The Australian Government regulates the quality of petrol and diesel that is sold (both wholesale and retail sales) in Australia via the National Fuel Quality Standards Act (2000). These Standards define the minimum parameters for petrol (all grades), diesel, and ethanol. The details of these regulatory requirements are stipulated in the Fuel Quality Standards Regulations 2019.
The Fuel Quality Standards are reviewed from time to time to ensure that they remain fit-for-purpose in the face of changing environmental objectives and continual changes in new vehicle technologies. In recent years, these Standards have been modified to reduce the permissible level of sulphur content and there is a current consultation exploring the merits of reducing the aromatics of petrol grades.
The Federal Department of Climate Change, Energy, Environment and Water (DCCEEW), together with the National Measurement Institute, works to ensure that the fuel supplied in Australia:
- is compliant with the fuel quality standards (including any variations that may have been granted), and
- has the appropriate labelling under the Fuel Quality Standards Act (2000) and relevant information standards.
Under the Fuel Quality Standards Act (2000) DCCEEW, these two Commonwealth Government agencies monitor fuel quality at a range of sites and locations across the country. They will also undertake specific investigations of fuel suppliers where they have received allegations of suspected fuel quality non-compliance.
NMI field inspectors are permitted to visit a fuel supplier at any time, and on any day of the week, to:
- sample and test fuel
- assess fuel delivery documentation.
- inspect fuel dispenser labelling.
- check any other requirements under the Act.
NMI inspectors also check fuel dispensing equipment to ensure that it complies with national measurement regulations and is dispensing the correct amount of fuel. That is, for example, checking that the pumps on a retail forecourt are giving accurate measurement information to consumers.
Importantly, the Australian Government does not get involved in cases involving damage to consumers’ vehicles caused by contaminated fuel (e.g. water in fuel). These issues are regulated by the Consumer Affairs bodies in each Australian State and Territory.
Rather, the NMI works to ensure that the chemical composition of the fuel accords with the fuel standards and that fuel grades are correctly labelled.
“In recent months, ACAPMA members have reported a significant increase in NMI inspectors visiting service station sites to test petrol – particularly the quality of fuel being sold as 98 Premium fuel”, said ACAPMA CEO Mark McKenzie.
“This action is welcomed by ACAPMA”, added Mark.
While it may at first seem odd for the national industry body representing fuel wholesalers and fuel retailers to support such action, the explanation for the Association’s unequivocal support of this action is pretty simple.
First, fuel purchases are an ‘invisible’ transaction. That is, a motorist cannot see whether the fuel going into their tank is the fuel that they believe they are purchasing – in terms of both fuel quality and fuel quantity. Consequently, consumers must be able to have absolute confidence that the fuel wholesaler/retailer is operating in full accordance with the law.
Second, fuel retailers that are deliberately selling lower cost, lower grade fuels (i.e. E10 or RULP) as premium fuels (i.e. 98 RON) are gaining a significant competitive advantage over the vast majority of fuel retailers that are doing the right thing.
“Within this context, ACAPMA believes that any fuel business that is deliberately swapping cheaper fuel grades for premium grades and/or deliberately calibrating their pumps to short-change consumers, needs to have the ‘book thrown at them’ by Federal Regulators”, said Mark.
Some members have suggested that, given the magnitude of the reputational and competition risk to the entire industry, that ACAPMA should actively lobby Australian governments to introduce a public ‘name and shame’ register that allows consumers to identify those fuel retail sites that have deliberately cheated consumers. Such a system, they suggest, might operate in the same manner as the one used in the Australian food supply industry for business that have breached food safety laws (see Name and shame | NSW Food Authority).
“While ACAPMA will never call for unnecessary regulatory action, this ‘name and shame’ initiative would appear to have significant merit – particularly if the current NMI action reveals that some fuel retailers are swapping fuel grades deliberately”, concluded Mark.
ACAPMA therefore intends to work closely with the NMI and the Federal Government on this issue over coming weeks to determine whether the current penalties for fuel businesses engaging in this behaviour are sufficient, given the substantial industry reputational and competition risks that are involved.