(Bloomberg) -- A new crop of startups are trying to makegas stations obsolete. Tap an app, and they'll bring the gas toyou, filling up your car while you're at work, eating breakfast, orwatching Netflix. Filld, WeFuel, Yoshi, Purple andBooster Fuels have started operating in a fewcities including San Francisco, Los Angeles, Palo Alto, Nashville,Tennessee, and Atlanta, Georgia. But officials in some of thosecities say that driving around in a pickup truck with hundreds ofgallons of gasoline might not be safe.

“It is not permitted,” said Lt. Jonathan Baxter, a spokesman forthe San Francisco fire department. Baxter said if San Franciscoresidents see any companies fueling vehicles in the city, theyshould call the fire department.

Yoshi, which operates in San Francisco, was surprised to hearBaxter's concerns. “We haven't talked to them. I don't know aboutthat. It’s news to me,” said co-founder Nick Alexander. The nextday, he said he believed Yoshi was following the law and that ithad been careful to limit the size of their gas tanks to stay underlimits outlined in the International Fire Code, a guidelinefollowed by many U.S. states.

Filld, an 18-month-old startup with thousands of customers inSilicon Valley, plans to start service in San Francisco on Monday,deploying three delivery trucks at 1 p.m. “You can never ask forpermission because no one will give it,” said Chris Aubuchon, thechief executive officer at Filld.

Fire departments drafting policies

The Los Angeles Fire Department said it’s drafting a policy aroundgasoline delivery. “Our current fire code does not allow thisprocess; however, we are exploring a way this could be allowed withsome restrictions,” said Capt. Daniel Curry, a spokesman for thecity’s fire department. “It’s just one of these things that nobodyhas really thought about before—kind of like how Uber popped up outof nowhere.” But he said it’s not a gray area: “All I can tell youat this time is it’s not allowed as per our current fire code.”

Bruno Uzzan, the CEO of Los Angeles-based Purple, said hiscompany is in discussions with the fire department. “I don't knowthat guy,” he said of Curry. When asked if Purple would stopdelivering gas, he replied, “No. Why should we?” Later, Bruno said,“The way we currently operate is permitted by the code.”

In the San Francisco Bay Area, Booster Fuels told customers inFebruary that it was halting fuel delivery there at the behest ofthe Santa Clara Fire Department. The company said the city isreviewing its permit application. Filld’s Aubuchon said that firedepartment also told his company to cease operations in the county.But Filld has continued operating. “We basically said, ‘We striveto be safe in every way to the consumer, and this is exactly whatwe do, and we welcome dialog,’ ” he said. “If it was illegal, theywould have and should have told us many months ago.”

Jennifer Yamaguma, a spokeswoman for Santa Clara, said the citymanager is compiling a report on gas-delivery businesses,which the city council will review. Atlanta’s fire departmentreferred a request to the Georgia Department of Transportation,which did not respond to a request for comment. The fire departmentin Nashville declined to comment.

“We have to look at the safety of everyone,” said Baxter, theSan Francisco fire department spokesman. “You could imagine whatcould happen if a fueling truck went into a parking garage under acommercial or residential building, it would not be a goodoutcome.”

“If it was illegal, they would have and should have told us manymonths ago.”

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Lugging hundreds of gallons of gas through residentialneighborhoods to fill up people’s cars while they sleep is new.(Photo: Bloomberg)

On a recent Monday morning, about 40 miles south of SanFrancisco, Aubuchon carefully drove a Ford F-250 pickup truck with324 gallons of gasoline into a hospital parking garage in PaloAlto, Calif. The truck—also loaded with a gas pump, two fireextinguishers, a bucket of chalk to absorb spills, two orangetraffic cones and a receipt printer—nearly grazed the ceiling ofthe garage as its radio antenna whipped around. Aubuchon waslooking for a silver Mini Cooper.

After a few wrong turns, he found it. The tiny car’s gas flapwas, to his relief, open. Aubuchon unrolled the gas hose from aspindle in the truck bed, clutched the handle of the fuel nozzle,stuck it in the car’s tank and began filling the Mini Cooper. Aftersix gallons, the car’s tank clicked. A printer in truck's cab spitout a paper receipt, and he transmitted an electronic receipt tothe owner of the Mini Cooper. Then he packed up his supplies anddrove away.

Disruption to fuel industry

“The land value in the city is going up, and the gas stations arebecoming more and more sparse,” Aubuchon said. “This is adisruption to a fuel industry.”

Construction companies, farmers and even some isolated homeshave been paying fuel delivery companies to deliver largequantities of diesel fuel and sometimes gasoline for years. Butlugging hundreds of gallons of gas through residentialneighborhoods to fill up people’s cars while they sleep is new.

“Those larger tanks, while they carry that many gallons forefficiency, if there is a turnover or an accident of one of those,it really is like a big bang; you have problems when any one ofthose has an accident,” Aubuchon said. “The size of our tanks ismuch, much smaller, and we have multiple of them. So for us to havea spill of their caliber, we’d have to have a hundred trucks in arow.”

Yoshi, the company that delivers in San Francisco, was foundedby two Harvard MBAs, a former Harvard law student and a formerStanford medical researcher. The startup also operates in Nashvilleand Atlanta. Booster Fuels has $12 million in funding and bigpurple trucks that can each carry 1,000 gallons of gas. It fills uptanks in parts of Northern California and Dallas-FortWorth. There’s also WeFuel, which put its first two trucks onthe road in Califonira’s Mountain View, Los Altos, Palo Alto andMenlo Park in January and is developing technology to notify thecompany when a customer is running low on fuel.

Purple has a fleet of about 80 cars driving around Los Angeles,San Diego, Orange County and Seattle with up to a half-dozenfive-gallon gas canisters in the trunk. “We wanted to ­give anoption to drivers to skip the gas station, as if they were orderingan Uber or a Lyft,” said Uzzan. Speaking of ride-hailing services,some of Purple’s drivers pick up passengers for Uber between refuelgigs, according to Uzzan. Uber declined to comment.

“This is a disruption to a fuel industry.”

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The delivery startups are still experimenting with businessmodels. (Photo: Bloomberg)

Selling gas is big business

Selling gas in the U.S. is a big business. In 2014, 10,545 gasstations collectively sold $534.7 billion worth of gasoline,according to the U.S. Census Bureau. Those gas stations earned acumulative $66.6 billion after accounting for what it cost them tobuy the gas.

The startups generally share two intuitions about the gasbusiness: One, owning a truck is cheaper than owning a gas station,and two, the more fuel they sell, the less they’ll have to pay pergallon for their gas. Aubuchon, a former venture capitalist, saidthe company can buy and equip a truck for $50,000, compared with$2.25 million for a gas station. Filld charges a delivery fee of upto $5 and then asks the same price per gallon for gas as the leastexpensive nearby gas station.

The delivery startups are still experimenting with businessmodels. Purple customers can open the company’s app and get gaswithin an hour, and their drivers are regular people with nospecial certification. Filld operates around the clock but askscustomers to schedule a delivery through their app at least a fewhours in advance. They employ commercial drivers who receive Hazmatcertification. Both Purple and Filld deliver to residential areas,while Yoshi and Booster are focused on filling up gas tanks inoffice parking lots. Yoshi’s trucks are similar to Filld’s. They’repickup trucks driven by professional drivers. Booster exclusivelycuts deals with businesses to fill up their employees’ cars duringthe workday. Its drivers have commercial licenses.

The regulatory challenges are ongoing. For example, countiesmust certify whether a gas meter is calibrated correctly, so it canensure that customers aren’t getting overcharged for gasoline. StanToy, deputy sealer at the Santa Clara County Department of Weightsand Measures, said his group has examined and approved meters fromYoshi, Filld, WeFuel and Booster. The department doesn’t inspect atruck's fuel tanks. “We don't know who they fall in,regulation-wise,” Toy said.

Regulatory confusion

The California government agency that oversees the state’s firemarshals office is convening a meeting on May 24 to discuss mobilefueling. It doesn't believe the startups’ current operations “meetthe requirements to be able to operate safely,” said LynneTomachoff , a spokeswoman for the agency. “There are so manytentacles to this whole issue.”

Back in March, before the San Francisco fire department toldBloomberg that fuel delivery was prohibited, Alexander tickedthrough the regulators that Yoshi had run into. He said highwaypatrol inspected the truck but didn't quite understand theindustry. “They don’t know what to really make of it,” Alexandersaid. He said one county department of weights and measuresinitially told Yoshi that it wouldn't be possible to certify a gaspump bolted to the back of a pickup truck. Then the county changedcourse and gave the go-ahead. “Once you’re approved at one, itcarries over” in California, he said.

Then he got to the fire marshals. “There’s nothing specific thatyou have to get them to cross off, but they have jurisdiction overeverything,” Alexander said. “It’s kind of fuzzy.” San Francisco’sfire department doesn't agree.

Noah Doyle, an investor in Filld, said that for the nascent fueldelivery space, safety wasn't so much a risk factor as a barrier toentry: “You simply have to jump through the hoops with the localauthorities to educate them and get them comfortable.”

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