Shrinkage is fuel or goods that go missing between what you bought and what you sold. The gallons or items you paid for do not match the ones you can account for.
Shrinkage, often just called shrink, is the gap between what came in and what went out. With fuel it is gallons: you bought a certain amount, you sold or still hold a certain amount, and the difference that cannot be explained is shrink. With store goods it is the same idea applied to merchandise.
The causes are a mix. Some is real loss, like theft or a leaking tank. Some is measurement, because fuel is hard to gauge to the exact gallon. And some is physics, since fuel swells in heat and shrinks in cold, so the same fuel can read as more or fewer gallons depending on temperature.
It matters because the margin is so thin. A jobber or a station earns pennies a gallon, so a small percentage lost to shrink eats straight into the profit on every gallon that did sell. The job is to measure shrink closely enough to tell normal, harmless variance from a real leak or a real theft, and to act fast when the number drifts.
In useThe site’s shrink runs a steady fraction of a percent for months, then jumps, and the operator pulls the tank readings to find out whether it is a meter, a leak, or a theft.
See also Wet stock, Reconciliation, Gross vs net gallons