Fuel Market Definitions
A plain-English glossary of terms used in wholesale fuel transactions. No legal jargon - just clear explanations.
Platts
A pricing and analytics service owned by S&P Global that publishes benchmark prices for energy commodities, including diesel fuel. Platts prices are widely used as reference points for wholesale fuel transactions.
Platts + Differential
The standard pricing structure for wholesale fuel. The base price references the Platts benchmark, and a differential (positive or negative) is added to reflect factors like location, volume, credit terms, and current market conditions. For example, 'Platts USGC + $0.05' means the Platts U.S. Gulf Coast price plus five 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 Platts benchmark is particularly relevant for Texas fuel 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 'rack price' which may be Platts-based or posted by the terminal operator.
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.