Your wholesale rack report is filled with critical fuel prices. But where do they come from?
The fuel prices in your report can help you ensure you are not being overcharged by a supplier. They can direct you to the best deals on gasoline, diesel, biofuels and more. And they can help you save money by providing you the power to make the right choices for your next supply contract.
But, where do the wholesale fuel prices that appear in your rack report – whether it’s one delivered to you at a specific point in your workday or in real-time – originate? Are they beamed in from the heavens? How does OPIS bring that pricing to you and ensure it is 100% legit?
This is where the OPIS rack price discovery comes in. Around 40 years ago, our founders pioneered the “art” of collecting and vetting wholesale fuel data.
But supplier rack prices aren’t posted on neon signs at the rack. So how do we gather the prices? Throughout our history, some suppliers have always confirmed their prices directly, sending OPIS the same pricing messages their customers receive. In other instances, prices get collected from buyers our team has vetted as reliable sources.
This post takes you behind the scenes to show you how the OPIS team of pricing analysts collect rack data. Consider it an "Anatomy of a Fuel Rack."
For this, I turned to OPIS' own Tanya Lee. Tanya and her team are responsible for all operations, internal sales support and customer care operational activities relating to wholesale rack pricing at OPIS. Tanya works closely with our customers on new product development and existing product enhancement. Tanya’s also been known to hoist a glass of wine or two to her hometown team, the Minnesota Twins.
New to using rack pricing reports? Read a step-by-step guide to your wholesale rack report to get a better understanding.
Jessica: Welcome to the blog, Tanya! So, tell me. How many fuel prices does your team process every day?
Tanya: Hey, Jessica. Prices come to us from hundreds of sources – we grind through about 2 million wholesale fuel prices a day and output more than 30,000 prices in about 400 markets. Now, those 2 million prices include a lot of duplicate data. But that’s a good thing, since we believe in getting multiple references for each price we publish. The same source may send us price data dozens of times per day. The OPIS data team normalizes the unique supplier codes so that all variations of a supplier, product or terminal read apples-to-apples and can be compared.
Jessica: Do those sources seek you out? And how do you verify that a new price source is sending you legit data?
Tanya: When OPIS doesn’t have any sourcing for a specific supplier at a certain location, the supplier itself or the supplier’s customer will often reach out to us asking OPIS to gather and publish data. Once we obtain a new price from a new reporting entity, that data is flagged by our internal system.
New data is something we always want because it enriches our reporting. But a new source record in the system kicks off a very rigorous process of validation before a price can be added to our reports.
First, we look to determine if we have multiple sources receiving the same price data. If so, we confirm that fuel supply to that particular rack location is consistent, using a minimum daily volume threshold – which varies market-by-market based on its size. We check that the price is being published each day and can be processed by our internal system. And we make sure that the price is an “OPIS Rack” price, available at a competitive market level, to customers buying at that rack.
If we don’t have multiple sources, we don’t include the data in our wholesale price report unless a customer specifically requests it. But, even then, we verify there will be consistent, daily supply available and that other suppliers in the marketplace agree that the supplier is a true market competitor.
View our full pricing methodology.
Jessica: Take me through your day-to-day price quality control process.
Tanya: Quality control occurs between 5:30 a.m. and 11:00 p.m. Eastern Time. Our system flags any prices that may be errors or outliers and need extra scrutiny by our analysts. When a price is deemed to not fit into our criteria, it is not included in any OPIS averages until it’s vetted. The price will still be displayed in the report, but will be noted with a little “d” to indicate it is not part of the OPIS benchmark data.
Markets are assigned high- and low-price thresholds. Prices that fall outside of this threshold are reviewed. Geography can have a lot to do with variations in price – sometimes a terminal that is slightly outside of a rack city’s “hub” can see a variance that is not seen at the hub itself. Branded and unbranded fuel suppliers are looked at separately and we also review standard deviations.
We perform analysis to identify markets that are long or short on supply. If a market is short, there is a very good likelihood that tighter thresholds will be run. For example, we look to see if a supplier’s branded price is cheaper than their unbranded price. That could tip us off that supply is tight in a market. We also consult the OPIS Editorial Team and see if there have been any issues reported in the Refinery Maintenance Report.
Our internal system flags conflicting supplier prices at a given location. An analyst will then reach out to sources and suppliers to determine which of the prices is the valid, posted rack price. In fact, we’ve saved many a supplier from sending out erroneous price data by catching an “oops” before it became a real problem!
Jessica: Our standard reports provide one price per product, per supplier, in a given geographic market. Can you walk us through the factors involved in choosing the most representative price for each supplier?
Tanya: If the supplier has the same product at multiple terminals, OPIS flags one of those terminals as the standard. There’s a set of criteria that help us select which one.
For example, if the supplier owns a terminal, their standard price will almost always be at that owned terminal (exceptions can occur, especially during terminal maintenance or where there is a much larger, and more-predominantly used, terminal for the supplier).
If the supplier does not own a terminal – pricing is reviewed over time and the standard price will reference the typically lowest value among the reviewed terminals.
Terminal infrastructure is reviewed, with more weight given to terminals that are higher-volume facilities.
Lastly, daily reviews are conducted, looking for values that indicate a supplier’s best option is not at the terminal OPIS has selected as standard. We’re always open to changing things up if the market dictates.
Jessica: And then, that’s it? Do you publish those prices right then and there?
Tanya: No, absolutely not! Beyond all our intense quality control and extensive vetting, prices are never published until a supplier makes them effective. That way, markets remain competitive and follow anti-trust policy.
Thanks, Tanya! We hope this has cleared up any question you may have surrounding our rack price publishing processes. But, we love questions! So, drop us a line below and let us know if you need any additional clarification.
In the meantime, be sure to check out our brand-new Fuel Regs & Specs book so you can be sure the product you are pulling at the rack is in line with your requirements.
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