An exchange agreement is a deal where two oil companies swap fuel in different parts of the country, so each one picks up the other’s fuel close to home instead of shipping its own across the country.
A refiner or supplier owns fuel at terminals in some regions but not in others. A terminal is the large storage site where pipelines and barges deliver fuel and trucks load out of it. An exchange agreement solves the gap: Company A lets Company B pull fuel from A’s terminal in one market, and in return B lets A pull fuel from B’s terminal in another. Each side draws fuel near its own customers and squares up the volumes later.
It works because moving fuel long distances is slow and costly. Rather than haul product across the country to serve a far-off market, a company trades for fuel that is already sitting where it needs it. The two sides track how much each lifted and settle any difference in volume or price.
This is the reason a branded station can run fuel that came out of a rival’s refinery. The gallons are exchanged in bulk before any brand name is involved, and the brand’s own additive gets blended in later, as the truck loads. For an operator, it explains why the fuel behind two different signs may have started in the very same tank.
In useTwo majors run an exchange agreement, so the branded jobber loads at the nearest terminal even though that fuel was refined by a competitor a state away.
See also Branded fuel, Terminal, Lifting