is there any way in multi player to decrease the fuel tank size, or at the very least decrease the amount you can fill it?

Press F12, you get a menu where you can change the amount of fuel you put in at the pits. You can't change the total capacity of the fuel tank.

Quote from shiny_red_cobra :

You can't change the total capacity of the fuel tank.

You can do it with some LFSTweak versions.

Quote from shiny_red_cobra :

You can't change the total capacity of the fuel tank.

yeah, thats really what i wanted to do. ok.

why? seems like an odd thing to do...

I'm not an expert at this, but if there's an insim packet going out that tells you how much fuel every player has, there can be a way to write a tool to kick everyone with more than that much fuel in his car. It just has to be written

Quote from Stefani24 :

if there's an insim packet going out that tells you how much fuel every player has

There isn't (not through InSim alone, anyway).

cant you just put less in to start with?

I can think of one pretty convoluted way how to do this. OutGauge provides info about fuel level, so if every player ran an application that would read this info from OutGauge and send it to your server, you could monitor fuel levels like that.
You can't do that on the server-side only because OutGague hides certain info if it's sending data of a car you're not driving at the moment. It does this to protect peoples' setup and not reveal their fuel/pitstop strategy.