Big Money in Freon Smuggling

I love stories like this; Government run amok.

The chief executive of the century-old company from America’s heartland shifted nervously on the witness stand here as he tried to explain how a trusted senior vice president had been caught on a wiretap buying half a million dollars in smuggled merchandise, much of it from China.

But the contraband purchased by Marcone, a St. Louis-based company that claims to be the nation’s largest authorized source for appliance parts, was not counterfeit handbags or fake medicines. It was a colorless gas that provides the chill for air-conditioners from Miami to Mumbai, from Bogotá to Beijing.

Under an international treaty, the gas, HCFC-22, has been phased out of new equipment in the industrialized world because it damages the earth’s ozone layer and contributes to global warming. There are strict limits on how much can be imported or sold in the United States by American manufacturers.

But the gas is still produced in enormous volumes and sold cheaply in China, India and Mexico, among other places in the developing world, making it a profitable if unlikely commodity for international smugglers.

So in 2009, Carlos Garcia, the Marcone vice president, generated big business for his company’s growing air-conditioning operation by selling smuggled foreign gas to repairmen at rock bottom prices in a promotion called Freaky Freon Fridays, drawing on a brand name that many use as a synonym for coolants.


Two great quotes:

International efforts to curb the use of HCFC-22 are faltering for dozens of reasons, from loopholes in environmental treaties to the reluctance of manufacturers to step up development of more environmentally friendly machines.


Many air-conditioning manufacturers have even figured out how to sidestep the 2010 ban on selling new machines containing HCFC-22, by offering unfilled air-conditioning compressors that service workers swap into existing units and then fill with the gas, creating refurbished machines that are as good as new.

Ya, kinda like the war on drugs.  Big brother steps in and basically screws up the entire marketplace.  Businesses position themselves around the law and the only result is products are now more expensive to the consumer… slowing the whole economy.

This notion the folks in the U.S. are rich and can afford the more expensive machine while folks in Mexico get to use HCFC-22 because they’re poor creates conditions ripe for a black market.  Same goes for the carbon credit swap in the Kyoto Treaty.  It’ll never work.

None of these kinds of restrictions ever work.