Technology Progression in Fuel Marking

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Stop Fuel Smuggling Series

By: Jeff Conroy, Chief Scientist, Authentix

Branded fuel suppliers began to use colorants in the 1950’s as a means to indicate fuel type, grade, or brand in the downstream petroleum industry, and this approach continues with wide-spread acceptance today. As fuel taxes and subsidies came into use around the globe, it was an easy extension to use this approach as an indication of taxes paid (or exempted).

The use of overt and covert dyes and field kits and devices to read them continue to be a backbone of many fuel marking programs. They are relatively inexpensive and allow non-technical personnel such as police and revenue inspectors to have some level of rapid field indication of illicit activity. This enforcement work is usually backed up by laboratory testing to confirm the identity and amount of marker present in the fuels in support of prosecution.

While visual colorants are low cost and easily implemented, as tax markers they have several disadvantages, including their ease of replication and removal from the fuels. In addition, because many fuels have some inherent color, visual determination is made difficult for many people, especially those with some degree of color misperception.

Making Tests More Reliable

Markers evolved to include more proprietary compounds, designed and developed for fuel marking. To overcome the shortcomings of a human visual assessment, machine readable features that are easy to use and give unambiguous results were developed. The application of portable devices for analysis of fuel markers also enabled a more rigorous quantitative analysis, making dilution detection in the field more reliable. Systems which utilize fluorescence (Forshee 2012) or absorbance (Banavali 2007) of invisible markers have been described. These devices are small, simple to use, and require very little maintenance.  Further enhancements of these types of devices have led to very sophisticated fuel analyzers, capable of analyzing multiple markers, in various fuel matrices, with little to no operator intervention to enable accurate measurement. Coupled with modern smart devices such as phones and tablets, these analyzers can give real-time GPS verified results and integrate with applications to manage workflows and data capture.

The Need for Quantitative Results

Because fuel integrity programs are often instituted to meet a wide range of objectives, each implementation is different.  For example, a country may choose to deploy a “national marker” program, indicating that all taxes have been fully paid on fuels.  In essence, the marker serves as a “chemical tax stamp” for all taxed fuels.  In this type of deployment, inspectors will be looking for the dilution of the fully taxed fuel due to the addition of a lower-taxed or diverted petroleum products, which do not contain a marker.  In this case, accuracy of a quantitative result is paramount.  To maintain program integrity, it is essential that the security of the marker is maintained with regular audits to maintain program integrity.

Another typical application is where a country needs to protect the use of subsidized petroleum products that can be used outside of their intended subsidized market.  In this case, the fuels would need to be treated with laundering resistant markers to prevent criminals from potentially removing the markers to prevent detection.  The simple presence of the marker in a non-subsidized fuel application could be enough to indicate illicit activity, reducing the need for quantitative results on the test.

Field versus Central Laboratory Testing

Some have advocated a “forensic test” in the field approach.  Such an approach requires “portable” instruments that require support (e.g. power, gases, and environmental control) from the vehicle in which they are mounted.  This approach can limit the number of testing systems deployed due to cost of the platform that includes a vehicle and the associated support.  In addition, the idea of deploying a forensic test into the field as opposed to performing the test under laboratory controlled conditions is yet to be defended in courts, where the approach may find considerable challenges.

In fact, two of the largest marker programs, the EU’s Euromarker and the United States Internal Revenue Service’s red dye marker have published reference methods (Linsinger, et al. 2004) (ASTM International 2009) and collection protocols required to support enforcement and prosecution.  The proper collection, chain of custody, and analysis of samples for support of litigation is well documented for many forensic activities such as drug enforcement, crime scene investigation, and environmental monitoring.  Following similar procedures for fuel sampling allows authorities to continue to deploy relatively cost effective field enforcement tests like covert machine readable features, while providing forensic evidence with a proven laboratory test protocol.

In the laboratory, GC-MS is used for analysis of fuel markers for over twenty years to provide unequivocal forensic level support of fuel marking program enforcement. Markers designed to exploit GC-MS offer definitive forensic evidence of the origin and condition of a fuel.  The markers are covert and robust, resistant to laundering agents, and compliant with the most stringent environmental regulations.  The analysis is very accurate, with limits of detection in the low parts per billion (or lower in some fuels) and very good accuracy and precision, as good as +/- 1% on the analytical method itself.

The Right Solution for the Right Outcome

Fuel marking technologies have evolved from the use of colorants and dyes to covert markers and machine readable features.  Field portable analyzers have greatly increased the accuracy of enforcement, and reduced the burden on personnel by making test results definitive and quantitative.  Markers have become more robust and resistant to laundering and meet the most stringent environmental, health and safety regulations.  Finally, the development of powerful laboratory controlled forensic molecular marker sets based on GC and GC-MS have strengthened the legal standing of these programs, enabling government agencies to enforce laws that protect subsidies and taxes on petroleum products.

Click here to learn more about how Authentix’s Vigilant® offering is helping governments prevent fuel fraud. You can also learn more about Assure™, our brand protection fuel marking program for oil marketing companies.

 

References:

ASTM International. 2009. “Standard Test Method for Determination of Solvent Red 164 Dye Concentration in Diesel Fuels.” ASTM Standard D6258 . West Conshohocken, PA: ASTM International.

Banavali, Rajiv M. & Ho, Kim Sang. 2007. Pyrazinoporphyrazines as markers for liquid hydrocarbons. United States. Patent 7,157,611. Published January 2 2007.

Forshee, Philip, & Kottenstette, Peter. 2012. Tagged petroleum products and methods of detecting same. United States Patent 8,129,190. Published March 6 2012.

Linsinger, T., G. Koomen, H. Emteborg, G. Roebben, G. Kramer, and A. and Lamberty. 2004. “Validation of the European Union’s Reference Method for the Determination of Solvent Yellow 124 in Gas Oil and Kerosene.” Energy & Fuels 18: 1851-1854.

Responsible Fuel Supply Chain Management Just Makes $ense

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Illegal Fuel Trade, Supply Chain Integrity and Technology

By: Erwin Dorland, Advisory Program Delivery Manager, Authentix

When addressing the problem of fuel smuggling or fuel fraud, responsible fuel supply chain management isn’t just a simple question of doing the right thing – it makes financial sense.

Responsible management and minimising risks within the fuel supply chain will ensure quality and security of the supply chain.

Financial gain is often the key motive behind supply chain infiltration, as illegal practices can be extremely lucrative1. Often the legal and regulatory framework is weak, the risks are low and the financial gains can be high. As mentioned in a previous BLOG, in many cases, organised crime is involved, which contributes to the growth of this type of fraud.

Most countries have significant problems with lower taxed fuels being sold at higher taxed prices. For example, in Europe, diesel is sold at a lower tax rate for agricultural use, but is illegally used by road users, who are supposed to purchase higher taxed diesel. This type of fraud is preventing governments from collecting the right amount of taxes, which impacts government programs, the well-being of all citizens and the environment in which we live. In my experience, there are four key areas of focus to ignite action against the business of illicit fuel trade.

Visibility2, 3

Visibility refers to the ability to see what is going on within the supply chain. Fundamentally, having access to information will enable managers to make better decisions.

Information technology is at the root of supply chain management. With the advent of the Internet and the Cloud, information exchanges can involve many stakeholders and enables access to critical data 24/7.

Traceability

Traceability is closely related to visibility and refers to the ability to track the fuel’s provenance and maintaining a record of activities of the product flow.

Several tools are available to ensure traceability as fuel moves through the supply chain. The advancements in technology now allow stakeholders to tap into a variety of information sources for a balanced view of supply chain participants and risks. The fuel industry has a number of tools available, such as visible dyes, covert dyes, chemical markers, sealing of tankers, GPS tracking of trucks, dipping of trucks, and wet stock control to track products, to ensure quality and prevent fraud.

Integrity

National governments are increasingly being held accountable for policy actions and therefore the governments’ awareness of and commitment to high principles and business practices is increasing.

The exposure of irresponsible practice in the supply chain can result in severe damage to national governments’ reputation and citizens’ trust. For example, governments not collecting the available taxes and having the appropriate system in place to do so, might have a negative standing with citizens.

Transparency

Transparency refers to national governments’ engagement and communication with external stakeholders. Such engagement is designed to share the national governments’ practices with those that have an interest in the governments’ behaviour, including environmental and social performance. Supply chain issues are becoming more and more visible to citizens and stakeholders. Therefore, developing transparent information systems and processes to communicate sustainable supply chain practices is vital. For example, governments can use social media to inform and educate citizens about their approach to responsibility, by promoting supply chain transparency.

 

Ready for Action

To really support the initiative to stop fuel smuggling and fuel fraud, making the supply chain more resilient to supply chain risk involves attaining a good understanding of the supply chain and conducting analysis of the potential threats and the level of risk4. Technology can be used to verify fuel authenticity and tampering. The resulting information will need to be captured using the appropriate information technology and made visible to the appropriate stakeholders.

Among the considerations of the technologies to be used, must be the ability for the technology to pay for itself. Government and policy makers need to be educated regarding the risks of fuel adulterations and how the legal and regulatory framework need to work hand-in-hand with the introduction of technologies. Awareness needs to be created that no technology will provide absolute supply chain security, as there are always weaknesses to be exploited. The key is to understand the key risks and put tools in place to collect the appropriate information, so those risks can be managed.

Click here to learn more about how Authentix’s Vigilant® offering is helping governments prevent fuel fraud. You can also learn more about Assure™, our brand protection fuel marking program for oil marketing companies.

 

References

  1. Illicit Trade, Supply Chain Integrity, and Technology – www3 … – Illicit Trade, Supply Chain Integrity, and Technology, J Picard and C.A. Alvaranga
  2. https://dupress.deloitte.com/dup-us-en/topics/operations/supply-chain-transparency.html – The path to supply chain transparency, D Linich, University of Tennessee
  3. creating a transparent supply chain best practices – Global Supply ……  – Creating a Transparent Supply Chain – Best Practices, University of Tennessee
  4. Manage your supply chains responsibly – Business in the Community – How to: Manage your supply chains responsibly, Business in the community

How to Create a Secure, High-Quality Fuel Supply

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Introduction to Stop Fuel Fraud Blog Series

Every country around the globe is dependent on the use of petroleum products to move people and goods around, generate power and generally keep their economies growing. Because of this ubiquity in the economy, most governments have developed fuel taxation systems to fund essential services for the benefit of their citizens and at times, provide subsidies to lower prices for certain essential fuels.

The differential in price between taxed, high-cost fuels and subsidized, low-cost fuels creates an incentive for criminally-minded people to perpetrate fuel fraud. The money generated by this illicit activity has been used to fund drug cartels and other organized crime[1] as well as terrorists[2].

Fuel fraud happens in a variety of ways. One form is smuggling in fuel from a neighboring country where prices are low. A striking example is Guyana, a small country in South America that shares a border with Venezuela, where the price of diesel is subsidized down to US$ 0.01 per liter. Guyana follows the prevailing market price for diesel, selling it at about US$ 0.70 per liter, so the incentive to bring fuel via ship or overland from Venezuela is quite strong.

Fuel fraud also occurs when high-priced, taxed product is diluted with cheaper or low-tax fuel products. An example of this is when diesel fuel intended for use in agriculture or mining carries a no- or low-tax rate and is diverted into the high-tax road diesel fuel supply.

Adulteration is a common type of fuel fraud that occurs when other types of hydrocarbons are introduced in the fuel supply. These are typically low- or no-value inferior products such as solvents or waste oils, which then adulterate the fuels meant for vehicles. These adulterants are both a source of additional air pollutants and can cause malfunctions, component failure and safety problems for engines that combust these compounds.

Fuel fraud is a rampant problem in the world, siphoning off needed tax revenues, harming air quality and damaging vehicle engines. This is the first in a series of articles about the ramifications of fuel fraud and a detailed review of the many ways it can occur. Stay tuned through the end of the series to learn how a well-designed, comprehensive fuel marking program – the introduction of environmentally-safe chemical markers into the fuel supply chain – can pay for itself in recapturing lost tax revenue while providing timely, actionable insights that allow government enforcement personnel to combat illicit fuel trade in their countries.

A secure, high quality fuel supply strengthens confidence in the government, provides a level playing field for the companies that sell and distribute fuel in the country and keeps vital funds out of the hands of the bad guys.

 

By: Gail Moser, Director of Marketing, Authentix

 

[1] https://www.nytimes.com/2017/04/26/world/americas/mexico-fuel-theft-crisis.html?_r=0

[2] https://www.usnews.com/news/the-report/articles/2015/11/23/financing-terror-where-does-the-islamic-state-group-get-its-money