Publications: The Petroleum Economics Monthly

IMO 2020: Economic Prospects (June/July 2018)


The restriction on shipping fuel sulfur content promulgated by the International Maritime Organization, which is scheduled to take effect in January 2020, has been the subject of hundreds if not thousands of articles. Many have addressed the rule’s impact on refineries. Many have examined the prospects for compliance. Many have focused on the economics of ship operations. Some have presented calculations of the supply imbalances created in petroleum markets. A few have offered tentative suggestions regarding the effect on crude oil prices. No one, though, has tried to forecast the impact on economic growth.


This report offers a first attempt to fill that gap. Our initial conclusion is that the regulation will likely cost the global economy a full year’s growth. Measured in current dollars, the cost exceeds $4 trillion, given the current rate of global growth and the World Bank's $80 trillion estimate of the current global GDP. The $4 trillion is a nontrivial sum based on any calculation.


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