Posted on 06/13/2012 5:34:04 AM PDT by thackney
New low-sulfur fuel standards for marine ocean carriers go into effect Aug. 1, and the near-term result is likely to be a 20 percent to 25 percent hike in fuel costs for a special blended diesel carriers will have to use.
The switch in fuels is required to meet a 1 percent sulfur limit set by the U.S. Environmental Protection Agency, several shipping companies have said.
EPA drops the other shoe in 2015, when the sulfur standard is lowered to 0.1 percent.
One vessel operator, Totem Ocean Trailer Express Inc., or TOTE, estimates that a 25 percent increase in fuel costs to meet the EPA standard effective in August will translate to about an 8 percent increase in shipping rates, according to its president, John Parrott. TOTE operates general cargo vessels from the Port of Tacoma to Anchorage.
Horizon Lines Alaska LLC, which also operates general cargo vessels on the same route, has not yet releases its estimates of increased costs.
Both TOTE and Horizon Lines said no significant engine modifications will be needed to use the fuel blend, however.
To meet the more stringent 2015 standard of 0.1 percent sulfur fuel, Parrott said TOTE will likely use 15-part-per-million Ultra Low Sulfur, or ULS, diesel to meet the standard because the ULS is readily available from refiners although it is expensive.
ULS diesel, which is now used by on-road trucks and equipment in the U.S., could cost about 50 percent more than the bunker fuel now used in TOTE’s ships, Parrott estimated.
U.S. Sen. Lisa Murkowski said she has been told by shipping companies that a 50 percent increase in fuel costs by 2015 could translate to a 20 percent increase in rates.
One added complication, Parrott said, is that the energy content of the ULS is less than that of the fuel now being used by ships so there will be an as-yet-undetermined loss of efficiency of the engines.
Also, engines in TOTE’s ships and no doubt other operators will require modifications by 2015 to run the ULS.
“Our immediate problem is that the 1 percent sulfur fuel is a boutique blend that will require our suppliers to blend and then store the fuel for us. To get the blend we’ll mix Ultra Low Sulfur with the fuel we’re using now to get down to 1 percent sulfur,” Parrott said.
TOTE will actually blend down to 0.9 percent sulfur to ensure it will meet the standard in August, and avoid the $25,000 per day EPA will levy as fines.
West coast carriers serving Alaska from the Pacific Northwest, such as TOTE and Horizon Lines, are particularly affected by the new rules because all of their Alaska voyages, which are from Tacoma to Anchorage, will be within the 200-mile offshore zone where the new fuel rules apply.
Other west coast shipping will be less affected. U.S. or foreign ships arriving and departing from west coast ports, or going to and from Hawaii, are under the rule only when they are within the 200-mile zone. Outside of that ocean carriers will be able shift back to high-sulfur fuels.
Large cruise ships operating in west coast and Alaska waters during the summer will be under the rule, which will also catch them when they are in the middle of the summer tourist season in Alaska.
Cruise ships will have to use the blended fuel for the remaining weeks of the tour season and then shift to other fuels when cruise ships move to the Carribbean or other destinations for the winter season.
The EPA rules are part of the U.S. compliance with International Marine Organization rules on emission standards, but are also stricter than the IMO requires, said Richard Berkowitz, director of the Transportation Institute, a shipping industry trade group.
Canada, which has also signed onto the IMO agreements, has requirements similar to the U.S. but with a delayed effective date, Berkowitz said. The rules will not apply off Mexico, shipping industry sources said.
Shipping on the Great Lakes are operating under an exemption secured by Congress in 2010 and not affected now by the new rules, Berkowitz said.
Because TOTE and Horizon Lines will use the blended fuel and ULS diesel in 2015 for their entire voyages, shipping rates will be affected.
In comments during a meeting in May with EPA Administrator Lisa Jackson, Murkoswki said, “Eighty percent of the groceries and consumer goods for most of Alaska’ population comes north on the ships operated by TOTE and Horizon. A 20 percent increase in rates caused me a great deal of concern.”
Parrott said TOTE is still hoping EPA may delay the rule, but so far the agency is sticking with the August effective date.
New low-sulfur fuel standards for marine ocean carriers go into effect Aug. 1, and the near-term result is likely to be a 20 percent to 25 percent hike in fuel costs for a special blended diesel carriers will have to use.
ping
Not only should we abolish the EPA, everybody in the EPA should spend a minimum of twenty years in prison.
Wouldn’t it make more sense to just require these ship operators to convert to wind and solar? The EPA wants us landlubbers to go back to the horse and buggy days anyway.
Cost of food and other products will INCREASE even more! Use to be you could shop at the Military Commissary and save a few $, not any more, some times they are higher than the private grocery store...and you still pay a 5% restocking fee vs a sales tax. And private grocery stores like Kroger’s in TN DOUBLE you coupons up to 60 cents, where as the Commissary only does face value.
Maybe we should raid mooch’s veggie garden...I have no room to put one in. We live on the top of a hill, hill in back, hill in front, no room for planting a small garden..lucky to get a few flowers in.
Reduce sulfur, reduce lubricity.
Decrease energy content, increase consumption
Burn more fuel, emit more C02
And this change does what to improve the environment.
I know there is a difference in ULS vs. Red Diesel. Red Diesel (off road) burns hotter, the engine is smoother and more powerful and more efficient. I burn both ULS and Red Diesel at the farm.
Oh, and now WHO have declared diesel exhaust a “probable” carcinogen.
http://www.greencarreports.com/news/1076921_raw-diesel-fumes-worse-than-second-hand-smoke-says-w-h-o
No worries, it won’t show up in the inflation rate.
Food and fuel costs are too volitle:)
EPA can have their way with us.
The Consumer Price Index includes Food and Fuel.
What goods and services does the CPI cover?
http://www.bls.gov/cpi/cpifaq.htm#Question_7
FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
HOUSING (rent of primary residence, owners’ equivalent rent, fuel oil, bedroom furniture)
APPAREL (men’s shirts and sweaters, women’s dresses, jewelry)
TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
MEDICAL CARE (prescription drugs and medical supplies, physicians’ services, eyeglasses and eye care, hospital services)
RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);
EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).
Go Nuke... It works for the navy.
Great Lakes carriers got an exemption from blended diesel, according to a guy who now sells the stuff out of Duluth-Superior.
Works for the Navy because they don't care about the cost, licensing, and large number of specialized personnel needed. It was tried in 1962 - ship was decommissioned in 1972
Refiners have resolved the lubricity issue.
It turned up in 1993 during the first round of low sulfur mandates.
Really? How?
If that happens, it WILL be a death sentence to Alaska. Too many people will not survive here. I even had to order a reduced amount of home heating oil last spring instead of a full up, and I have a good job.
I didn’t think I dreamed this.
From Bosch Fuel Injection:
“It is expected that the useful operating lifetime of any mechanical component will be adversely affected by fuel with a lubricity exceeding 460 microns.”
Lots of diesel enthusiasts are still concerned about lubricity of ULSD. Guess they are all on the wrong track and wasting their money on lubricity additives. It is really good to know that the refineries solved the problem in 1993.
http://www.dieselplace.com/forum/showthread.php?t=177728
Not quite a blanket exemption for Great Lakes carriers.
Second, a fuel availability relief provision has been added for use only by vessels with diesel engines operating on the Great Lakes and Saint Lawrence Seaway. This provision allows operators to buy the lowest sulfur marine residual fuel available if fuel that meets the near-term 1.0 percent (10,000 ppm) fuel sulfur standard is not available. This provision preserves the greatest benefits of this rulemaking, while avoiding undue consequences for a narrow segment of the regulated industry.
Furthermore, we are finalizing an economic hardship relief provision for vessels with diesel engines operating on the Great Lakes and Saint Lawrence Seaway. This option provides temporary relief from the 2015 ECA-level fuel sulfur standards upon demonstration that the burden of compliance costs would cause serious economic hardship.
Finally, reflecting technical challenges to the use of lower sulfur fuels in steamships, a corresponding potential for reduced safety and a clear directive from the Congress, we are excluding from this final action the application of the ECA-level fuel sulfur standards in MARPOL Annex VI to existing steamships operating on the Great Lakes and Saint Lawrence Seaway.
http://www.epa.gov/nonroad/marine/ci/420f09068.htm
Not if, when.
And the when is this summer. It has been in the works for quite a while.
“The EPA rules are part of the U.S. compliance with International Marine Organization rules on emission standards, but are also stricter than the IMO requires...”
Our EPA is so wrong on this. First, the USA should never just follow rules of an international organization-we are a sovereign nation and should set our own policies on our own national interests. Second, our crazy EPA made the rules even tougher than those of IMO. Third, these rules will make all of our numerous imported and what we export more costly.
Transport ships have used the nasty sludge left over after all the better oils are refined off, bunker fuel, to run profitably. The new rules make them buy more expensive diesel like oil, so even our trucks will have a cost increase due to less supply available.
US shippers are at another disadvantage than foreign carriers so will go broke. There are not many US shippers now as most of ours already use foreign flags of convenience due to tax and labor advantages.
And the very same perps who force this requirement on carriers will demonize them for the price increases.
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