Consumers are always being advised to 'shop around' for the best price on a product and with rising costs of oil, motorists have also been trying to save a few cents at the petrol pumps. Recent fuel price hikes now mean costs of over ¤200 extra per year for petrol users and over ¤300 extra per year for diesel users. However, with more than 1 in 10 garages in Ireland now estimated to be selling laundered diesel, some motorists are finding that their attempts to save money can be a false economy, when they're landed with massive bills because washed diesel has damaged their engines.
Laundered diesel fuel has the dye removed from it. There is a dye added to agricultural fuel in order to differentiate it from fuel used for ordinary motor vehicles. Diesel is laundered or washed by forcibly removing the dye either using acid, or passing it through substances like charcoal and kitty litter . It means that while the dye is washed out, the lubricants in the fuel are also removed which is what causes all the problems in a diesel engine - the car will start to run a little more slowly, there will be a lack in power, it will start to feel sluggish and it might not run as smoothly as before. If you notice these signs it's important that you get into your mechanic or to retailer as soon as possible. It could end up costing you anything from ¤1,500 up to ¤15/16,000 for a bigger engine.
Diesel laundering is a big problem in Ireland at the moment. A recent report by the Irish Petrol Retail Association claims that up to 12 per cent of the diesel sold on Irish forecourts is "washed", or laundered, agricultural diesel, sold at more than 120 stations across the State. There has also been a large increase in the number of fuel laundries detected in the past few years. Between 2006 and 2009, Customs detected 3 laundries in total. In 2011 alone, Customs detected nine laundries and to date in 2012, 5 laundries have been detected. SIMI (the Society of the Irish Motor Industry) has said that in the space of 18 months, there has been a significant increase in the number of SIMI members who are dealing with vehicles with damage associated with laundered fuel, which would not be caused by normal wear and tear. On the back of that, SIMI is currently undertaking a survey of all members around the country to measure and establish the extent of the problem and hope to complete this survey shortly.
Traditionally, diesel laundering and selling this substandard product would have been a border problem, but if looking at the laundries identified by Customs over the past few years - these have been found in Meath, Offaly, Laois, as well as Monaghan and Donegal. The activity is being carried out by criminal groups based mainly in the border regions and they are making large amounts of money for their own gain. It's difficult to put an exact figure on what is being lost to the Exchequer with this black economy activity, but for every litre of laundered diesel sold 55c is lost to the Exchequer. When you consider that Customs have detected laundries with the capacity to launder up to 20 million litres of fuel in one year, that would mean a loss of ¤10 million due to one fuel laundry alone.
The bottom line for consumers is that you need to be careful where you buy your diesel. Sticking to well-known, legitimate brands helps. The old maxim 'If it's too good to be true it probably is' applies here - while a genuine bargain is always welcome, very cheap prices may be an indication that the fuel could be laundered so ask questions, before you buy. A bargain at the pumps may not be so cost-effective in the long run if you end up with a huge bill to fix your engine.
Conor Faughnan, Director of Consumer Affairs at AA Ireland, agrees that laundered diesel is becoming a very common problem in Ireland. A new quality assurance logo is being introduced later this summer which will help consumers know they can trust the fuel they are buying. Otherwise, consumers should always purchase their fuel from reliable sources, keep receipts and, if suspicious, report the garage to the AA.
Statement from the Irish Petroleum Retail Association (IPRA):
IPRA is the industry body representing the interests of over 350 independent petrol retailers in Ireland. The retail market has suffered, like many businesses, as a result of the recent economic downturn but has an added problem due to the huge growth in the abuse of gas oil. The problem reached a peak in 2011 with adulterated fuels being found throughout the country from Dundalk to Cork. The estimated loss in excise duty is over ¤150 million at a time when Government needs every cent to move the country out of recession.
Legitimate retailers and distributors struggled to make profit faced with this increasing illegal trade and levelled criticism at both Government and Revenue. The trade alleged that there was a perceived lack of enforcement and 'light touch sentencing' by the judiciary.
The good news is that Government has finally realised the size and scale of the problem and the new orders in the Finance Act 2012 are in direct response to the report and lobbying by IPRA and the legitimate retail trade. Under this Act Revenue has been given further powers to vary the Mineral Oil Licence and introduce a registration scheme for marked oil products. The introduction of a registration system for fuel users, distributors and retailers is a major step in the right directions providing a verifiable 'track and trace system' which will facilitate a supply chain analysis and assist Revenue identify where the laundered fuel is entering the market.
To complement the revised legislation IPRA is proposing to introduce a quality assurance scheme which will test fuel quality and give consumers information enabling them to make an informed choice regarding their purchase. The IPRA scheme will be run and vetted by Independent Laboratories who specialise in fuel testing from their base in Dublin.