Maritime Fuel Switch Could Drive Fuel Prices Skyward

source: The Technology for Sustainable Future Shipping Group

Ever feel like you're playing musical chairs? Just when automakers thought they had an answer for fuel costs with higher-efficiency diesels, turns out the maritime industry is considering a switch to diesel as well. It's cleaner to be sure... so good for ozone layers and baby seals, but potential consumption for such a change is estimated to be 1.5 times that of diesel-happy Europe. For those who didn't take Business 101, ridonculous additional demand + current supply = you're screwed. Of course, nothing's been finalized yet for the cargo ship types. However, the probability is there and we've been warned. More after the jump.

PRESS RELEASE: Maritime Fuel Switch Could Drive Diesel Prices

LONDON, UK-- A ship industry proposal to switch the world's merchant fleet to diesel fuel will send oil soaring through the $150-a-barrel mark, stoking fears of higher petrol prices and rampant inflation, an environmental technology group said on Thursday. It will mean even higher prices at British petrol pumps, with the GBP10 gallon a distinct possibility as demand begins to outstrip supply. Consumers will also feel the knock-on effect of higher food and energy bills.

Shipping circles are debating how to reduce harmful sulphur dioxide emissions, which cause acid rain, respiratory illnesses and heart problems.

Part of the industry, led by the independent tanker owners' organisation Intertanko, wants a total ban on high-sulphur marine fuels in favour of lower sulphur diesel fuels.

The International Maritime Organization (IMO), the UN agency responsible for preventing pollution from ships, will consider the controversial fuel proposal when its Marine Environment Protection Committee (MEPC) meets in London Monday (31 March).

The switch to diesel at sea would be equivalent to one and a half times the annual automotive diesel consumption in Europe.

Robert Clarke, spokesperson for the Technology for Sustainable Shipping Group said the idea "did not make any sense" environmentally or economically.

"It is not a cost-effective way to improve the environment," he said. "The oil market impact alone would likely more than double the cost of marine fuels and substantially increases prices of diesel, aviation jet fuel and heating oil on land.

Refineries would need to produce an extra 250 million tonnes of distillate fuels a year to meet the new diesel at sea demand, requiring around one billion tonnes per annum of crude.

"That's more than double annual production of Saudi Arabia," Clarke said. "The increase in the cost of crude oil is also likely to spell bad news for the economy as costs and prices rise. And the development poses a major threat to international economies, which are already suffering from the global credit crunch.

Clarke also said the ship industry proposal to switch to diesel risked raising carbon dioxide (CO2) emissions in the manufacturing process.

The Technology for Sustainable Shipping Group is an informal forum designed to communicate the benefits of emissions reduction technology. Members of the forum include The Torvald Klaveness Group (Norway), BP Krystallon (UK), Marine Exhaust Solutions (Canada) and Wärtsilä (Finland).