Diesel fuel theft has risen in the past decade in direct correlation with the price of oil. Growing energy demand in emerging markets such as India, China, Russia and Brazil and the volatile supply chain disruptions due to disaster and civic unrest in oil-producing nations will continue to cause fuel prices to rise, creating a lucrative market for black market fuel. This has led, since the financial crisis of 2008, to a situation where diesel theft is beginning to be a huge factor in the risk-management of a logistics company.
The current turmoil in Libya is a good example of how volatile fuel prices are. In December 2010, before the civil war, the country was producing an average of 1.6 million barrels per day. During February, as the revolt caught steam, production fell almost baseline to 400,000 barrels a day and Gaddafi was legally unable to export. According to the Economist, this only decreased global oil production by a mere 1%, while the price of oil sharply inflated 15% to 120 dollars a barrel. While interesting in its own right, this study of price suggests that demand for oil will continually increase while the volatility of production causes oil prices to erratically jump. When these prices increase, fuel, petrol, oil and diesel have all begun to draw significant attention from criminal agencies and enterprising scammers.
Further illustrating the correlation between diesel prices and diesel theft has come through TruckPol, a United Kingdom-wide freight crime intelligence agency. They have begun releasing a report each quarter showing reported fuel theft statistics for hauliers. Their analysis of crime data undoubtedly states that diesel theft has risen. From only the period of January 2011 to March 2011 the incidence of fuel theft increased 18 percent. This trend is can be correlated with the overall rise of diesel prices in the UK. According to the Freight Transport Association, the cost of diesel throughout the UK has risen from 105,11 pence a liter (6. January, 2011) to 112,7 pence (23. March, 2011), an increase of over 7 percent.
These statistics only illustrate the invasive robbery of siphoning fuel, the true statistic would be much higher as diesel theft usually occurs as a scam involving employees “skimming excess” with increasingly ingenious methods. One interesting method reported by The Times of India illustrates a scam whereby workers loosened the nuts on the fuel valves connected to the tanks during the journey of passenger and freight trains and let the fuel slowly leak out into plastic bottles. Or on a much more heinous level, US military contractors abusing an outdated ‘pen and paper’ accounting system selling diesel on the black market, costing the effort in Afghanistan hundreds of millions of dollars.
What can companies and governments do to stem the flow of fraud and theft from their vehicles and tanks?
The first step is to secure the vehicle. Place locking gas caps and anti-siphon security devices to protect against the less motivated thieves armed only with a siphon.
The second step is to park in secured areas. This is the most important to protect against invasive fuel theft. Thieves are much less likely to take the risk of being caught when the vehicle is surrounded by adequate lighting and security.
The third step is training your employees. They should know what is a safe place to park and how to react when a theft occurs. Most importantly against fuel fraud is to treat your employees with respect, pay them well, let them be part of a team and give incentives for good performance. An adequate list of anti-fuel theft techniques can be found from the website of Zurich insurance, which deals in risk-management for logistics companies.
While these methods are helpful, they are far from comprehensive. The most fail-proof method to protect your fleet is to actively monitor your diesel tanks through a telematics device. This works by integrating your vehicles running values and location into a secure database to be monitored by a fleet manager. When you have control over your fuel tanks, you can prevent when it occurs by receiving an alarm message that your fuel level is dropping. Furthermore, scamming by employees is easily recognizable by registering a time and location stamp each time the fuel level increases or decreases, objectively informing you of any incidences or discrepancies in fuel levels.