The cost of dirty fuel


Service stations selling contaminated fuel are leaving customers with huge repair bills.

Dirty rotten fuel


Any driver can pump contaminated fuel into their car and do damage that can cost tens of thousands of dollars to repair. Getting service stations to pay is an uphill battle and insurance companies are versed in the blame game. You may be left without a car for weeks and the kind of repair bill that'll require a personal loan.

There's no way to tell if the fuel you're buying, whether petrol or diesel, is contaminated. It's not until you leave the service station that you'd even realise your car has been damaged.

We take a close look at the issue of contaminated fuel, examining case studies and speaking to industry experts, to help find the best ways to protect yourself.

Pumping water

One rainy April night this year, Ahmed Kilani filled his car with a full tank of fuel. The next day his car was sluggish and had to be towed to its Hyundai dealership. Mechanics concluded the fuel had been contaminated by water and scheduled repairs that would cost more than $20,000.

"Fuel sitting in the tank within the service station can become contaminated, in that water gets into them. It [can] happen after heavy rain," says NRMA spokesperson Peter Khoury.

And while it may just be water, it can do some serious damage to a car.

"It is an expensive thing to fix," says Khoury. "Sometimes they have to remove the engine and drain it."

Often symptoms will present quickly – just a few kilometres down the road from the servo. You might notice the engine running rough, lacking power or stalling; being harder to start than usual; or misfiring, pinging or backfiring. The 'engine check' light may also be illuminated.

Four petrol stations in NSW have sold dirty fuel in the last 18 months, but these are only the instances the NRMA is aware of.

One of the most publicised incidents of fuel contamination happened last year, when more than 24 drivers were stranded in the breakdown lane of the M4 motorway, after buying fuel at a Caltex Petrol station in Eastern Creek, NSW.

"Cars were filling up, it was peak hour, and as soon as they drove out a bunch began to break down," says Khoury.

The media coverage prompted a response from Caltex, with drivers being urged to keep their receipts in order to recoup the financial costs.

Smaller petrol stations are less accommodating, as Ahmed Kilani discovered. He bought diesel fuel from Metro Petroleum in Narwee, NSW; a full tank for his four-year-old Hyundai Sante Fe.

"It was a rainy night and the car was running on empty. [My wife and I] filled up more than 50-litres and basically drove it [a few kilometres] home.

"The next day the car was so sluggish, it wouldn't accelerate or anything. Then a light came on and said you need to clean the fuel filter."

 A mechanic's report on Ahmed Kilani's car stated that there was water in the fuel filter and that the fuel sample was very hazy. />
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<div class= A look at contaminated diesel: water sinks to the bottom as it is heavier than fuel.

It needed to be towed to the Hyundai dealership – on more than one occasion, as it would turn out – where the mechanics on site would conclude in a report: "Upon inspection found water in fuel filter…Fuel sample has been taken from vehicle and found to be very hazy."

Changing the fuel filter cost $218, but then, after driving a few kilometres, the problem reoccurred and the car had to be towed back to the dealer.

This time mechanics removed the fuel tank and replaced the fuel pump, seal and filter, at a cost of $2619.

But more work would be needed, as the contaminated fuel had affected the car's engine. Invoices seen by CHOICE reveal the cost of the third repair was $18,810. And the extent of the repairs left the Kilani family without a car for six weeks.

The total cost of getting the car back on the road was a hefty $21,646 – and that doesn't include the cost of a tow truck or a rental car. Who is responsible for the bill remains a contentious subject.

Water could be your best case scenario

Water is the most common contaminant – particularly in diesel-powered cars ­– but a number of foreign particles can enter a storage tank and pervert a service station's supply of fuel.

It was "predominantly magnetic iron particles" in fuel, according to a report seen by CHOICE, that damaged Greg Meredith's car in 2011. The iron particles took a slow toll on his 2007 Toyota LandCruiser, allowing him to drive 400-kilometres before causing the engine to misfire.

Fixing the car would cost $19,600, but the petrol station in Bathurst, NSW did not accept responsibility.

"I spoke to the NRMA and their legal people said if you drive out of the servo and you go less than 10 kilometres, then they can be held liable. But once you go 400 to 500 kilometres, then the fuel company can say 'it wasn't us'," Meredith tells us.

Holding service stations accountable

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Some weeks after his car had been damaged by contaminated fuel, Ahmed Kilani took this photo of work being done at the petrol station where he'd filled his car. It was later confirmed that there had been issue with the tank underground.

Getting a petrol station to claim responsibility for contaminated fuel isn't easy. Discussions can come to an immediate halt if a customer doesn't provide a receipt. Without it, a petrol station can evade liability.

"I paid by credit card, but [management] wouldn't accept the statement [as a proof of purchase]," says Kilani.

"I went down to the servo the next day and the staff member pulled [a copy of the receipt] out of the computer for me."

More than three months have passed since Kilani filled his car with contaminated fuel. Representatives of Metro Petroleum opened an investigation that has stalled. Mechanics have assessed the fuel as being contaminated by water. Kilani has provided company management with his proof of purchase, repair invoices, copies of his licence and registration papers, a first-person account of what happened and photos of the contaminated fuel sample.

Weeks later, he noticed construction work was underway on the very pumps he used to fill his car. Kilani kept a record of it by snapping some photos.

And yet Metro Petroleum did not take responsibility for the damage caused to his car.

The petrol station's standards and compliance officer, Melad Najem, confirmed to CHOICE the fuel was unfit for sale.

"We had issues with the tank underground, which led to the problem with the fuel. It was repaired by the respective landlord [at] that site," says Najem.

"Naturally we only knew there was a problem when customers were complaining about the fuel."

Routine water-paste tests using a dipstick and colour-sensitive paste could've identified the fuel contamination. Najem says the site in Narwee, a franchise, is in charge of its own quality assurance measures.

"Whether that site has performed water paste tests is something I don't know. We don't have any control over that site in any way."

Najem would not disclose if the service station has paid to make repairs to any affected cars.

Want to know how many cars in Australia were affected by contaminated fuel? CHOICE has continued investigating and published a follow up.

Who foots the bill?

Not everybody has $20,000 that can be earmarked for contaminated fuel repairs. If a petrol station is evading responsibility, or taking too long to admit fault, a less expensive solution may be available.

Insurance providers may process a claim to repair the damage caused by dirty fuel. A handful of providers will cover the cost of repairs for comprehensive policyholders, such as NRMA and GIO, as long as a mechanic's report determines contaminated fuel to be the cause. However, check with your insurer – we found customers of AAMI and Just Car Insurance, for example, would not be covered.

Ahmed Khilani held a comprehensive insurance policy with Allianz, which did cover the cost of his repairs. He incurred the $800 charge of his premium and lost his 60% no-claim bonus. Had Metro Petroleum confirmed the fuel was contaminated, he would've had a rental car, but because it wasn't part of his policy, he and his family had to make do without a car for the six weeks.

Even the small costs hurt

Not all repairs caused by contaminated fuel cost the equivalent of a brand new car. Mechanics can start by replacing the fuel filter in the hope further damage hasn't been caused. This can be the extent of the damage in some cases, but unless a petrol station concedes fault, you'll still have to wear the cost.

Zoe Okely filled her Hyundai Sante Fe with diesel on 17 June this year at United Petroleum in South Nowra, NSW. After driving a claimed 80 kilometres, the car entered what her husband described as 'limp mode', failing to go faster than 70km/h or enter higher gears. Mechanics at the Hyundai dealership in Bomaderry determined the cause of the sluggish performance to be "lots of water and contaminated fuel".

Replacing the fuel cartridge, along with labour and replacement petrol, cost $499 – less than the excess of many insurance premiums.

Invoices seen by CHOICE confirm Okely had her fuel filter replaced and her fuel system inspected when it was serviced six months prior to the contamination.

Two complaints were filed in writing and, after a month, United Petroleum declined her claim on account of no other customers being affected, leaving her with the unexpected expense.

What to do if your car is damaged by contaminated fuel

Australian Consumer Law should protect the rights of consumers, as contaminated fuel qualifies as a major failure of a purchased good, but the process of recourse is not simple.

Each state has a government body that processes contaminated fuel grievances.

In New South Wales, for instance, the process is handled by the Department of Fair Trading. Cases may be referred to the NSW Civil and Administrative Tribunal (NCAT), which can make orders of compensation to the value of $30,000. This includes payments of money, fixing the problem or replacing the goods.

NRMA's Peter Khoury describes the process as challenging.

"The [NSW] Department of Fair Trading is responsible for making sure nothing untoward is happening in the industry," he says. "But the benefit of [contacting them about contaminated fuel] is quite limited."

How to protect yourself

  • Always ask for a receipt when filling up fuel. An invoice proves a business transaction occurred at a specific time, date and place. It's also the first step in establishing a paper trail.
  • Take note of the bowser number – check it's on the receipt.
  • Other cars may have broken down nearby as a result of the same contaminated batch of fuel. Find them and exchange details. Proving it happened to more than one customer helps eliminate other factors as the cause of the damage to your car.
  • Tow your car to a reputable mechanic. Both the petrol station and the insurance company will ask for a mechanic's report certifying the damage to the car was caused by contaminated fuel. Request for a sample to be kept; in Ahmed Kilani's case, Metro Petroleum requested a photo of it.
  • Notify the service station and its head office in writing. Not only does this help to ensure no one else suffers from a contaminated batch, but it also establishes a paper trail detailing the events.
  • Fill up at trusted petrol stations with a high turnover of customers. The cases of dirty petrol we observed happened in areas further away from the city. Smaller petrol stations in these cases were more reluctant to cover the cost of repairs.
  • Check your insurance policy to make sure you're covered for contaminated fuel. Insurance product disclosure statements (PDS) tend to refer to dirty fuel as 'contaminants'.

Have you come across contaminated fuel in the past? CHOICE would like to hear about your experiences. Leave a comment below or send an email to tibrahim@choice.com.au.


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