Publications: Notes at the Margin

The US at the IMO (October 29, 2018)


This report has commented on the economic threat posed by the International Maritime Organization’s 2020 rule, which restricts the sulfur content of ship bunker fuel to 0.5 percent beginning on January 1 of that year. On several occasions, we have warned that diesel prices would likely be pushed much higher, causing great hardship to the global economy. We focused these efforts on getting the IMO rule changed.

This week the IMO finalized the sulfur rule, offering no flexibility regarding its implementation despite last-minute entreaties from the White House (or maybe because of them). The compliance deadline remains January 1, 2020. The offending sulfur will be removed from marine fuel.

On the positive side, if one can call it that, changes in the world’s economic situation over the last six months may moderate the regulation’s impact. In particular, the stagnant US housing market and the spreading global slowdown may ease the IMO 2020 price effect by depressing demand and allowing distillate supply to increase. The situation is still tenuous, but a global recession could make the IMO transition relatively easy.


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