General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe Regulation That Could Push Oil To $200
Last edited Fri Jul 27, 2018, 10:10 AM - Edit history (1)
A research paper from economist and oil market watcher Philip K. Verleger predicts there could be a shortage of low-sulfur diesel fuel in 2020 as a result of regulations from the International Maritime Organization (IMO) aimed at cutting sulfur emissions. The regulations, due to take effect at the start of 2020, lowers the allowed concentration of sulfur in maritime fuels from 3.5 percent to just 0.5 percent.
https://oilprice.com/Energy/Oil-Prices/The-Regulation-That-Could-Push-Oil-To-200.html
The marine industry accounts for 5% of oil consumption*.
http://energypolicy.columbia.edu/sites/default/files/SlowSteamingto2020InnovationandInertiainMarineTransportandFuels817.pdf
* (shameless self promotion) less if you've taken my Fuel Oil Management seminar
mr_lebowski
(33,643 posts)Turbineguy
(37,320 posts)is that the proportions of various products from refineries don't change much. So a demand for gasoline that is met, creates a glut for jet fuel and diesel fuel. If ship's heavy fuel use was shifted to diesel it would be something like a 20% increase in demand for that product.
Pricing effects what people do. The market re-balances. Demand for gasoline drives the price up. People chose to fly or take the train (which in the US is diesel). Heavy fuel right now is about $435 per metric ton, Marine diesel is about $620 per metric ton (Rotterdam NL).
The thing about ship's propulsion is that the large slow speed two-stroke engines (as well as the smaller medium speed four stroke engines) can burn heavy fuel very efficiently, but there's a maintenance cost and on-board fuel processing is a major task. If this fuel was no longer used, ships would go to gas turbines, which with recuperators and exhaust economizers could be slightly more efficient , but have to burn more expensive fuel.
Then there the question of what would happen to this residual fuel? You can only pave so many roads or roof so many houses.