New Red Diesel Laws May Cause Rise in Fuel Theft

Major changes to the regulations surrounding rebated fuel duty came into effect just a few months ago, on 1st April 2022. These new rules have excluded many industries from accessing rebated fuel, forcing them to revert to white diesel; white diesel is subjected to a fuel duty at 57.95p per litre (ppl), compared to just 11.14ppl for its rebated equivalent. One expert believes that these changes could precipitate a spike in fuel theft, potentially costing businesses thousands of pounds.

Petrol and diesel costs have recently hit all-time highs as part of a larger cost of living crisis that is occurring across the UK, spurred by the recent Russian invasion of Ukraine, the ongoing COVID-19 pandemic, and the disruption to markets experienced as a result of the UK’s withdrawal from the European Union.

This status quo has exacerbated the pressure on many businesses as they struggle to adapt to the new rules. The new rules have left many with massive new costs and red diesel-stained equipment that needs draining and flushing out to comply with the ban.

Graham Hawkins, UK Director of Environmental Adjusting for Sedgwick Insurance, warned The Express that many businesses would be forced to do everything they can to protect themselves from the sharp increase in costs.

Hawkings believes that to comply with the new regulations, many businesses may need to repair, replace, or upgrade existing storage tanks, which could encourage fraudulent claims about existing damage. He also asserts that instances of domestic heating oil theft, which have been increasing in certain areas of the UK in recent weeks, could be exaggerated to recoup losses; where a partial tank is stolen, it may be reported as a full tank, for example.

Hawkins suggests a higher level of scrutiny on claims of fuel and heating oil theft in the months ahead, as well as stronger investigation into storage tanks damaged beyond repair, considering the age and condition of the equipment to assess the likelihood of the claim: “as many individuals and companies begin to struggle financially, claimants might be tempted to pursue false claims as a result of increasing media exposure around oil thefts.”

The insurance industry should be prepared for a potential influx of claims surrounding fuel theft and environmental pollution, Hawkins concluded, and customers should practice vigilance in the coming months, even boosting security systems where required. One thing is clear: now that these new rules are in place, there will certainly need to be a higher degree of scrutiny on companies and industries using red diesel from now on.