Islay Distilleries Run Out of Fuel Oil

[Lawrence]

From Mark Reynier at Bruichladdich;

Islay Runs Dry


The whisky island of Islay is running on empty. The stills are being turned off as distilleries end whisky production for the foreseeable future. The oil has finally run out.

And it’s nothing to do with the Middle East. To run their stills, the island’s eight distillers are dependant on nine oil deliveries a year, brought to the island by sea.

An oil delivery scheduled for 17th November was turned back forcing distilleries to shut off their stills and close down production as supplies dwindled and finally ran out today.

250 barrels per day of new whisky are made on the island which equals to a liability of £988,000 of Alcohol Duty a day.

Despite benign conditions at the time the tanker returned to harbour without unloading. Since then, there has been a series of gales lashing the island preventing further supply.

A re-supply attempt is anticipated once a period of calm weather arrives. But that is not expected soon. Islay is buffeted by 25 gales a year from low pressure systems.

With no road tankers available for this type of oil delivery and exceptionally high freight charges by State-run ferry operator Calmac, there is no viable alternative source.

The cause is a piece of well-meaning European legislation that requires that enlarged, double skin tankers are used exclusively by 2008 to prevent spillage of oil at sea.

Argyll & Bute Council controversially spent £4m altering the existing pier despite strong local opposition claiming the design was not fit for the island’s exposed Atlantic location.

To avoid the risk of pulling the new pier apart, the large new tankers are unable to unload their cargo except in totally calm weather conditions - which are rare in winter.

Bruichladdich Distillery Managing Director Mark Reynier:

“Shell have left the island in the lurch. They approved the pier as fit for purpose when it plainly isn’t. The island needs distilling - and distilleries need oil.”

“This isn’t the Mediterranean; this is the North Atlantic. It is windy here especially during the winter. We did warn them. The whole new pier scheme has been a fiasco.”

“We managed to finish our 2006 Islay-grown Bere barley distillation overnight before running out - but it was touch and go. To have lost that harvest would have been disastrous.”

“Luckily we installed a new boiler in the spring. Duncan, Bruichladdich’s distillery manager and engineering genius, will hopefully be able to adapt it to run diesel.”

“With £1m worth of alcohol Duty a day is being lost. I wonder what the Chancellor of the Exchequer will have to say?”

[Deactivated Member]

Which pier? Port Askaig?

[Mr Fjeld]

Shocking! However, maybe the perfect opportunity to go back to using solely peat....

Would be interesting limited edition - and perhaps very costly too!

[Deactivated Member]

I don't think it's remotely possible to burn peat hot enough to fire the stills. (I know you're being facetious, Christian, but somebody will take it seriously, and the next thing you know, somebody will be repeating it as fact.)

[Mr Fjeld]

Would be fun though

And it is shocking that they lack fuel! Just shows how dependent the island communities are of good weather and sympathetic authorities with enough economic support.....

[Deactivated Member]

Hey...Bruichladdich have some barrels full of that quadruple-distilled usquebaugh-baul...I bet that burns nice!

[Jan]

Sad story - does anybody know if it's really all the distilleries who have run out - or only Bruichladdich. I imagine some could stock reserves or some such?

There was a thing in the article, that struck me as a bit strange:

Mark states that 250 barrels are produced a day equalling £988.000 in duty.
If one presumes the barrels are hogsheads with a 250 liter capacity, this would mean the duty pr liter whisky should be £15.80.

Surely that can't be right, when some brands are sold at £20 or lower for 70 cl bottles?

[kallaskander]

Hi there,

why not when about 70% of the price for a bottle are tax?

http://www.scotch-whisky.org.uk/Scripts ... a-csmr.htm

Greetings
kallaskander

[irishwhiskeychaser]

Firstly peat is sufficent to run stills as it was the main method before the advent of coal and then they went from coal to oil. However I would reckon the main issue is that all distilleries are not set up to use peat any more as it was a direct fire method which I don't think is in use anywhere any more. Further it would be a much slower and complicated process and probably nobody has the expertise to know what to do when etc.

The main probalem with peat as a source of heat is the fluctuation of temps. When is the burn declining or when do tou add more fuel etc? This seemingly had a huge effect on the distilation process and it was a very skillfull job to know how to keep the peat fires going while keeping a constant heat . Further direct peat fires have been known to ruin whole batches as they were too hot.


Lastly I'm amazed that the bigger distilleries do not have contingency fuel kept aside. I would of expected Coal Ila or Laphroaig to be prepared for such events.

[Andrew_Toronto]

maybe we should each send a can?

[Jan]

Hi there,

why not when about 70% of the price for a bottle are tax?

http://www.scotch-whisky.org.uk/Scripts ... a-csmr.htm

Greetings
kallaskander

Yeah, guess you could be right. It did just seem high to me....

If these figures are right, Islay is quite a good source of income to the UK... and this is just seven distilleries out of what? 90? active...

[vitara7]

if the goverment is loosing that much each day just down to no fuel oil, i can see gorden brown personally flying a shipment...

[Spirit of Islay]

this would mean the duty pr liter whisky should be £15.80.

Surely that can't be right, when some brands are sold at £20 or lower for 70 cl bottles?

It is actually £19.56 per litre of Alcohol but what you do is calculate on "number of bottles from a cask X size of bottle X ABV X £19.56" (or at least on a single cask bottling anyway , i think the duty on a 40% bottling works out at about a fiver ) .

Slainte
Gordon

[vitara7]

but surly the figure quoted on their web site would not only include the £5 say on a bottle at 40%, but would also include the 17.5% vat when the bottle is acctually sold in the shop.

[Spirit of Islay]

but surly the figure quoted on their web site would not only include the £5 say on a bottle at 40%, but would also include the 17.5% vat when the bottle is acctually sold in the shop.

Don't know , just quoting the calculation off when i bottled a cask .......
Perhaps they are allowing for 46% and not the buggars who stoop to bottling at below that and diddle us out of them lovely flavours.....

Slainte
Gordon

[Lawrence]

I've been told by a distillery manager that duty is calculated on 100% alcohol.

From the Isle of Arran Distillery Website;

TAXES AND DISTRIBUTION

Duty and VAT

Duty is the charge made by HM Customs & Excise based on the percentage of pure alcohol. The current rate in the UK is £19.56 per litre of pure alcohol. This is £70.65 per case of 12 bottles (70cl) at 43% alc. vol.

UK VAT is currently 17.5%. This is charged on the cost price of the whisky at the time of purchase, together with the Duty rate prevailing at the time of removal from bond and the storage and insurance charges paid over the years. Both Duty and VAT are due when the cask is removed from the bonded warehouse.

Taxes are subject to change by the UK government. Various different rates of Duty apply throughout the EU and the rest of the world.

[Admiral]

Consider yourselves lucky!

Excise in the UK is stated by Lawrence above (or at least from his source) as 19.56GBP per litre.

That's about $48 Aussie dollars.

The excise taxed on the whisky when it's imported into Australia is a whopping $68 per litre!!!

Cheers,
AD

[TheLiquorBaron]

I've been told by a distillery manager that duty is calculated on 100% alcohol...

Absolutely correct.

Remember people there are 2 taxes...Excise or duty and then there is the standard tax applied to all products(and some services as here in Oz)

"Excise duties and customs duties (excluding the 5% ad valorem tariff) are set on a volumetric basis — i.e. levied on the actual amount of alcohol in the product...." - Taken from Distilled Spirits Council of Australia
For example the rate of duty here in Oz is $64.21 per litre of Alcohol + 5% ad valorem(meaning add 5% of the purchase price, generally FOB cost)
Our standard tax rate(GST) is 10%

And regarding the fuel shortage...What a costly mis-calculation, both for producer and government.
I don't think Shell will get an invite to any Christmas parties this year??

[Deactivated Member]

I'm still unclear as to what the story is here. Is all of Islay out of oil, or just the distilleries, or just Bruichladdich? Is the pier in question Port Askaig, Port Ellen, or Bruichladdich? Is the real issue oil, or a local issue with the pier? Have they really stopped distilling, or is this a Doomsday scenario? There's nothing about this at the Ileach site that I can see--you'd think it would be a big story. Some clarification is in order.

If anyone can find a link to a news story about this, I'd like to see it.

[Lawrence]

The fuel shortage just affects the distilleries and the pier involved in the one right near Bruichladdich. A picture came with the news release and I recognized it right off. No doomsday.

[Jeroen Kloppenburg]

AFAIK its the pier at bruichladdich tattieheid. Thats where Shell has its reservoirs for storing oil for the island. As its on the Atlantic coast part of the isalnd its much more exposed then for example port askaig. The islanders (according to the press release from Bruichladdich) requested the pier to be located on a non-atlantic coast location becuase of this.

[Jan]

this would mean the duty pr liter whisky should be £15.80.

Surely that can't be right, when some brands are sold at £20 or lower for 70 cl bottles?

It is actually £19.56 per litre of Alcohol but what you do is calculate on "number of bottles from a cask X size of bottle X ABV X £19.56" (or at least on a single cask bottling anyway , i think the duty on a 40% bottling works out at about a fiver ) .

Slainte
Gordon

Ohh - of course. Had'nt really thought it through. Thanks for the info - makes a lot more sense now.

[Deactivated Member]

AFAIK its the pier at bruichladdich tattieheid. Thats where Shell has its reservoirs for storing oil for the island. As its on the Atlantic coast part of the isalnd its much more exposed then for example port askaig. The islanders (according to the press release from Bruichladdich) requested the pier to be located on a non-atlantic coast location becuase of this.

OK. I know the pier--was standing on it a month ago--and knew it had been refurbished in the last year. Didn't know that was central receiving for oil, but come to think of it I do remember the storage facility nearby. Not what I was thinking about while in Islay! The pier's on Loch Indaal, but it is rather exposed. I suppose they'll have to build a breakwater for a bazillion pounds now.

Thanks for the info. (Lawrence, too.)

[Spirit of Islay]

Lawrence , £19.56 is the rate at 100% Alcohol , the calculations for the bloodtub i bottled were :-
Duty on 39 bottles is 39 (bottles) x 0.7 (size of bottle ) x 61.4%( ABV at bottling strength) = 16.76 (Litres of Alcohol at 100%) x £19.56 duty per L/A = £327.83 Duty !

Right from the very start of the Pier development there have been arguements about it , the Islander wanted it put out to tender to other companies as well as shell (they have a slight monopoly on the supply of oil ) . The design was argued over , it can now only be used for said oil unloading whereas in it's old guise Fertilizer and coal was unloaded . Also a large tree felling operation is about to start on Islay and guess what ? they can't use the pier ! So all the cut trees have to be took off via the ferry ....... Talking of which Calmac have just took the Hebridean Isles off service for a refit at one of the busiests times for commercial traffic and put the aging Isle of Arran in it's place with reduced load carrying restrictions on it so there's even less space for lorries which is another sore point for the Ileachs......

BTW if you want to see Bruichladdich pier as it used to be watch "The Maggie" , it's featured in that cleverly intercut with the Pier at Port Charlotte .
We were watching the Pier at Port charlotte last week-end being submerged underneath the raging waves , so you can imagine what it was like in Loch Indaal (but it was perfectly dry in the bar of the PC Hotel !)

Slainte
Gordon

[Deactivated Member]

What an unpleasant story. They manage to have a swipe at the Treasury, Shell, Calmac, Argyll and Bute Council, the European Union and the Scottish Executive. All in the one article.

Chaps - you have to inhabit the world you live in - deal with it.

[vitara7]

surley, given the remotness of islay this sort of theing has happened in the past, and surley they shoudl only have themselfs to blame. as with any business, fallback stratiges are put in place etc should a company etc that supplies you with a production critical somthing or other was to go bust. now surley they should be buying extra heating oil just incase of such a senario? what if you got a hard winter and went through more oil than normal? its somthing that you have to factor in.
i fell they only have themselfs to blame, its somthing that shouldnt have happened and i fell its simply down to trying to keep as much cash in the bank as opposed to sitting in a tank somwhere, and now its only came back and bitten them in the bum.

[Lawrence]

When you live on an island (as I do) you have to accept that sometimes it's not as convient as living on the mainland. It's more expensive also but I would have thought that a sheltered pier would have been sorted long ago. I suspect the distilleries will be building larger storage tanks in the future.

[Deactivated Member]

I suspect this was just another opportunity for the distillery in question to see its name in print.

[vitara7]

they've messed up trying to penny pinch and now there trying to point the finger elsewhere.

[vitara7]

put it this way, as far as i know its only bruichladdich thats been effected, can you imagine the cheif exect of LVMH munching on his lumpfish caviar for brekkie, only to be told his prize distillery is shut down as it has no oil....

it would be like his driver coming up and teling him the bentley wasnt going anywhere today as some minion never filled it up!

[Deactivated Member]

Presumably, though, they will be able to have a comemorative edition to celebrate the event, not to mention the last batch before the oil ran out and the first batch following recommencement of supplies...

Hurrah to the Franklin Mint of the whisky world!

[Lawrence]

As I see it Bruichladdich made a choice not to spend their advertising money on glossy magazine ads, like the one where it looks like a seal dragging itself out of the the sea to whelp (Bowmore).

Instead they spend that same money on travelling all around the world and talking to their customers face to face and pouring them a dram. I thinks it's brilliant.

As for the large range, they are tiny runs and they help grab headlines, without having to pay for it, saving money so that they can make more whisky and talk face to face with their customers.

I can just imagine the howls of frustartion if Bruichladdich just a 10, a 15 and a 21.

They also employ 42 Islanders and they saved a distillery from the wrecking ball. The whiskies are becoming better and better. Keep it up I say.

[vitara7]

your right nick, the next valinch will be about having no oil, and then a strictly limited run of about 20000 bottles at 6 year old about getting new bigger oil tanks installed.

[Scotchio]

If they've run out of Fusil Oil won't that result in a shortage of Guff ?

[Jan]

Presumably, though, they will be able to have a comemorative edition to celebrate the event, not to mention the last batch before the oil ran out and the first batch following recommencement of supplies...

Hurrah to the Franklin Mint of the whisky world!

Nick you're wicked...