Jobber Fuel Supply Agreements: How They Work & What to Negotiate

What Is a Fuel Jobber — and Why Does It Matter for Your Station?

If you’re an independent gas station owner or a dealer site operating under a supply agreement, there’s a very good chance a fuel jobber — not a major oil company — is the entity actually delivering product to your tanks. Yet many operators sign jobber agreements without fully understanding what they’ve committed to, how pricing is structured, or what protections they’ve negotiated away.

A fuel jobber (also called a petroleum marketer or distributor) buys fuel at the terminal rack, transports it using their own or contracted tanker fleets, and resells it to retail operators like you. They occupy a critical middle layer in the fuel supply chain: below the refiner or terminal operator, but above the retail site. Some jobbers represent a single branded supplier (e.g., a BP or Shell distributor); others operate as unbranded independents sourcing product from multiple terminals based on price.

Understanding how this relationship works — and what’s actually negotiable in a jobber agreement — can mean the difference between healthy margins and a supply contract that quietly erodes your profitability for years.

How the Jobber Supply Chain Actually Works

From Rack to Tank

Fuel moves from refinery to pipeline terminal to rack. At the rack, product is priced in cents-per-gallon (CPG) against a benchmark — typically OPIS (Oil Price Information Service) or Platts. Your jobber loads there, adds their margin and freight, and delivers to your site. The price you pay is called the dealer tank wagon (DTW) price, which is the rack price plus jobber markup plus delivery freight.

Some larger independent operators buy on a cost-plus basis — they pay the rack price directly plus a negotiated CPG fee for the jobber’s service. Smaller or newer operators typically buy on a posted DTW price, giving the jobber more margin flexibility. Knowing which pricing structure you’re on is the first step in evaluating whether your jobber agreement is competitive.

Branded vs. Unbranded Jobbers

A branded jobber has a franchise or distributor agreement with a major oil company (Chevron, Shell, BP, Marathon, ExxonMobil, etc.) and is authorized to sell branded fuel along with the associated image program and credit card brand. They pass through brand requirements — image standards, canopy colors, equipment specifications — to dealer sites. An unbranded jobber sources fungible product from any terminal, often at lower cost, but without brand affiliation or the marketing support that comes with it.

Your choice between branded and unbranded supply has cascading effects on your dispenser configuration, loyalty program eligibility, credit card acceptance terms, and even your site’s valuation. These upstream decisions are typically locked in through the fuel supply jobber agreement itself.

Key Sections of a Jobber Agreement — What You’re Actually Signing

1. Term and Exclusivity

Most jobber agreements run 3–10 years, with automatic renewal clauses if neither party provides written notice (often 90–180 days before expiration). Branded supply agreements tend toward the longer end; unbranded deals are sometimes shorter but still typically carry 3–5 year commitments.

What to negotiate: Push for the shortest initial term you can secure while still getting favorable pricing. Request mutual termination rights with reasonable notice — not just the jobber’s right to terminate for non-payment. Automatic renewal language should require affirmative written consent, not just silence.

2. Volume Commitments and Minimum Purchase Requirements

Most agreements include a minimum annual gallonage commitment. Miss it, and you may owe a shortfall fee, sometimes calculated as a fixed CPG penalty multiplied by the gallonage gap. Penalties of $0.02–$0.05 per gallon on shortfalls are common, which on a 50,000-gallon annual shortfall translates to $1,000–$2,500 in fees — before any other damages the contract allows.

What to negotiate: Request volume flexibility bands (e.g., ±15% of committed volume without penalty). If your site is affected by road construction, a nearby competitor opening, or a compliance-related suspension — all events outside your control — you want relief language baked in from day one.

3. Pricing Structure and Price Change Notification

This is the highest-stakes section for operators watching margin. Contracts often allow the jobber to change the DTW price with as little as 24-hour notice. Fuel retail margins are thin enough — typically $0.08–$0.18 per gallon on gasoline — that a 2-cent DTW increase can wipe out a week’s profitability if you haven’t repriced your pumps in time.

What to negotiate:

• Require 48–72 hour advance notice of price changes above a threshold (e.g., more than $0.03/gallon in a single adjustment)
• If you’re on DTW pricing, ask for a move to cost-plus once you hit a volume threshold — this aligns your interests more closely with market movements
• Clarify whether OPIS, Platts, or another benchmark is the basis, and specify which rack location (e.g., “Collins Pipeline, Doraville terminal” for Georgia operators)
• Negotiate a price protection window — typically 24–48 hours — where you can lock in a load price after confirmation

4. Delivery Terms, Lead Times, and Emergency Supply

Standard delivery lead times in jobber agreements are typically 24–48 hours from order. But what happens during a supply disruption — a hurricane, a pipeline outage like the 2016 Colonial Pipeline spill, or a terminal strike? Emergency supply language (or the absence of it) can leave you with dry tanks and zero contractual recourse.

What to negotiate: Include force majeure definitions that are mutual — they shouldn’t only protect the jobber. Request a best-efforts emergency supply obligation, and clarify whether the jobber has secondary terminal sourcing agreements. Ask specifically: “If your primary terminal is down for more than 72 hours, what is your documented backup supply plan?”

5. Equipment Loans, Image Programs, and Financial Encumbrances

Many branded jobbers offer or require equipment financing as part of the supply agreement — canopy upgrades, dispenser installations (Gilbarco Veeder-Root Encore 700s are common), or underground storage tank (UST) upgrades. These are often structured as equipment loans or advances that are repaid through CPG deductions on your fuel purchases.

Here’s the catch: these advances are typically secured against the site and tied to supply agreement compliance. Default on your supply volume? The jobber may accelerate the equipment loan repayment. Sell the site? The advance balance may need to be paid off or assumed by the buyer, complicating your transaction.

What to negotiate: Require complete disclosure of all advance balances in writing at closing. Ensure the advance terms are documented separately from the supply agreement, with their own amortization schedule. Confirm whether the advance is tied to the site (transferable to a buyer) or to you personally (requiring full repayment on sale).

6. Credit Terms and Fuel Payment Timing

Fuel payment terms in jobber agreements are typically short — net 7 or net 10 days is common, with some requiring payment on delivery (POD) for newer operators. In a high-volume station moving 100,000+ gallons per month at $3.00/gallon, a 7-day net arrangement ties up $100,000+ in receivables. This has a real cost of capital impact.

What to negotiate: If you have a strong payment history, push for net 14 or net 21 terms. Ask about ACH versus wire requirements — ACH gives you slightly more float. Negotiate a cure period of at least 3 business days before a late payment triggers a default or supply suspension.

Regulatory Considerations That Intersect With Jobber Agreements

PMPA Protections for Branded Dealers

If you operate a branded dealer site, the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. §§ 2801–2841, provides important federal protections. Under PMPA, a franchisor (including a branded jobber acting as franchisee-grantor) cannot terminate or non-renew your franchise relationship without cause, and must provide 90 days’ written notice for non-renewals in most circumstances.

PMPA defines specific grounds for termination — failure to comply with lawful franchise provisions, fraud, criminal conduct, abandonment — and provides a private right of action with potential actual damages, exemplary damages, and attorney’s fees. If your jobber is a branded distributor passing through a major oil company brand, PMPA governs that relationship regardless of what the contract says.

Practical implication: Before signing or renewing any branded supply agreement, have an attorney review it against current PMPA standards. Some jobber-drafted agreements attempt to waive PMPA rights or limit remedies in ways that are unenforceable — but only if you know to challenge them.

State Dealer Protection Laws

Many states layer additional protections on top of PMPA. States including Connecticut, Maryland, New Jersey, Virginia, and Hawaii have enacted petroleum franchise laws that extend non-renewal notice periods, restrict grounds for termination, and in some cases grant dealers right-of-first-refusal on site purchases. Review your state’s specific statute — these vary significantly and can dramatically affect your negotiating position.

Environmental Liability Allocation

Your jobber agreement should clearly address environmental liability — specifically, who bears responsibility for product-quality claims and for contamination caused during delivery. Under 40 CFR Part 280 (the EPA’s UST regulations), the site owner/operator is the responsible party for UST releases, but contamination caused by a delivery driver’s overfill or equipment failure may create shared liability.

Ensure your agreement includes: (1) jobber indemnification for contamination caused during delivery; (2) product quality warranty language tied to ASTM standards; and (3) a clear process for disputing off-spec fuel loads before the product is accepted into your tanks. Proper delivery receiving procedures at your site will support any quality dispute you need to bring against your jobber.

What Jobbers Won’t Tell You (But Will Negotiate If Asked)

Contract Clause	Standard Jobber Position	Negotiated Improvement
Agreement term	5–10 years, auto-renewing	3–5 years, requires affirmative renewal
Volume shortfall penalty	Full CPG penalty on all shortfall gallons	±15% flex band; force majeure carve-outs
Price change notice	24 hours or less	48–72 hours above threshold changes
Payment terms	Net 7 or POD	Net 14–21 with ACH; 3-day cure before default
Equipment advance	Site-secured, payable on sale or default	Transferable to buyer; separate amortization schedule
Termination rights	Jobber-only termination for cause	Mutual termination with 90-day notice
Emergency supply	No obligation during force majeure	Best-efforts obligation; documented backup sourcing

How to Evaluate Competing Jobber Proposals

Before renewing or switching, get competing proposals from at least 2–3 jobbers. When comparing, normalize everything to a single metric: your all-in CPG cost. This means rack price + jobber margin + freight + any applicable brand fees, minus any volume rebates. Jobbers often obscure true cost through fee structures and rebate thresholds — building a simple spreadsheet model against your actual monthly gallonage will expose the real economics.

Also evaluate non-price factors: delivery reliability, 24/7 emergency contact availability, quality of driver training (relevant to understanding how terminal gate pricing and product quality issues flow through to your site), equipment support capabilities, and references from other operators in your market.

Operator Insight: “We switched jobbers after our agreement expired and cut our all-in CPG cost by $0.04 on gasoline — that was $48,000 annually at our volume. The key was having a competing offer in hand before we sat down to renew. Our existing jobber matched 80% of it.” — Multi-site independent operator, Southeast region

When to Involve Legal Counsel

At minimum, engage a petroleum industry attorney before: (1) signing an initial branded supply agreement; (2) accepting any equipment advance over $50,000; (3) selling your site with an active jobber agreement; or (4) receiving a termination notice. Petroleum marketing law is highly specialized — a general business attorney may miss PMPA nuances, state dealer protection provisions, or environmental indemnity language that an industry specialist would catch immediately.

Legal fees for agreement review typically run $500–$2,500 for a standard review, far less than the cost of a poorly structured 5-year supply commitment or a disputed equipment advance at sale time. Understanding the difference between branded and unbranded supply structures before entering negotiations will also help you arrive with clearer objectives.

Action Items: Before You Sign Your Next Jobber Agreement

1. Calculate your true all-in CPG cost — don’t rely on the jobber’s summary sheet. Map rack + margin + freight against real OPIS data for your terminal.
2. Pull competing proposals from at least two other jobbers before any renewal or new agreement discussion.
3. Request a full equipment advance balance disclosure in writing, including payoff schedule and transferability terms.
4. Review your state’s petroleum dealer protection law — know your PMPA rights before sitting down to negotiate.
5. Mark your auto-renewal deadline on your calendar now — most agreements require 90–180 days’ notice, meaning you need to start 6 months before expiration.
6. Have legal counsel review any agreement over 3 years in term or involving equipment advances over $25,000.
7. Document your delivery and quality history — records of late deliveries, off-spec loads, and driver issues strengthen your negotiating position.
8. Negotiate emergency supply provisions explicitly — don’t assume your jobber has a backup plan until it’s written into the agreement.