Fuel is becoming more expensive in the US, and we can expect it to get even more costly over the next few months. At the time of writing, late March 2021, the average gallon of gasoline in the US costs $2.86, with Californians paying at least a dollar more. Diesel fuel averages $3.14, and again, Californians pay more.
These high prices have many Americans feeling uneasy about spring break and summer travel plans. Some people tend to immediately blame the new Biden administration for rapidly increasing fuel costs, citing Biden’s executive order to block the Keystone XL pipeline as the cause of soaring prices at the pump. And this isn’t wholly untrue.
- Crude oil is a key component of gasoline, and US refineries use one barrel of crude oil to produce almost 20 gallons of gasoline.
- Crude is also a major ingredient in diesel fuel, marine diesel fuel, jet fuel, and other transport-related products like asphalt.
The Keystone pipeline currently brings 700,000 barrels of crude oil every day to refineries in Texas. The XL expansion would bring 130,000 barrels more. It would also cure a crude oil bottleneck that occurs at Cushing, Oklahoma. Between more crude and improved flow, the XL expansion could ease supply considerably. And as we all remember from Economics 101, excess supply leads to lower prices.
Still, there are other issues at play regarding the price of fuel (both gasoline and diesel). One source of regulatory concern that leads to price hikes comes in the form of ultra-low sulfur diesel requirements (ULSD) that will affect the marine fuel market in 2022–2024. It could be a painful gut-punch to cruise corporations and little charter boat businesses that were slapped so hard by the pandemic.
But let’s start at the beginning: diesel fuel for over-the-road transportation.
On Diesel and Freight in the US
We’ve already discussed the importance of diesel fuel to the US transportation industry here. At a glance, the US is home to roughly 325 million people. Our enormous appetite for consumer goods is the biggest in human history.
- 11.84 billion tons of freight crossed our nation in 2019.
- Diesel trucks moved about 70% of it.
- 97% of those trucks are Class 8 trucks — the big rigs — which consume 22 billion gallons of diesel annually.
Burning all that fuel creates tremendous amounts of emissions and greenhouse gases (GHG.) Now, the usual conversation we have about GHG starts with carbon monoxide (CO). Another less-talked-about emission comes in the form of sulfur dioxide, SO2, an indirect greenhouse gas.
Sulfur Dioxide, The Environment, and Your Health
We think Greenhousemaps.com says it best: “Sulfur dioxide is [called] an indirect greenhouse gas because, when coupled with elemental carbon, it forms aerosols. They [can] scatter the sun’s radiation, sending it back to space and cooling the planet. Still, they also increase the lifetime and thickness of clouds,” which ultimately leads to increased warming and radiation. We still have much to learn about aerosols. Scientists aren’t sure whether aerosols have a net-warming or net-cooling effect.
Whether it’s affecting the climate or not, we know SO2 is harmful to humans. The EPA website says short-term exposure to sulfur dioxide can damage your respiratory system and make breathing difficult. People with asthma — children, in particular — are known to be the most sensitive to it.
Furthermore, high concentrations of SO2 in the air generally lead to the formation of other sulfur oxides and result in particulate matter (PM) pollution. That’s the stuff that damages our lungs and reduces our visibility with brown smog. Even plants can react negatively to sulfur dioxide at high levels.
This research has led to regulations in the form of ultra-low sulfur diesel requirements.
ULSD: Ultra-Low Sulfur Diesel Requirements
The US Environmental Protection Agency (EPA) has been monitoring diesel fuel sulfur levels since 1993. Before then, diesel fuel contained as much as 5,000 parts per million (PPM) of sulfur.
- Later, in 2006, the EPA took a more stringent position, aiming to lower diesel’s sulfur content to 15 ppm or less.
- Ultra-low sulfur diesel requirements were phased in over four years, through 2010.
From 2010 on, all highway diesel fuel supplied to the US must be ULSD, and every truck on the road must run it.
EPA’s diesel standards target sulfur emissions from two sources:
- On-road engines — meaning highway and commuter vehicles
- Non-road engines — farm equipment, construction equipment, and marine engines
Non-road diesel engines — that includes marine systems — have been running ULSD since 2014. The EPA claims these diesel standards have collectively reduced harmful emissions from both sources by more than 90%.
What Is the Effect of US Diesel Regulations on Pollution?
The US transportation industry is only held accountable for about 15% of the world’s annual emissions. Asia is the problem polluter, and developing nations (India and China) are known for comparably high GHG and sulfur emissions per capita.
- This makes sense. As nations industrialize and develop, they create plants and manufacturing facilities.
- They’ll manufacture consumer goods for the US at uber-economic prices by paying their staff ultra-low wages for extra-long days.
- Then, those goods are shipped here and sold at high prices.
- (Nike, seen by many as a virtue signaler, does this all the time and is shameless about it, by the way.)
While the U.S. tries to tackle 15% of the globe’s pollution, the problem is that corporations set up shop in other nations with little regulatory oversight. Meanwhile, the EPA is considering expanding ULSD requirements to cover ocean-going vessels and large ships.
International Fuel Standards for Global Marine Fuel
Ocean-going vessels, cruise ships, and shipping vessels traditionally use “bunker fuel” with sulfur levels as high as 5%, or 50,000 ppm. The EPA says this bunker fuel is a significant source of harmful air pollution in the US. They want to mitigate those harms.
- EPA is proposing changes to 40 CFR part 80, subpart I to allow for the distribution and sale of distillate diesel fuel that complies with the 0.50 percent (5000 ppm) global sulfur standard.
- Per the EPA website, these changes will accommodate the supply and distribution of distillate diesel fuel as a global marine fuel.
How EPA Plans to Implement Changes to Marine Fuel by 2022
The implementation of new standards for engines and vessels will happen in two phases.
- The first phase sets the model year 2022 as the implementation deadline for engines installed in a wide range of vessels. As with vehicles, the new model year will come out in late 2021.
- This phase is limited to propulsion engines with maximum power output up to 1,400 kW and a power density of at least 35.0 kW per liter displacement.
- So this rule change includes lobster fishing boats, pilot boats, and some research boats.
- The second phase set the model year 2024 as the implementation deadline for engines installed in a narrower set of high-speed vessels that require additional lead time.
- This phase would be limited to vessels with a single propulsion engine with maximum power output up to 1,000 kW and power density of at least 40.0 kW per liter displacement. These vessels have a nonmetal hull and a maximum length of 50 feet.
- This will primarily impact lobster and fishing boats.
But wait! Anyone who’s ever been on a cruise knows the next point we’re going to make.
Who the F*%k Gives EPA Jurisdiction to Make Fuel Regulations on International Waters?
No one does. No single independent nation gives the EPA jurisdiction to create fuel guidelines for their nation’s ocean-going vessels. That’s why 99% of cruise ships fly a Bahamian flag, by the way, and an estimated (but unquantifiable) 90% of our commercial vessels operate this way, as well. EPA regulations are strict, and other nations are less stringent about shipping emissions.
The only two semi-exceptions are emission control areas (ECAs) near the US:
- The North America ECA, which extends 200 miles out from North American shores
- The Caribbean Sea ECA, which covers waters around the Virgin Islands and Puerto Rico
The sulfur content of marine fuel for vessels operating in these ECAs may not exceed 0.10 weight percent (1000 ppm). That’s 1/5th the current global standard of 0.50 weight percent (5000 ppm), which was seven times higher two years ago. The point we’re making is that less-stringent rules aren’t the same thing as a devil-may-care attitude.
At any rate, both cruise ships and commercial vessels may need to change how they operate, and soon.
What it All Means to the US Consumer
The price of lobster is going up (and my favorite Nantucket Oysters) — heck, the cost of everything imported will go up by 2022 or 2024. Diesel sulfur regulations are getting stiffer around the world, and especially in the US coastal waters. Domestic cruises to Alaska, short trips to Mexico, even riverboat gamblers will be paying more for fuel. So hang in there — it’s going to be one expensive summer as fleets try to prepare for a new level of compliance.
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