Fuel theft in the USA reaches $8 Billion in 2008


jeffIn 2005 I wrote an article relating to the high risk of fuel theft and waste that is impacting US haulers over $2 Billion annually.

Based on a cost of almst $5 a gallon for diesel, my estimates for 2008 have increased to over $8 Billion of the $100+ Billion fuel spending for 2008.

It isn’t that the price of diesel is twice as high as 2005, it’s that the attraction to steal at $5 a gallon is considerably more attractive.

RFID is one of the compelling technologies that can reduce this economic cost considerably.

Comment on this story and we’ll provide you direction to reduce the costs associated with abuse of fuel dispensing.

RFID protector
Jan 1, 2006

Fuel prices rising by as much as 20% a year have spurred an increase in fuel theft, and waste, from commercial vehicles. This employee-related crime is now costing the United States trucking industry $2.1 billion a year, according to Jeff Schaengold of RF Commerce LLC.

The rate of fuel theft is accelerating as climbing fuel prices tempt more employees to steal fuel. Fuel waste also is a pronounced concern as transportation companies struggle to find a cost-effective answer to curb what is threatening their bottom line.

Latest figures from the American Trucking Associations (ATA) indicate that the US trucking industry will face a $72 billion fuel cost for 2005 — a $20 billion increase over 2004. In the past few months, fleets have reported these rising gas prices are crimping quarterly profits. “It’s no wonder that coupled with rising cases of employee fuel theft because of overall rises in petroleum, the public sector is suffering as well,” said Schaengold.

Taxpayers foot the bill when public funds are used to compensate for misuse of state-purchased fuel — a double blow for the economy. But both government authorities and private firms are taking simple, affordable steps to stop the waste and theft of trucking fuel with cutting-edge RFID (radio frequency identification) technology to combat this problem.

When using RFID to monitor rolling assets such as trucks and company vehicles, fuel theft dramatically decreases. This saves the company, the taxpayer, and the US economy billions of dollars of resources and revenue.

“The greater the consumption of all grades of fuel in the United States, the higher the fuel pump price to consumer, the higher home heating oil will be this winter, and the rate of inflation in 2006,” said Schaengold.

Because RFID tracking is geared to monitor and communicate activities of trucks and operators, trucking companies can tailor each RFID product to suit their needs, without unnecessarily going over their current budgets.

Recent industry reports have shown an increased use of RFID in monitoring truck activity in construction and mining operations to ensure that loads are accounted accurately. This is occurring on refrigerated containers and trailers to monitor temperature and humidity, and RFID is also used in yard management systems to locate assets.

“The same sensor-based technology used in refineries and chemical facilities to measure and monitor flow of liquids is applied to monitoring truck fuel consumption,” said Schaengold. “RFID coupled with GPS provides real-time tracking of the truck movements as well as idle time when the engine consumes fuel instead of shutting down.”

RFID allows a fuel tank cap to be matched with an authorized fuel pump. If the operator opens the fuel cap and he is not within the proximity of an authorized fuel pump, the RFID transponder unit logs the event. The trucking company, through reporting and messaging, receives a record of the event and can challenge the operator’s activity.

RFID-associated fuel pumps match drivers and trucks through closed-circuit TV images with the truck RFID transponder. Much like EZ-Pass, if the truck doesn’t match the transponder, the trucking company is alerted.

Traffic jams waste fuel at high rates with no mobility value. RFID can route drivers away from congestion, saving both time and fuel costs. According to Schaengold, “RFID presents practical, manageable, and affordable solutions for the trucking industry because it works, and for a new technology, it’s refreshingly based on solid, defined methods of tracking principles.”

Without RFID, fuel usage waste and theft is hard to manage and hard to prove. Not only does RFID offer a precise and trackable method, but it also offers a strong deterrent for fuel theft and unnecessary waste, while savings far outweigh the costs.

Management of truck operators requires quantification and real-time visibility. Managers need to know they can locate their drivers at any time, and find out what they are doing, precisely and efficiently. RFID does that, in a cost-effective and non-obstructive method that doesn’t drain valuable company resources.

RFID enables tracking and monitoring of all types of trucking. It is more efficient than bar-code tracking, since RFID requires no manual scanning and no line of sight.

Because RFID works seamlessly within the trucking industry, and creates a mutually beneficial working environment, the savings and enhanced efficiency more than cover the cost of acquisition. With such a costly activity as fuel waste and theft reduced, RFID’s cost-saving results will give companies the edge over trucking competitors and competing transportation modes.

The higher the price of fuel, the more value technology to reduce fuel consumption gains in importance. Again, the cost of fuel falls not only on private companies and the public sector, but also the consumers. Fuel is heading towards $3 a gallon, so trucking fuel costs — aside from those incurred through theft — are rising at double digits. Yet “RFID makes the task of fuel, operator, and rolling stock monitoring entirely manageable, without the need for companies to hire extra staff,” said Schaengold.

US trucking companies are using RFID with considerable results. RFID-enabled smart cards at the fuel pump are making fuel dispensing easier and quicker. It is estimated that by year 2007, companies not using RFID will lose up to $4 billion due to fuel waste and theft, if the adoption of RFID is not accelerated in 2005 and 2006.

Comments

5 Responses to “Fuel theft in the USA reaches $8 Billion in 2008”

  1. Robert Weinberg on June 8th, 2008 2:10 pm

    Great idea.
    How can I use that technology in my fleet?

  2. Jeff Schaengold on June 9th, 2008 11:10 am

    Hello Robert Weinberg,

    Your question is excellent.

    The simple answer is that you can use the technology to monitor behavior, or you can use the technology to prevent undesired behavior.

    What we can tell you is that in this economy of rising fuel costs, your worse enemy and enabler of fuel theft is your fleet credit card. By providing your operators the ability to re-fuel their vehicles at random authorized locations, there is no practical means of determining whether a stop was for bathroom, lunch or fuel theft.

    The core to the decision cycle is whether the fleet is a closed loop fleet or an open loop fleet.

    A closed loop fleet is basically a fleet that is only out on the road within the same commercial zone and the equipment returns to the ‘barn’ at the end of every day. This would generally translate to equipment that is generally fueled at the same pump.

    An open loop fleet is a fleet where operators are provided gas fleet cards, or there is a reimbursement policy, and re-fueling is conducted at random locations.

    If you suspect there is an opportunity for your fleet operators to steal fuel, the best way is to begin is by ‘monitoring.’ Monitoring can be as simple as a cap that is used as an RFID logger. When the cap is removed from the neck of the tank, the event is logged in the memory tag of the fuel cap. When the vehicle returns to the home facility, an RFID reader is used to download the logger data and the memory is set to zero. This method allows a fleet operator to determine if, and when, the fuel tank was accessed. The event log can be bumped against the fuel log to determine when an authorized event occured. Equally, for a higher cost the RFID fuel cap can also log the GPS location when the fuel cap was removed so the ‘when’ is resolved.

    The other method of ‘monitoring’ is to use an RFID gas cap that has a built in LED alarm. This device is best used in a closed loop application where the dispensing agent has RFID installed at the pump. When the cap is removed while at the RFID enabled pump, the LED remains GREEN. If the cap is removed anywhere else a RED LED is illuminated. When the vehicle returns to the barn, if the gate security or supervisor visually sees the RED LED, or the RFID infrastructure detects a disruption, the appropriate action is executed.

    Another option is considered ‘prevention.’ With a preventative device, it’s required that authorized fueling locations are equipped with RFID readers that basically ‘releases’ the electronic lock of the RFID fuel cap. Without the RFID reader transmitting the ‘unlock’ code, the fuel cap can not be removed without force.

    An average truck today consumes approximately 70-100 gallons of fuel for a regulated operator workday, which is close to $500 a day. The operator himself is lucky to have a take home pay of $150 for the day. Stealing 5 gallons a day is like extracting a 25% pay raise.

    I hope this answers your question.

    Thanks,

    Jeff Schaengold

  3. maurice walsh on August 14th, 2009 6:39 am

    hi im from the repuclic of ireland and have patented an anti fuel theft system for vehicles,domestic and commercial premises. this system operates like a lot of alarm systems i.e. monitoring of regular fuel use , on sudden increase of consumption alarm is activated,your contact number notified but the next step is the key ;a d.n.a. based dye is released immediately into the fuel turning it black and making it tracable to our system therefore if caught in possesion with black fuel police can know immediately two possabilities ; either this person has our system and his fuel system was tampered with or you are in possesion of stolen goods. the fuel eventhough contaminated is perfect to use but would a potential thief steal fuel knowing it will change to a dark black colour and be traceable to a particular anti theft system.trying to get company to manufacture this at the moment but some of these are like talking to the walking dead as they dont realise the global problem fuel theft is. if you can direct me to any company would appreciate it . thanks.

  4. rajesh on October 26th, 2010 5:11 am

    this is good for vechile tracking but it show inacive some it will show inactive long time to resolve power failure ok but it have gsm and gprs signal is not available

  5. Marius Terblanche on January 10th, 2011 2:32 pm

    Our Company Dreamworks Technologies developed a unique fuelmanagement software product that detects fuel theft/fraud and abuse.Need to know more- visit our website at http://www.fuelmanager.co.za

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