Anne Davis, 16 December 2015

Service station owners are facing a double whammy over E10 ethanol petrol after the Department of Fair Trading issued warnings they faced fines up to $1 million if they did not start advertising its octane rating as 94, instead of 91.

In a strongly worded fax to all services station owners two weeks ago, Fair Trading said its testing had revealed that E10 should be labelled as 94 not 91 RON (Research Octane Number).

Unless petrol retailers got analytical reports from their fuel supplier proving otherwise, it said it would begin fining companies up to $110,000 and individuals $22,000 from early 2016. It also warned that failing to display an accurate RON number may breach the Australian Consumer laws and attract penalties up to $1.1 million.

The clampdown by Fair Trading is the latest salvo from the Baird government in what appears to be a concerted effort to boost sales of ethanol.

The Baird cabinet is scheduled to consider new measures on Thursday to force all petrol stations to sell E10 petrol. Retailers with less than 20 outlets are currently exempt from the rule that retailers must try to ensure ethanol accounts for 6 per cent of all petrol sold, via the E10 blend.

Mark McKenzie, chief executive of the Australasian Convenience and Petroleum Marketers Association, said doing away with the exemption would cost $326.6 million in upgrades of tanks and pumps and require an 8¢ a litre hike over three years to recover costs.

He said the latest move by Fair Trading to enforce RON labelling, represented an even more serious threat.

The Research Octane Number is a measure of the compression it will tolerate before combusting. But most consumers see it as a measure of quality, with the higher the RON indicating that it is suitable for advanced motors. Because E10 can be an issue in some advanced motors, most petrol stations label basic unleaded as 91 RON and use the same delineation for the ethanol blend, E10.

“Labelling E10 with an octane rating of 94 implies it is a premium grade fuel when it is anything but what motorists expect in terms of performance and sulphur content, Greens MP John Kaye said.

“Generations of motorists have come to rely on octane rating as a measure of fuel energy density and suitability for advanced vehicles. The Baird government is exploiting that trust to cajole consumers into purchasing the product of one of their largest campaign donors,” Dr Kaye said.

The only producer of ethanol in NSW is Manildra, which is a major donor to all the major political parties. Despite the 6 per cent legislated target, ethanol accounts for about 2.7 per cent of all petrol sold in NSW.

Dr Kaye said that while the Baird government’s consumer watchdog has the black letter law on its side, the timing of the decision to enforce a two-year-old labelling standard was a measure of the success of the lobbying power of a major political donor.

“Petrol stations are being forced to mislead motorist over the energy and sulphur content of E10 in order to fatten up the profits of a major campaign donor to the Liberals and Nationals,” he said.

A spokeswoman for Manildra Group said “”E10 at the pump is typically blended at 9% ethanol which is a minimum of 94 RON,”

“Some oil companies label E10 as 91 RON, which is misleading to consumers. Blended correctly with exactly 10% ethanol, E10 has a RON of 95,” the spokeswoman said in a statement.

Extracted in full from the Sydney Morning Herald.