Are you monitoring your fuel usage? Miles per gallon analysis is key

We first shared this advice in our recently updated resource: Best practices for fueling government-owned vehicles. For more tips on how to improve your fueling system controls, check it out! 

Whether you operate your own fuel pumps, or use a commercial fuel card system, you want to make sure you only buy fuel for your vehicles. If you rely on an employee to review every fueling receipt, you may overlook fraudulent activity. A few red flags might catch the reviewer’s eye – like if the time of day or day of the week is different than the employee’s work schedule, or if the fueling location is outside the employee’s assigned work area. Otherwise, it is almost impossible to know if the employee used the fuel for a work vehicle just by looking at the receipt. 

The best way to make sense of fuel purchases, and to identify potential theft, is to monitor miles per gallon (MPG) variances. To do this, compare the actual MPG to the vehicle manufacturer’s published MPG, as per vehicle specifications. In this blog post, we’ll describe how to set this up and interpret the data.  

(If you have a separate department, outside of finance, that monitors fuel activity – please share this article with them.) 

Getting started 

To do this type of monitoring, you must collect fuel transaction data on a per vehicle basis. That means when you assign fuel cards, fuel keys or some other device, you should assign them per vehicle – not per driver. You also need to record all fuel usage in one central database. If you have any manual logs at remote fueling sites, you must enter this data into your central database.  

You should train your employees to use the fuel card or fuel keys appropriately, as some of their actions can distort data. For example, consider the employee who uses their vehicle’s fuel card to fill up both their vehicle and a coworker’s vehicle waiting next in line. Or, the employee who uses their vehicle’s fuel card to fill up both their vehicle and gas cans used to operate small equipment.  

Collecting mileage data 

You also need to know the odometer reading at each fueling to determine the total distance driven, which is a necessary input to calculate MPG. Many fueling systems require the employee to input the odometer reading each time they pump fuel, but employees sometimes bypass this step. Most commonly, they enter zeros or make up numbers. To ensure you obtain accurate odometer readings, you should emphasize the importance of entering correct information with drivers, monitor the reasonableness of those readings, and then hold drivers accountable if they do not comply. 

If your system has the capability, you could configure it to deny fueling when the employee enters an odometer reading outside reasonable parameters. For example, one government’s system automatically declined fueling when the odometer reading entered was not within 350 miles of the last entered reading.   

Calculating MPG and comparing it to manufacturer specifications 

If you take the total miles driven and divide it by the fuel gallons purchased during that same time, you’ll get the actual MPG. Then, compare it to the MPG rating as per the manufacturer’s specifications, and follow up when you notice significant variances. 

Example: The vehicle was driven 300 miles, during which time 30 gallons of fuel was purchased per the vehicle’s fuel card: 300/30 = 10 MPG 

If your calculation shows that a vehicle is getting 10 MPG — but it should be closer to 30 MPG based on manufacturer specifications — then you may be buying more fuel than is actually filling the vehicle. Or in other words, the employee may be using that fuel card to fill up both their work vehicle and their personal vehicle. Another potential explanation for lower fuel mileage is a vehicle performance issue. And as mentioned previously, data distortions can also cause these variances, if an employee did not properly use the fuel card. A variance is merely a starting point to doing more research and asking more questions.  

Visit our Resource Library 

All our guidance is available online at no cost. We have a lot of great information to share, so spend a few minutes in our Resource Library to see what we have to offer! 

How to reach us for more assistance 

Remember, the State Auditor’s Office can help. If you have technical questions, submit them using our HelpDesk in the client portal. 

We also have internal control specialists at our Center for Government Innovation available to talk with you about best practices and resources. For assistance, reach out to us at Center@sao.wa.gov.