Can fuel theft be stopped once and for all? –

By James Osborne

WASHINGTON – Almost as long as people have been drilling oil and turning it into fuel, there have been criminals ready to steal that fuel for sale on the black market.

But sophisticated new techniques in chemical fuel marking are starting to make a dent in developing countries where fuel theft proliferates, according to a new report by the Atlantic Council’s Global Energy Center, a Washington think tank.

“(Fuel marking) allow regulatory and law enforcement agencies to determine what sort of fuel-related crimes are being perpetrated, at what scale, and in many cases, at what points along the supply chain,” the report read. “By shining a light on the areas in which crime proliferates, concrete countermeasures add considerably to the “risk” side of criminals’ risk-reward calculus. They can be extremely effective deterrents.”

In nations across the globe criminals steal and dilute fuel primarily to evade government fuel taxes and exploit regional differences in fuel price.

Enter fuel marking. From simple dyes to molecular markers that are measured with spectrometers or chromatographs, the basic principle is to “mark” fuel as it is refined so authorities can track it as it moves through nations’ fuel networks.

But while dyes and other longstanding markers can be removed fairly easily by criminals, molecular markers are not only difficult to detect but require specialized equipment to remove.

A case in point is Mozambqiue, where the use of molecular markers on certain fuels resulted in a more than 30 percent increase in fuel tax revenues in just six months time.

“A routine inspection found a reduced concentration of molecular marker in the diesel sold at an established brand’s retail site, indicating either adulteration or dilution. Testing revealed that large amounts of kerosene had been added to “stretch” the fuel,” the report read.

An investigation tracked the shipment to a nearby distribution hub, where officials discovered the owner been adding kerosene to gasoline for years.

Likewise in Tanzania, where a similar program was put in place, the amount of fuel being “adulterated” fell from 78 percent in 2007 to 4 percent last year.

But marking fuel is only half the fight, according to the report, which recommends countries look at reforming the fuel subsidization programs that criminals seek to exploit.

But for poorer nations whose citizenry can not afford market-rate gasoline and diese, that is likely to be a tough sell for politicians.

“Price interventions that create distortions in the market are major incentives for downstream crime,” the report read. “Phasing out fuel subsidies altogether, though likely to reap enormous benefits in the long term, is a far more difficult undertaking.”

James Osborne covers the intersection of energy and politics from the Houston Chronicle’s bureau in Washington D.C.