Americas News
ECA Could Raise Fuel Prices By 25%
Market watchers are predicting fuel costs are "likely" to increase 20-25% when the upcoming North American Emissions Control Area (ECA) comes into effect on August 1.
Shipping companies operating within the 200-mile offshore zone will have to use bunker fuel with a maximum 1% sulfur, or create a 1% sulfur blend using 3% bunker fuel and Ultra-Low Sulfur Diesel (ULSD).
'Our immediate problem is that the 1% sulphur fuel is a boutique blend that will require our suppliers to blend and then store the fuel for us,' said John Parrott, President of privately-owned roll-on/roll-off cargo ship operator Totem Ocean Trailer Express in an interview with Platts.
When the marine fuel sulfur standard is further tightened in 2015 the use of ULSD will be needed to meet a 0.1% marine fuel sulfur standard, and Parrott says that is expected to boost fuel costs 50% above current fuel prices.
Further complicating the issue is the fact that ULSD has a lower energy content which Parrot says will mean an as-yet-undetermined loss of engine efficiency as well as the likely need for ship modifications in order to run more ULSD in 2015.
According to the Platts report, bunker suppliers and buyers say bunker fuel with 1% sulfur is currently valued between $90-$100 per metric tonne above the 3% sulfur bunker fuel currently used.
There are currently no concerns of a shortage of the 1% bunker fuel, with a source from Maersk quoted as saying "New York is fine, Houston is OK, Panama is getting there and the same with Los Angeles...It is just a matter of paying up for it. It ain't cheap, that's for sure."
A logistical concern for cruise ship operators is the need to switch from blended to other fuels depending on where they are operating from spring/summer to winter destinations.
According to Richard Berkowitz, director of the Transportation Institute, a shipping industry trade group, the EPA rules are part of the U.S.' compliance with the International Marine Organization rules on emission standards but are also more strict than the IMO rules.
