On an 8,000-gallon load earning a 7-cent spread, a truck that comes in 1.5 cents higher than expected takes about a fifth of the broker’s income on that load. Here is how the spread works, and when the broker keeps it.
What is the spread on a fuel load?
spread = sell price − (product cost + freight)
Product cost often starts from the supplier’s rack price, plus or minus a negotiated differential. Freight is what the carrier charges to move fuel from the terminal to the drop. The broker keeps what’s left.
A worked load
These numbers are hypothetical, and taxes are left out of both sides. Dyed diesel sold for road use through December 31, 2026 raises its own tax questions: see what the dyed diesel order means for distributors.
| Line | Per gallon | On 8,000 gallons |
|---|---|---|
| Product bought at the terminal | $2.4800 | $19,840.00 |
| Carrier freight to the drop | $0.0600 | $480.00 |
| Cost delivered | $2.5400 | $20,320.00 |
| Sold to the buyer, delivered | $2.6100 | $20,880.00 |
| Broker’s spread | $0.0700 | $560.00 |
Arithmetic: $2.48 + $0.06 = $2.54. $2.61 − $2.54 = $0.07. $0.07 × 8,000 = $560.
Buyers compare per gallon, so the spread is quoted that way. The same 7-cent spread on 3,000 gallons is $210, less than half of this load’s $560.
Now the freight moves. The expected truck was 6 cents, but it comes in at 7.5 because the first carrier passed. The sell price was already agreed, so the difference comes out of the spread: 7.0 − 1.5 = 5.5 cents, or $440. A 1.5-cent freight change cut the broker’s income on that load by about a fifth.
Whoever fixes one side of the price while the other side floats carries that risk. The same happens when product is priced at lift and the rack moves before pickup.
Principal or agent: who owns the fuel?
In general, how a broker gets paid depends on whether it takes title to the product.
| Principal (buy and resell) | Agent (arrange the sale) | |
|---|---|---|
| Owns the fuel | Yes, between purchase and delivery | No; the sale is between supplier and buyer |
| Paid by | The spread between buy and sell price | A fee or commission, per gallon or per load |
| Price risk | Carries it if one side floats | Usually none on the product |
| Credit risk | Owed by the buyer, owes the supplier | Depends on the agreement |
| Invoices the buyer | Yes | Depends on the agreement |
A principal broker resembles a jobber, which buys at the terminal rack and resells downstream. The margin can be bigger, and so can the exposure: if the buyer pays late, the principal has still paid the supplier.
An agent earns a fee, such as 3 cents a gallon (hypothetical): $240 on 8,000 gallons. The fee doesn’t move with freight or the rack, so an agent’s income is usually steadier and smaller.
Some brokers do both. Whichever role you take, read the invoicing clause before the first load, so you know who the supplier will chase for payment.
How is fuel transport brokerage paid?
Transport brokerage is different. Under the regulation, a broker is paid for arranging the haul, not for the fuel. Under 49 CFR 371.2, a broker is “a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier.” Section 371.3 says a broker “shall keep a record of each transaction,” including “The amount of compensation received by the broker for the brokerage service performed and the name of the payer.” Each party to a brokered transaction “has the right to review the record of the transaction required to be kept by these rules.”
Those sections cover transportation you arrange. They don’t address the margin on fuel you buy and resell. If you do both, keep the two records separate.
If you’re weighing hauling the fuel yourself, how to start a fuel hauling business covers the registrations and terminal access a carrier needs.
Why price visibility decides who keeps the margin
The spread tends to hold while the buyer can’t see your product cost and the supplier can’t see your sell price. Once either side sees both numbers, the talk turns to cents per gallon instead of the delivered price.
Two habits protect it:
- Know your freight before you set the sell price. On the worked load, freight took 1.5 cents of a 7-cent spread. The math is in fuel hauling rates.
- Keep buy and sell prices on the order. A spreadsheet beside the dispatch board gets emailed around with the margin in it.
A blind bid protects your freight number further by asking carriers to price a load without seeing each other’s numbers.
How Energy Connect handles it
Each order line has optional buy and sell price fields in dollars per unit. Outside a contract, both are shown, and both can be edited until the load is delivered. On contract orders, the buy price is locked to the contract. The margin lives on the order, not in a separate spreadsheet.