So what is your take on diesel fuel prices after 2020?

[ShinerBock]

For those that do not know, a few years ago the International Maritime Organization made a significant regulation that will have a big impact on everyone's wallet, especially diesel vehicles owners. They set a new standard for sulfur content in ship diesel fuel that they allow at their ports to .5%S by January 1, 2020. That is a significant drop from the current limit. While this will have an impact on everyone's wallet because this new fuel will be more costlier than current fuel used(which will increase prices on everyday goods), it may end up hurting or helping diesel owners according to some analyst.

Many here may remember when the EPA set the ULSD standard and how it effected diesel prices due to the extra refining and purification needed, and causing "sweet" crude prices to increase even more. For years, on land diesel owners alone had to pay the added cost for all of the added refining equipment and processes since the low sulfur fuel was only for them. Diesel fuel refiners also switched to using more "sweet" crude (that was only previously used to make gasoline) due to its lower sulfur content versus less expensive "sour" crude it used before causing the demand(and price) for "sweet" crude to increase.

There are people on both sides of this argument. Some are saying it will cause both diesel and gas prices to skyrocket because it would cause the demand for "sweet" crude to increase even higher. Others are saying that it will cause on road diesel prices to go down because now shipping will also be paying for the added refining processes spreading out the cost for the added piping and other equipment needing to purify "sour" crude.

What is your take on it?

[ghostrider421]

https://www.yachtingmonthly.com/news/sailors-to-be-consulted-over-uk-red-diesel-ban-68752
Tho the article is from 2015, the fact is brit marinas still sell it

[RobertRyan]

FishOnOne wrote:

ShinerBock wrote:

FishOnOne wrote:

ShinerBock wrote:

FishOnOne wrote:

ShinerBock wrote:
what I was getting at was how much it will go up due to the new regulation just like the switch to USLD increased costs.

How much will it go up with this change?

Not sure, but I would imagine it would be similar how much the switch from LSD to ULSD increased the costs for us. The refineries that make this current fuel will have to upgraded for the added hydrotreating process needed to remove the sulphar down to acceptable levels. This will go in to the cost per gallon until the capital is recouped.

Then there is the loss the refiners will take when the pump the ULSD through pipes and tanks that carried LSD contaminating it with higher than acceptable levels. This is fuel would probably be sold as loss. The other issue is the added corrosion that ULSD has on tanks and pipes due to its higher water solubility.

Lastly are the extra additives to bring back the lubricity of the fuel. All these things will cause the price per gallon to increase, but I am not sure how much.

The reason I asked was because your statement sound like you knew precisely how much it was going to go up.

Again I don't subscribe that this change will have a significant impact.

Noted, but I know people who said ULSD would not cost more than LSD diesel back before we switched in 2006. Then diesel went from being below gas to above it.

As far as the financial impact, I am just going based on what the US EIA's petroleum report about the cost increases of LSD to ULSD. The report went into more detail as to what caused the increases and the amount per gallon increase each caused. I by no means am an energy or petroleum expert, but report did have some solid facts.

There appears to be increasing pressure for the diesel suppliers to meet the "Top Tier" standards for diesel fuel which many fear will increase diesel prices, but I think ExxonMobil with their new "Diesel Efficient" meets these standards, but didn't increase the price.

Factor in possibly something a from left field .Saudi Arabia may decide have revenge over any possible sanctions

[ghostrider421]

ppine wrote:
Ships use a less refined fraction of the oil barrel. There are no regulations for air polllution at sea

Ah, well that's where you are wrong. The IMO regulates what fuel and the rules change in 2020 for all major shipping companies. Their choices are very limited - put on scrubbers, convert to LNG or methanol or go out of business. The way things used to be don't count anymore.

[ShinerBock]

I am not talking about price fluctuation depending on the price per barrel of crude. I am talking about price increase due to added steps and infrastructure needed to get the current ship diesel to the new standards.

Let me put in another way that is easier to understand. Going from LSD to ULSD added an addition $.10-.40 center per a gallon cost according to the US EIA. This cost is added on top of any fluctuation of a barrel of crude which means that even if the cost of LSD increased and decreased, ULSD is always going to be $.10-.40 more expensive than what it would have been if we had LSD due to what it takes to make ULSD. This is the increase I am talking about.

[ppine]

Ships use a less refined fraction of the oil barrel. There are no regulations for air polllution at sea, they dump their trash out beyond 10 miles.

Diesel was cheaper than gasoline for land based vehicles before the EPA regs took out S. Since then it has mostly been more expensive or similar to gas. Economies of scale may reduce the cost of refining diesel. World geopolitics probably will have more to do with fuel prices than taking out S.

The current trade wars and tariffs started by Trump are bad for international supply chains of materials. It may negatively impact the cost of diesel more than taking out the sulfur.

[ShinerBock]

FishOnOne wrote:

There appears to be increasing pressure for the diesel suppliers to meet the "Top Tier" standards for diesel fuel which many fear will increase diesel prices, but I think ExxonMobil with their new "Diesel Efficient" meets these standards, but didn't increase the price.

Going from one ULSD formulation(additive) to another ULSD formulation(additive) should not increase the price enough to bde noticed.

However, that is not what this is about. This is about going from LSD to ULSD which added a substantial cost per gallon to diesel back when we switched in 2006 according to the US Energy Information Administration. That was the main reason diesel went form being below gas to above it almost over night.

[FishOnOne]

ShinerBock wrote:

FishOnOne wrote:

ShinerBock wrote:

FishOnOne wrote:

ShinerBock wrote:
what I was getting at was how much it will go up due to the new regulation just like the switch to USLD increased costs.

How much will it go up with this change?

Not sure, but I would imagine it would be similar how much the switch from LSD to ULSD increased the costs for us. The refineries that make this current fuel will have to upgraded for the added hydrotreating process needed to remove the sulphar down to acceptable levels. This will go in to the cost per gallon until the capital is recouped.

Then there is the loss the refiners will take when the pump the ULSD through pipes and tanks that carried LSD contaminating it with higher than acceptable levels. This is fuel would probably be sold as loss. The other issue is the added corrosion that ULSD has on tanks and pipes due to its higher water solubility.

Lastly are the extra additives to bring back the lubricity of the fuel. All these things will cause the price per gallon to increase, but I am not sure how much.

The reason I asked was because your statement sound like you knew precisely how much it was going to go up.

Again I don't subscribe that this change will have a significant impact.

Noted, but I know people who said ULSD would not cost more than LSD diesel back before we switched in 2006. Then diesel went from being below gas to above it.

As far as the financial impact, I am just going based on what the US EIA's petroleum report about the cost increases of LSD to ULSD. The report went into more detail as to what caused the increases and the amount per gallon increase each caused. I by no means am an energy or petroleum expert, but report did have some solid facts.

There appears to be increasing pressure for the diesel suppliers to meet the "Top Tier" standards for diesel fuel which many fear will increase diesel prices, but I think ExxonMobil with their new "Diesel Efficient" meets these standards, but didn't increase the price.

[ShinerBock]

FishOnOne wrote:

ShinerBock wrote:

FishOnOne wrote:

ShinerBock wrote:
what I was getting at was how much it will go up due to the new regulation just like the switch to USLD increased costs.

How much will it go up with this change?

Not sure, but I would imagine it would be similar how much the switch from LSD to ULSD increased the costs for us. The refineries that make this current fuel will have to upgraded for the added hydrotreating process needed to remove the sulphar down to acceptable levels. This will go in to the cost per gallon until the capital is recouped.

Then there is the loss the refiners will take when the pump the ULSD through pipes and tanks that carried LSD contaminating it with higher than acceptable levels. This is fuel would probably be sold as loss. The other issue is the added corrosion that ULSD has on tanks and pipes due to its higher water solubility.

Lastly are the extra additives to bring back the lubricity of the fuel. All these things will cause the price per gallon to increase, but I am not sure how much.

The reason I asked was because your statement sound like you knew precisely how much it was going to go up.

Again I don't subscribe that this change will have a significant impact.

Noted, but I know people who said ULSD would not cost more than LSD diesel back before we switched in 2006. Then diesel went from being below gas to above it.

As far as the financial impact, I am just going based on what the US EIA's petroleum report about the cost increases of LSD to ULSD. The report went into more detail as to what caused the increases and the amount per gallon increase each caused. I by no means am an energy or petroleum expert, but report did have some solid facts.

[FishOnOne]

ShinerBock wrote:

FishOnOne wrote:

ShinerBock wrote:
what I was getting at was how much it will go up due to the new regulation just like the switch to USLD increased costs.

How much will it go up with this change?

Not sure, but I would imagine it would be similar how much the switch from LSD to ULSD increased the costs for us. The refineries that make this current fuel will have to upgraded for the added hydrotreating process needed to remove the sulphar down to acceptable levels. This will go in to the cost per gallon until the capital is recouped.

Then there is the loss the refiners will take when the pump the ULSD through pipes and tanks that carried LSD contaminating it with higher than acceptable levels. This is fuel would probably be sold as loss. The other issue is the added corrosion that ULSD has on tanks and pipes due to its higher water solubility.

Lastly are the extra additives to bring back the lubricity of the fuel. All these things will cause the price per gallon to increase, but I am not sure how much.

The reason I asked was because your statement sound like you knew precisely how much it was going to go up.

Again I don't subscribe that this change will have a significant impact.

[ShinerBock]

ghostrider421 wrote:


Energy prices fluctuate minute by minute. It's fault is the whim of the traders. They burp and price jumps, go to war and jumps higher. Takes forever for it to drop at the stations. Just in the past week I visited my Dad in Georgia. You would think that the truck stops there would have the best prices - they don't always. Their price was 2.729/gal. Across the street from his home is an Exxon station with 2.549/gal gas. Now why is it that a lil ole gas station would have lower price than a BIG truck stop. Logic says the truck stops buys more at a better price. But not always.....

Many truck stops are higher due to convenience. They know most customers that are traveling through will not want to stray too far from the highway. The little ole gas station has to lower prices enough to entice traffic to want to stray away from the highway.

[ShinerBock]

FishOnOne wrote:

ShinerBock wrote:
what I was getting at was how much it will go up due to the new regulation just like the switch to USLD increased costs.

How much will it go up with this change?

Not sure, but I would imagine it would be similar how much the switch from LSD to ULSD increased the costs for us. The refineries that make this current fuel will have to upgraded for the added hydrotreating process needed to remove the sulphar down to acceptable levels. This will go in to the cost per gallon until the capital is recouped.

Then there is the loss the refiners will take when the pump the ULSD through pipes and tanks that carried LSD contaminating it with higher than acceptable levels. This is fuel would probably be sold as loss. The other issue is the added corrosion that ULSD has on tanks and pipes due to its higher water solubility.

Lastly are the extra additives to bring back the lubricity of the fuel. All these things will cause the price per gallon to increase, but I am not sure how much.

[FishOnOne]

ShinerBock wrote:
what I was getting at was how much it will go up due to the new regulation just like the switch to USLD increased costs.

How much will it go up with this change?

[ghostrider421]

ShinerBock wrote:

ghostrider421 wrote:

time2roll wrote:
Those ships have at least three options. Low sulfur diesel, install scrubbers, or convert to natural gas. I agree that the additional cost to ship the fuel will increase the world prices. Refining capacity could be squeezed for some time as lower sulfur fuel is required. How much effect on price is anyone's guess. Supply side changes could mute the entire thing or could add additional pressure independent of the transport fueling issues.

Our fleet moved out of the business because they couldn't afford the scrubbers and LNG was not a viable option. Personally to stay in the business I would have gone with new builds using LNG.

Someone asked a question about how much diesel was being used - to put it in perspective our ship carried 100 metric tons to go 2000 nm. 100mt = 26,417 gal
There are approx 4500 ships around the globe carrying that much as fuel and more. Not including the super tankers. The USCG issued a warning on IFO380 bunker fuel as being contaminated. We had to re-polish our entire tank farm in Singapore last year. https://worldmaritimenews.com/archives/257924/report-contaminated-bunker-fuel-found-in-singapore/

And, to answer the question - fuel prices will go up, not down. Right now domestic fuel prices are within 50 cents of where they were last year in most of the western USA. Eastern USA is seeing prices within a quarter of 2017.

Prices are always going to fluctuate with the cost per barrel, but what I was getting at was how much it will go up due to the new regulation just like the switch to USLD increased costs. Thank you for the numbers. I think a lot of people here do not understand just how much fuel these ships use and how many are out there.

This will definitely have a cost impact on anything being shipped along with the possibility of effecting our on road fuel prices.

Energy prices fluctuate minute by minute. It's fault is the whim of the traders. They burp and price jumps, go to war and jumps higher. Takes forever for it to drop at the stations. Just in the past week I visited my Dad in Georgia. You would think that the truck stops there would have the best prices - they don't always. Their price was 2.729/gal. Across the street from his home is an Exxon station with 2.549/gal gas. Now why is it that a lil ole gas station would have lower price than a BIG truck stop. Logic says the truck stops buys more at a better price. But not always.....

[ShinerBock]

ghostrider421 wrote:

time2roll wrote:
Those ships have at least three options. Low sulfur diesel, install scrubbers, or convert to natural gas. I agree that the additional cost to ship the fuel will increase the world prices. Refining capacity could be squeezed for some time as lower sulfur fuel is required. How much effect on price is anyone's guess. Supply side changes could mute the entire thing or could add additional pressure independent of the transport fueling issues.

Our fleet moved out of the business because they couldn't afford the scrubbers and LNG was not a viable option. Personally to stay in the business I would have gone with new builds using LNG.

Someone asked a question about how much diesel was being used - to put it in perspective our ship carried 100 metric tons to go 2000 nm. 100mt = 26,417 gal
There are approx 4500 ships around the globe carrying that much as fuel and more. Not including the super tankers. The USCG issued a warning on IFO380 bunker fuel as being contaminated. We had to re-polish our entire tank farm in Singapore last year. https://worldmaritimenews.com/archives/257924/report-contaminated-bunker-fuel-found-in-singapore/

And, to answer the question - fuel prices will go up, not down. Right now domestic fuel prices are within 50 cents of where they were last year in most of the western USA. Eastern USA is seeing prices within a quarter of 2017.

Prices are always going to fluctuate with the cost per barrel, but what I was getting at was how much it will go up due to the new regulation just like the switch to USLD increased costs. Thank you for the numbers. I think a lot of people here do not understand just how much fuel these ships use and how many are out there.

This will definitely have a cost impact on anything being shipped along with the possibility of effecting our on road fuel prices.

[ghostrider421]

time2roll wrote:
Those ships have at least three options. Low sulfur diesel, install scrubbers, or convert to natural gas. I agree that the additional cost to ship the fuel will increase the world prices. Refining capacity could be squeezed for some time as lower sulfur fuel is required. How much effect on price is anyone's guess. Supply side changes could mute the entire thing or could add additional pressure independent of the transport fueling issues.

Our fleet moved out of the business because they couldn't afford the scrubbers and LNG was not a viable option. Personally to stay in the business I would have gone with new builds using LNG.

Someone asked a question about how much diesel was being used - to put it in perspective our ship carried 100 metric tons to go 2000 nm. 100mt = 26,417 gal
There are approx 4500 ships around the globe carrying that much as fuel and more. Not including the super tankers. The USCG issued a warning on IFO380 bunker fuel as being contaminated. We had to re-polish our entire tank farm in Singapore last year. https://worldmaritimenews.com/archives/257924/report-contaminated-bunker-fuel-found-in-singapore/

And, to answer the question - fuel prices will go up, not down. Right now domestic fuel prices are within 50 cents of where they were last year in most of the western USA. Eastern USA is seeing prices within a quarter of 2017.