The Larger Costs of Fuel Fraud
Despite advancements in renewable energy production technology like solar and biomass, fossil fuels are likely to be our dominant source of energy for decades to come. As prices increase, governments often subsidize the cost of particular fuels or exempt them from tax to support industries like farming and mining, as well to reduce the cost of heating fuel for their population. Meanwhile, other fuel products like diesel and gasoline, available from the pump, are taxed to generate revenue.
The differential in cost between fuels of a similar grade sold at different prices within the same country has given rise to fuel fraud in the form of adulteration and dilution. Since fuel taxation can differ from one country to the next, it also leads to fuel smuggling and theft, particularly along borders where the gaps in fuel prices are significant. In Europe, these problems have caused some governments to lose more than one billion euros in tax revenue each year1, to say nothing of the cost of policing and litigating increased criminal activity. Fuel tax evasion has become a means for organized crime to raise funds for other illegal activities.
What Constitutes Fuel Fraud?
Adding subsidized or tax-exempt fuel to the same type of unsubsidized fuel; mixing with less expensive smuggled fuel
Mixing lower grade fuels or solvents with domestic fuels
Oil and gas companies also feel the effects of fuel fraud and smuggling in the form of reduced profits, increased liability issues and brand erosion. Substandard fuels have the potential to reduce engine efficiency and cause engine damage, in addition to the environmental and health impact of incomplete combustion.
Deterrents Made Better by Spectroscopy
To combat fuel fraud, governments use a variety of fuel markers and dyes to differentiate subsidized or tax-exempt fuel. Many countries require the addition of specific dyes to subsidized fuels by law, allowing questionable fuel to be rapidly tested for adulteration or dilution with subsidized fuel. The test often involves extraction with an acidic aqueous solution resulting in a characteristic color change, and is effective down to concentrations of a few percent.
Fluorescent dyes are also used as a more covert method of fuel marking. They are not obvious to the human eye, can be added in even lower concentrations, and often require a specialized spectrophotometric detection system.
While these methods may prevent the amateur from committing fuel fraud, they do not deter the more serious criminal. Fuel dyes can be removed or degraded through chemical processing, heating or the addition of an adsorbent material. The “laundered” fuel is then sold on the black market or via mobile pumps at a significant profit.
Laundered fuel may not show a color change that is obvious to the human eye, but measurement with a spectrometer can often detect residual dyes. The greater sensitivity of spectroscopic detection also enables the use of lower concentrations of markers, reducing the cost to government and increasing the difficulty of effective fuel laundering.
Sales of legitimate diesel and gasoline often jump when temperatures plummet, as adulterated fuel performs poorly in cold weather.
Unique Markers Get Right to the Source
Traditional fuel dyes offer a front-line defense against fuel fraud, but better techniques are needed to assist governments in pinpointing its origin. That’s where fuel markers come in. Fuel markers are chemicals that can be added to fuel at its point of origin, each with a unique signature that can be sensed only by proprietary readers capable of detecting multiple markers within the same sample. This allows fuel of different grades, taxation status, or supply origin to each be identified with its own marker. Fuel suppliers often team with governments in establishing fuel marking programs as a method of ensuring brand protection and supply chain security.
If added at the refinery and tested at multiple points on its route to the consumer within a comprehensive fuel monitoring system, fuel markers can be used to trace the movement of fuel and pinpoint the location within the supply chain at which fuel fraud occurs. When fuel retailers are held accountable for the authenticity of the fuel they sell through litigation or de-branding, the rate of fraud drops and illegal traders can begin to be identified. When border officials have an effective means of validating the authenticity and integrity of non-subsidized fuels, they can reduce the prevalence of smuggling.
What Makes an Ideal Fuel Marker?
The ideal fuel marker can be added to fuel or adulterants at parts per billion levels, is invisible to the naked eye and undetectable by routine chemical analysis, is stable in fuel and with exposure to sunlight, resists chemical alteration and adsorption materials, and can be conclusively and accurately detected using robust, field-portable equipment operated by non-technical personnel.
The latest generation of covert fuel markers involve extremely complex recipes and increasingly sophisticated detection. While analytical methods like GC-MS (gas chromatography-mass spectrometry), immunoassays, X-ray and UV-IR spectroscopy can be used for detection, they often lack the sensitivity needed, and are not always convenient for field use.
Portable CCD-based spectrometers offer the portability and price point needed to be deployed widely and effectively through the supply chain. They also open up opportunities for more novel optical detection methods and are well-suited to the identification of multiple fuel markers.
One such optical method is based on SERS, surface-enhanced Raman scattering2. Raman spectroscopy provides a unique fingerprint for each molecule detected, an effect which can be enhanced through the use of metal colloids or patterned substrates to achieve trace level detection of substances. Development of a stable silver colloid that meets the requirements for stability described in the proceeding section has allowed fuel marker technology to be adapted to SERS detection using a portable spectrometer system.
The spectrometer system uses a relatively low power 532 nm excitation laser, with detection over a 200-2000 cm-1 Raman fingerprint range. The sample is prepared in a glass vial, and the total time to complete sampling, measurement and data processing is under five minutes. Not only can this method identify the presence of a given marker, but it can also quantify it down to ppb levels. Though the excitation laser may cause other additives within the fuel to fluoresce, quenching of this fluorescence by the silver colloid and the selectivity of the detection method prevents this effect from causing interference.
Advanced Optical Fuel Marker Detection Systems
While the development of covert fuel markers can be incredibly complex, the spectroscopic systems used to detect them require their own sophisticated engineering. To be effectively deployed throughout the supply chain, they must be handheld, battery powered, possess remote data connectivity and secure onboard data logging, and be easy to use. Their optics, mechanics and software must be robust enough for use at temperatures ranging from freezing to desert conditions, capable of withstanding the shock and vibration of transport and rough use, and provide consistent, dependable answers capable of holding up in a court of law.
Ocean Optics modular spectroscopy systems and integrated OEM solutions offer the flexibility, sensitivity and durability to take new fuel marking technology from the lab to the field. They can be configured to detect a wide variety of absorbing, fluorescent, Raman or SERS-active dyes and markers, or to offer concurrent detection via multiple optical methods.
Our systems are a cost-effective optical solution for detection that can be widely deployed throughout the fuel supply chain for protection against smuggling, adulteration and dilution of fuels, thereby protecting brand identity for oil and gas producers and assisting in excise tax recovery for governments. Fuel marking systems that deter organized criminal activity and protect the supply of subsidized fuels not only benefit those to stand to profit from them – they benefit us all.
1 Rozhnov, Konstantin, and Marek Strzelecki. “Fuel Fraud Costing Europe More Than $4 Billion in Lost Taxes.” Bloomberg.com. Bloomberg, 27 Aug. 2013. Web. 20 July 2015.
2 Wilkinson, Timothy, et al. “Development of surface enhanced Raman scattering (SERS) spectroscopy monitoring of fuel markers to prevent fraud.” SPIE Defense, Security, and Sensing. International Society for Optics and Photonics, 2013.