late or rough numbers cost you gallons, so the marketers who collect the full credit keep their inventory current instead of scrambling when a drop hits.
Does price protection work in both directions?
No. It only helps when prices fall. When the rack rises, the fuel you already bought is worth more and you keep that gain. That one-sided upside is why suppliers cap how many falling-market gallons they will cover, because marketers already have a reason to carry stock.
Do unbranded jobbers get price protection?
Rarely. Buying unbranded on the open market means you own the price risk both ways, up and down. A few large supply contracts carry limited downside terms, but most spot and rack buyers take the full swing themselves. If steady downside coverage matters more to you than open-market flexibility, that pulls toward a branded supply deal.