Petrol stretching now major danger for Irish motorists

While the tide seems to have turned significantly in the war on diesel laundering, due to greater levels of investigation and significantly increased enforcement, a new scourge has emerged, which proves that crime pays while victims continue to suffer. Petrol stretching is now rampant in the West of Ireland, border regions and the midlands, AutoTrade.ie has learned.

Fuel rackets have cost the authorities on both sides of the border hundreds of millions of Euro each year. And in addition to the significant cost to the State, there is often a major price to be paid by the Irish motor industry, insurers (so that transfers in to higher premiums), but in particular hundreds if not thousands of Irish motorists.

AutoTrade.ie and the Auto Trade Journal have learned that a new crimewave of ‘Petrol Stretching’ is now causing havoc among petrol engined car owners and the auto industry in the West of Ireland, border regions and midlands in particular.

We have also learned that the Revenue Commissioners, Customs and Excise and Gardai have been investigating ‘petrol stretching’ and it has been established that there is a significant fuel contamination issue in the aforementioned regions.

The latest petrol stretching involves adding between 6 and 10 per cent volume of kerosene to petrol. As we go to press, kerosene is available to anyone including households at as low as 80 cents per litre, as opposed to petrol, which retails at close to double that at €1.55 per litre.

So for example in round figures a retailer that buys in 10,000 litres of petrol, could lay out €15,000 but a competitor illegally adding 10 per cent kerosene to 9,000 litres of petrol will have a rounded outlay of €13,500 + 1,000 litres of kerosene at €800, a total of €14,300 or a saving of €700. Even discounting against their nearest legitimate petrol retailer location to them, they make more than €500 extra profit per 10,000 litres sold.

One outlet that we know of, has had petrol samples tested. These tests showed a positive presence of near 10 per cent of kerosene. The fuel was retailing at €151.9 per litre, while most legitimate retailers in that town were charging €155.9 per litre.

We estimate that well over 100 petrol cars have already had their engines badly damaged by petrol stretching with kerosene. There are a lot of self-drive / rented cars including many 142 registrations crippled around the country. Practically all brands with mainly smaller petrol engines including Toyota, Volkswagen, Opel, Nissan, Skoda, Hyundai, Kia and others have suffered from this latest crimewave.

The damage is so severe that in many cases the engine pistons have melted and ended up coated in carbon. Kerosene is completely unsuitable to add to petrol and will damage an engine even more quickly than laundered diesel.

Common indicators for motorists that this may be a problem include a lack of power, misfiring of the engine and the engine warning (check engine) light coming on.

Motorists may also experience a knocking noise, low compression with excessive crank case pressure. You would also expect these symptoms to be more noticeable when the engine is cold.
Some insurance companies that used to cover engine and associated damage resulting from contaminated fuel, now exclude it in their policies. Most motorists are not aware of this fact.
The insurers that will not accept such liability suggest to their customers that have damaged engines as a result of contaminated fuel, that they seek compensation from the fuel retailers where they purchased the fuel.

This equally applies to petrol stretching as well as laundered diesel, because as far back as 2009, customs officers from both sides of the border were working against illegal petrol stretching and they identified it as a growing problem.

Back then criminals were adding methanol and ethanol, which are essentially paint thinners, to fuel to get more for their money. In Northern Ireland at the time those contaminants were just 25 per cent of the price of petrol. However, with revenue and customs officers being equipped with  a chemical detection kit to check petrol for methanol and ethanol, as well as the massive growth in diesel car sales through the previous decade, the criminals turned their attention totally to diesel laundering.

It appears from comments made to AutoTrade.ie that there is a consensus among various interested sectors including petrol/diesel suppliers, engineers/accessors, motor retailers and car manufacturers that diesel laundering has been greatly reduced and largely confined to border counties.
Due to the aforementioned greater levels of investigations, and significantly increased enforcement, as well as an effective new oil management initiative diesel laundering appears to be on the wane.

On October 1, 2012 a positive change was introduced in the Republic – those who buy and sell green agri diesel must have a licence. Every sale of the fuel must be recorded, along with the buyer’s licence number, and sent to Revenue on a monthly basis.
Custom officers say that move is of significant assistance in thwarting the launderers. Licensing cuts off or severely limits sales of the raw material (green diesel) from the southern side of the border.

Then back in February of this year following a joint process – the Revenue and Customs on both sides of the border identified a new product to mark rebated fuels, including what is commonly known as green diesel in Ireland. We have learned that from spring next year (2015) it will prove to be a major boost in the fight against illegal fuel laundering in both jurisdictions.

During a rigorous evaluation, the chosen marker, which will be produced by Dow Chemical Company, proved significantly more effective than the previous markers on the basis of laboratory testing.

This testing found that it was highly resistant to known laundering techniques. It will be implemented on both sides of the border next year following consultation with the oil industry and other affected sectors and it will be used alongside the current marker mix.

These initiatives as well as several joint-intelligence led high profile discoveries have resulted in the destruction of numerous illegal fuel plants. Last year alone 30 filling stations were closed down in the Republic for selling laundered diesel.

Many have since re-opened under new management and we have been shown proof (test results) that one of those is selling stretched petrol.

To highlight the scale of diesel laundering in recent years, last December in South Armagh a complex plant, capable of pumping out 16 million litres of fuel each year was raided and closed down.

Around 73,000 litres of fuel were removed from large tanks and it had the capacity to launder 16 million litres of fuel each year, with the Revenue and Customs in Northern Ireland estimating it would account for a resulting loss of £10 million in taxes.

Twenty tonnes of potentially deadly waste was discovered nearby, which presented another major problem. For instance the sludge clean-up bill in County Louth in 2011 was over €1 million.
And in January this year, A company director was charged in connection with an alleged €9 million-per-year diesel laundering operation in a yard in County Monaghan, which gardai maintain had a capacity to launder 18 million litres of fuel annually.

The above operation coincided with the introduction of new legislation aimed at tougher sentencing of fuel and tobacco fraudsters in Northern Ireland.

The Director of Public Prosecutions in Northern Ireland now has the power to appeal sentences for such excise evasion on the grounds of undue leniency. Despite hundreds of arrests over the past decade, I cannot recall instances of offenders from Northern Ireland (or the Republic) having been jailed over fuel fraud.