ECS Eclipse News

Gasoline theft. A true story.

February 12, 2010 (comments: 0)

Retail petroleum operators often ask, “Why should I bother to reconcile my gasoline inventory? It’s all there, right?” We would all hope that the most valuable product sold at the convenience store/gas station is all accounted for and appropriately sold, but this is not always the case. The story below is a true summary of a recent theft event that cost a petroleum marketer a loss in excess of $80,000 dollars.

The setting of this tragic story is a retail gas station and convenience store nestled in a mid-sized New England city. The operator of the facility was a commissioned agent working for a petroleum marketer who owns in excess of 200 stores. The theft events took place over a period of several months in 2008. The discrepancy in gasoline was first recognized at the corporate accounting level. The first response was to emphasize to the commissioned agent the need to do his paperwork correctly. The issue, in fact, had little to do with paperwork accuracy and a lot more to do with a dishonest operator who would place a gasoline dispenser in “stand alone” mode.

When this particular operator was working alone at this site, he would place one of the six dispensers in stand alone mode and tape a sign on the dispenser that read “Cash Only.” As patrons pulled up to the dispenser, they would either move on to the next dispenser to use their credit card or step into the store and give the attendant a ten or a twenty to make their gasoline purchase. With the dispenser in stand alone mode, the volume of gasoline dispensed would not be captured by the point of sale system and the attendant would pocket the cash paid by the patron. At the end of his shift, the cash register would not be short and his larceny would go unnoticed.

Unnoticed, until the gasoline inventory is reconciled, that is.

Historically, the accuracy of the inventory reconciliation from this particular site was mediocre at best. Typical composite sheets had very large swings from day to day. Sometimes sales closings were not always coordinated with daily inventory readings. Manual entries were not always legible and math errors were frequent. Corporate accounting initially thought the issue was one of sloppy paperwork. They invested time to correct the supposed issues and waited for the monthly composite sheets to come in. The shortage issue remained.

With the losses still appearing on the monthly composite sheets, the petroleum marketer suspected the hauler of not delivering the entire product promised on the bills of laden. The hauler was subsequently changed, but over time, the issue persisted. A leak in the Underground Storage Tank (UST) system was suspected and testing was contracted. All the testing passed.

Time (and money) was passing this petroleum marketer by while they attempted to find the source of their loss. An historic tolerance within the company for inaccurate reconciliation masked the true source of the gasoline shortages, employee theft. More accurate inventory reconciliation and prompt analysis would have identified the product theft immediately.

Eventually suspicion was placed on the site operator as the culprit for the loss of inventory. An unannounced visit by the Area Sales Manager (ASM) unveiled the “cash only” sign and the operator’s scheme. The ASM contacted the police and the operator was arrested on the spot.

Unfortunately, several months had passed and $80,000 worth of product was stolen before the culprit was caught. Regrettably, this story has an even sadder ending. After his arrest, the operator posted $1,500 bond and was released while he awaited trial. The operator fled the jurisdiction and returned to the “old country” before any restitution could be imposed.

Proper inventory reconciliation cannot directly stop theft, but it is a formidable deterrent. If an operator realizes he will be discovered immediately, he is considerably less likely to attempt the theft. This is the reason clerks do not simply help themselves to a stack of twenties from the register drawer. At a minimum, proper reconciliation practices will identify a problem early, before it grows to the magnitude of this true story.

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