Now we're suckin' illegal diesel

DIESEL IS an increasingly popular fuel among Irish motorists. But this new-found fondness at the pump is coming at a price that, in some cases, involves criminal gangs and potentially expensive engine repairs.

In 2007, 21 per cent of the new cars sold were diesels. This year that figure is 71 per cent. Diesel engines emit less carbon dioxide and, since July 2008, new cars qualify for lower tax. The annual tax savings can be several hundred euro.

The fuel bill is lower, too, and consumers are increasingly motivated by price. Diesel costs approximately 8c less per litre than petrol, depending on the station. According to AA Ireland, for an average diesel car doing just over 19,000km a year and achieving about 5.8L/100km, the typical monthly fuel bill can be more than €130. So when someone offers diesel at, say, another 10 cents a litre less than the average price, the saving is tempting.

This growing market is attractive to illicit operators. Agricultural diesel carries low rates of tax and duty. To indicate the difference, a dye is added, once red but now green. This fuel is meant for agricultural and industrial use, not for everyday vehicles. There are big profits to be made by washing out the dye in illegal laundering plants and selling the agricultural fuel at below-market prices.

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.

The scale of the operations is significant, to judge by recent raids on such plants by customs officials. This week, customs officers supported by armed gardaí raided a commercial premises in Glaslough, Co Monaghan. They found an underground tank that was being used to remove the green dye from up to 40,000 litres of agricultural diesel a day. The facility was using a bleaching agent to wash out the dye.

David Bleving of the Irish Petrol Retail Association estimates the loss in tax revenue at €150 million a year, a significant portion of which goes into the hands of the gangs. The number of raids by customs gives a sense of the scale of the laundering operations in Ireland. Between 2005 and 2010, nine sizeable plants were uncovered; this year customs have already uncovered that number of illegal sites.

There’s a perception that diesel laundering is concentrated in quiet rural areas of the Border counties, but given that the illegal diesel has been found as far south as Cork and Kerry – and given that the criminals involved prefer not to transport the fuel in tankers for long distances for fear of getting caught – the problem could be nationwide. Last month raids found laundered diesel on sale at service stations in Roscommon, Galway, Offaly and Dublin.

With more than 1,000 forecourts in the State, the Irish Petrol Retail Association’s estimates of 120 selling laundered diesel would indicate that the vast majority of operators don’t participate in this scam. Yet for some there is the temptation of taking a load of illegal diesel at a discounted price. According to Seán Kelleher, a customs enforcement manager, the gangs involved are also moving into direct retail sales themselves, in what have become known as pop-up stations.

Meanwhile some seemingly legitimate stations have taken occasional delivery of illicit fuel and mixed it with their regular supply in an attempt to conceal it from customs inspections.

The cost of the illicit trade in laundered diesel is not only a drop in tax revenues. The washed diesel can seriously damage a vehicle’s engine.

"Acid is used to remove the dye, and it is put through charcoal and in some cases even kitty litter," according to Martin Boylan of Independent Laboratory, who recently explained the effects to The Irish Times. "The fuel can retain more water and can be filled with slime."

Motorists are increasingly complaining of mysterious engine failure in relatively new cars, and car dealers report that, when inspections are carried out, dirty fuel is often at fault.

Michael Courtney of Diesel Engineering Services, in Cavan, says that of the vehicles he encounters with such problems, 60 to 70 per cent are caused by contaminated fuel. Telltale signs are that a vehicle is hard to start, lacks power or comes to a halt on the road. The repair bill can range from €2,500 to €15,000 for a complete engine replacement.

What to do about dodgy diesel?

How can motorists ensure they're not filling their cars with damaging laundered fuel?Motorists need to be aware of the risks. It's important to shop around, says Conor Faughnan of the Automobile Association, but "you have to use common sense. Be realistic about prices and go to reputable sources. The problem is that there are situations where laundered diesel is being sold at a competitive price but not an unrealistic price, and sold through outlets that have every appearance of being highly respectable, so it's really difficult for the motorist to know."

One way to ensure a secure supply is to identify a well-priced, reputable station and use it consistently. That way if there are engine problems caused by dirty fuel the source can be more easily determined.

Are there ways to combat the dodgy diesel trade?

David Bleving of the Irish Petrol Retail Association suggests more complex chemical markers or dye might be used in agricultural diesel to help differentiate between regular and laundered diesel.

Conor Faughnan suggests full duty charges could be applied to green diesel, with a rebate system operated after purchase.

However, there are concerns that the criminals may find ways around any new markers. As for a system where the duty could be reclaimed by farmers and businesses after purchase, officials warn such a scheme would create huge admin costs. (The current marker system was introduced in the 1950s because of abuses of a previous reclaim system.)