When the taxman has more power than the Green lobby

In the rush of the political field to produce ‘cheap power’ one item on the list which the government in the UK, is sticking it’s head in the ground over is the use of bio-diesel.  You would think the option of burning waste fuel in place of mineral oil, would have the government blessing, as it would reduce the dependency of oil, helps remove waste, cuts emissions and helps with the government’s aims on the Kyoto Protocol.  Heck, even the Americans are doing it http://www.greasecar.com/ and we all know how they love their oil!

So, why is it that since 2005 HMRC’s tax on bio-diesel is the same rate as mineral oil derived diesel?  HMRC argument was that waste vegetable oil on the market from small producers did not meet the official definition of biodiesel in Section 2AA of The Hydrocarbon Oil Duties Act 1979 (HODA), and consequently was merely a fuel substitute chargeable at the normal diesel rate.  Something which was a contradiction to many EU directives!

So, is HMRC and The British Government in league with big oil to suppress alternative fuels?

The rate of taxation on straight vegetable oil (SVO), pure plant oil (PPO), waste vegetable oil (WVO) and used vegetable oil (UVO) was originally set at a reduced rate of 27 pence per litre, which made it a viable concern for collection and then refining/cleaning and then selling, but that was before 2005.

Thinking back to the days of the turn of the century, and there was a spate of people being stopped and fined in South Wales, for running their cars of vegetable oil recycled from the local chippy.  In 2002 it even hit the national press with stories such as the following from Reuters:-

A Welsh police team dubbed “the Frying Squad” has been formed to sniff out motorists who fuel their cars with cooking oil from fish and chip shops in a bid to avoid paying high government fuel taxes.

Three Welsh motorists have already been caught and fined for using waste oil from restaurants selling Britain’s favourite deep-fried dish, the Times newspaper reported Wednesday. 

“I have halved my motoring costs since I started running my Subaru on cooking oil,” the paper quoted one of those stopped as saying. 

“The car runs just as well and even smells a lot better than diesel.” 

The drivers were fined 500 pounds and warned that persistent offenders may face up to seven years in jail.

 

By 2003 the Welsh had even got in on the act of buying straight from the supermarket, as reported by the Guardian:-

According to Mike Hebson, the manager of Asda’s store in Swansea, south Wales, there was no reason to be suspicious that sales of the company’s cheapest bottles of cooking oil were running 20% higher than the previous year, way above any other store in Britain. “We just thought it was one of those things,” says Hebson.

Why should he and his staff have been remotely questioning, he suggests, if men in overalls and lived-in denims had started buying Smart Price vegetable oil in batches of six, eight and 12 litres at a time. When one customer came in and filled a trolley to the brim with plastic containers of the thin, urine-coloured liquid, the checkout operator barely gave him a second glance. “Naturally, we assumed they were buying on price,” says Hebson, an Asda man to the soles of his own-brand brogues. There was another reason that his staff were unlikely to see anything untoward in bulk-buying cheap vegetable oil. “We just thought they were doing a lot of frying,” he says. “You have to remember, healthy eating has not hit Swansea in a big way.”

It wasn’t until the Department of Transport began a series of trial tests in the city last March that staff realised something odd had been going on. In an attempt to take diesel vehicles belching out illegal emissions off the road, department inspectors introduced experimental spot checks on roads in Bristol, Westminster, Glasgow, Middlesbrough, Canterbury and Swansea. It was in the latter that they found something surprising: a car with a fuel tank half full of cooking oil.

“The funny thing was,” says Hebson, “the driver told them he had been getting it from Asda Swansea for four or five months, because it was the cheapest around. When we read the report in the local paper we began to put two and two together.”

The enterprising motorist was, so the reports suggested, running his diesel-engine motor on a mix of Asda cooking oil and standard fuel. At 42p a litre, the supermarket chain’s oil is considerably cheaper than the 73p a litre that even a discounted retailer charges for diesel. The astonishing thing was it worked. Without any need to modify the engine, the motorist could run his car on the mix with no discernible difference in its performance. What’s more, instead of diesel fumes, the engine gave off a rather pleasing odour – like frying time at the local chippy.

Independent research has shown that rather than decreasing performance, cars that are converted to run on pure vegetable oil have an increased power performance as compared to diesel over most speeds.

So, with the problems in the Middle East, and the Markets worried about the production of oil being effected, are we likely to see the price of oil reach another high, and if so if the government likely to do anything about it?

Interestingly, after a review in late 2006; HM Revenue & Customs announced the changes to the system of the administration and collection of excise duty of biofuels and other fuel substitutes (Veg Oil).  They came up with the change so that it’s no longer a requirement to register to pay duty on vegetable oil used as road fuel for those who “produce or use” less than 2,500 litres per year.

So, admittedly whilst the ‘very small’ companies and back street boys, can in theory produce less than 2,500 litres a year before they hit the requirement to register to pay duty.  Could we see a return of used fish and chip oil running cars around the country?  Or might we see the local supermarkets running out of cooking oil, because people are putting it in their tanks instead of cooking with it.

Worse still, imagine the criminal element of organised crime getting involved, and Chip Shops being held up for their vats of used cooking oil….

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