[Xist]

Billions hate him!

Starting in 2020, the [International Maritime Organization (IMO)] will require the phasing out of sulfur from ship fuels despite documented difficulties in refiners’ ability to meet strict new standards. Unless the IMO changes course, consumers across America, and all around the world, will foot the bill for higher gasoline prices as the result of global fuel shortages.

But the agency’s 2016 decision to ratchet down sulfur content in shipping fuels from 3.5 percent to 0.5 percent has received plenty of press and attention from analysts around the world.

In moving away from sulfur, shippers will likely switch en masse to alternatives such as gasoil or diesel. That’s not good news for refineries, which will face significant pressures to ramp up production of these stand-ins. Currently, there simply isn’t enough low-sulfur fuel to go around, and refineries will need to sharply increase capacity and operations in order to keep up.

Economist Philip K. Verleger notes, “As many as half of world refineries cannot produce fuel that meets the new regulation…They cannot reprocess a high-sulfur diesel fuel to a low-sulfur diesel because their facilities are inflexible.”

Faced with pressures to ramp up production of low-sulfur fuel and constrained by ever-expanding regulation, refineries will face major hurdles producing the gasoline required by billions to get around on a daily basis. And if ships can’t get the diesel and gasoil they need to maneuver between continents, global trade may suffer to the detriment of everybody.

Columbia University scholars predict that IMO 2020 regulations could “paradoxically end up slowing down what might have otherwise been a more rapid transition of the shipping market away from traditional bunker fuels.”

Gas Prices Expected to Rise in 2020—Thanks to an Obscure UN Regulator