Fuel Market Definitions
A plain-English glossary of terms used in wholesale fuel transactions. No legal jargon — just clear explanations.
Market Benchmark Reference
Wholesale fuel pricing is quoted as a differential to published market indices. OPIS and DTN rack pricing serve as the standard reference for most Texas transactions. For large-volume wholesale deals, Platts (S&P Global) USGC pricing may be used as the index reference.
Index Reference
Standard Volume — OPIS / DTN Rack
Rack index + differential is the prevailing structure for most Texas commercial and wholesale transactions.
Large Volume — Platts USGC
For transactions meeting volume thresholds, Platts U.S. Gulf Coast pricing may be used as the index reference.
The differential reflects location, volume, credit terms, and current market conditions. Pricing structure is confirmed during the quoting process.
OPIS and DTN are trademarks of their respective owners. Platts is a trademark of S&P Global. We do not publish, set, or cache market prices. Links provided for reference only.
Differential
The plus or minus number added to a published index price to get the final per-gallon price — it reflects location, volume, credit terms, and current market conditions.
Rack Pricing
The wholesale price posted at a fuel terminal for buyers lifting product directly — the starting point for most commercial deals, before a differential is added.
OPIS / DTN
OPIS (Oil Price Information Service) and DTN are the primary rack pricing services used as reference benchmarks for most Texas wholesale and commercial fuel transactions. They publish daily terminal rack prices at hundreds of locations. Most standard-volume deals reference OPIS or DTN rack pricing plus a differential.
Platts
A pricing and analytics service owned by S&P Global that publishes benchmark prices for energy commodities, including diesel fuel. Platts is the standard index reference for large-volume wholesale transactions. When deal volume is large enough to qualify, Platts USGC (U.S. Gulf Coast) pricing may serve as the index in place of rack-based indices like OPIS or DTN.
Rack Index + Differential (OPIS / DTN / Platts)
The standard pricing structure for wholesale fuel. The base price references a published index — OPIS or DTN rack for standard commercial volumes, or Platts USGC for large-volume deals — and a differential (positive or negative) is added to reflect location, volume, credit terms, and market conditions. For example, 'OPIS Gulf Coast rack + $0.03' or 'Platts USGC + $0.05' means the index price plus that number of cents per gallon.
ULSD
Ultra-Low Sulfur Diesel. Diesel fuel with a maximum sulfur content of 15 parts per million (ppm). Required for all on-road diesel vehicles in the U.S. since 2006. This is the standard diesel product in most wholesale transactions.
USGC
U.S. Gulf Coast. A major petroleum refining and distribution region encompassing Texas, Louisiana, Mississippi, Alabama, and Florida Gulf coastlines. The USGC benchmark is particularly relevant for Texas fuel transactions — referenced via OPIS or DTN rack pricing for most commercial deals, and via Platts USGC for large-volume wholesale transactions.
Rack / Terminal Lift
Purchasing fuel at a terminal (fuel storage and distribution facility) and arranging your own transport. The buyer lifts product directly from the terminal rack. Pricing is typically quoted as an OPIS or DTN rack-based price plus a differential for standard commercial volumes, or Platts USGC-indexed for large-volume lifts.
Delivered Fuel
Fuel pricing that includes transport to the buyer's location. The seller or a third-party carrier handles logistics. Delivered pricing is typically higher than rack pricing to account for freight costs.
Spot Transaction
A one-time fuel purchase for immediate or near-term delivery. Pricing reflects current market conditions. No ongoing supply commitment between parties.
Term Agreement
A contract for ongoing fuel supply over a defined period (weeks, months, or years). May include fixed pricing, formula-based pricing, or periodic price adjustments. Provides supply security for buyers and demand certainty for sellers.
Buyer-Agent
A party that represents buyer interests in sourcing products or services. In fuel brokerage, a buyer-agent works on behalf of buyers to identify supply sources, coordinate pricing discussions, and facilitate transactions. The buyer-agent does not take ownership of the product.
Transaction Coordinator
A party that facilitates the administrative and logistical aspects of a transaction between counterparties. This includes coordinating documentation, managing timelines, and supporting communication. The coordinator does not execute the transaction itself.
KYC
Know Your Customer. A verification process to confirm the identity of individuals involved in business transactions. Includes identity verification and authorization to transact on behalf of an organization.
KYB
Know Your Business. A verification process to confirm the legitimacy and standing of a business entity. Includes verification of business registration, ownership structure, and operational status.
ICPO
Irrevocable Corporate Purchase Order. A formal document from a buyer confirming binding intent to purchase under specified terms. Issued after preliminary agreement on price, volume, and terms. The 'irrevocable' nature indicates the buyer cannot unilaterally withdraw once issued.
SPA
Sales and Purchase Agreement. The formal contract between buyer and seller that governs a fuel transaction. Details all terms including product specifications, volume, pricing, delivery schedule, payment terms, and conditions for default or dispute resolution.
BL (Bill of Lading)
A shipping document confirming the receipt and transfer of product, serving as proof of shipment/receipt and key logistics document. In fuel transactions, it documents the quantity and condition of product transferred from seller to carrier and from carrier to buyer.
COA
Certificate of Analysis. A document from a laboratory or quality control facility certifying that a product meets specified standards. For fuel, this confirms properties like sulfur content, cetane number, and other specifications required by the buyer or regulatory standards.
FOB
Free on Board. An Incoterm indicating the seller fulfills delivery obligations when product passes over the ship's rail (or equivalent transfer point). Risk and cost transfer to buyer at that point. FOB Origin means the buyer assumes risk during transit.
CIF
Cost, Insurance, and Freight. An Incoterm where the seller pays for transport and insurance to the destination port. Risk transfers to buyer when goods pass the ship's rail at origin, but seller covers costs to destination.
DAP
Delivered at Place. An Incoterm where the seller delivers goods to a named destination, ready for unloading. Seller bears all risks and costs until arrival at destination. Buyer handles unloading and import clearance.
Laycan
Laydays and Cancelling. The window of dates during which a vessel must arrive to load cargo. If the vessel arrives before the first date (laydays), it waits without penalty. If it arrives after the final date (cancelling), the contract may be cancelled.
Counterparty
The other party in a transaction. In a fuel sale, the buyer and seller are counterparties to each other. Verified counterparties have completed verification processes establishing their legitimacy and capability to transact.
Need more information?
If you have questions about any terms or need clarification on how these concepts apply to your situation, please reach out.