IMO 2020 goes mainstream and its political ramifications

IMO 2020 is everywhere - conferences, expert briefings, webinars, blog posts, newsletter articles, ad ot has gone beyond the province of shipping industry insiders (and readers here) and certainly reached into the mainstream media. Witness two articles in the prestigious Financial Times (FT) within one week.

The maritime business, and IMO 2020, is now mainstream top of the fold stuff. “Shipping is the new frontier in the climate change fight” - offering a skewed take on corporate social responsibility -appeared in the FT on 14 March, with “New shipping rules leave oil traders strangely paralysed” - dealing with refining and spreads - appearing on 21 March.

These articles coincided with a social media awakening by an organization called The Coalition for American Energy Security (CAES), on the web at and on Twitter, nearly every hour, it seems, at #SecureUSEnergy, which has come out swinging hard in favour of a timely implementation of IMO 2020.

Refingering energy security Marcus

The CAES explains that: “We recently formed to educate policymakers on the benefits to the United States of timely implementation of the International Maritime Organization’s (IMO) 2020 standards. Imposing the standards in a timely manner will serve as a tremendous boost to the United States economy.”

On the website, they add that: “The IMO’s sulphur standards are a ‘win-win’ by positioning the American energy industry to lead the global market for low-sulfur nautical fuel while also dramatically reducing sulfur emissions at sea.” They make the case that the US energy industry, after having made substantial investment, is ready for IMO2020- and able to meet maritime needs for low sulphur fuels. The website links to a number of the aforementioned blogposts and newsletter articles.

The new awareness, for shipping people, should be the extreme political ramifications of IMO 2020, with US linked oil producers standing to gain a great deal from the post 1 January 2020 environment. Members of the CAES include well-known oil names BP and Valero, mid-size logisticians PBF and HollyFrontier, as well as the American Petroleum Institute (API) and American Fuel and Petrochemical Manufacturers.

Importantly, industry buy-in comes through the membership of the World Shipping Council- which represents a broad range of liner companies calling at US ports, many of which have developed mystery-ridden formulae for Bunker Adjustment Factors, or BAFs.

The backstory of the CAES concerns the upcoming 2020 election, with dialogue on the FT comment boards gets to the heart of the matter. Quite simply, it is suggested that low energy prices, particularly for petrol and for gasoil, will help get President Trump re-elected, and that high prices might not.

Noted energy economist Phil Verleger, who worked in the 1970’s White House in the years of major “Oil Shocks”, has pointed out: “This president is a ‘pretty good tactician’ as far as his base. He knows they need and demand low gasoline prices… He also knows farmers need low diesel prices. They are a key part of his base. He has already hurt them. He has the authority to impose block exports. He will keep gasoline and diesel prices down if he does that.”

The posts continue: “If world oil prices start to rise he will act. This is why the API, a number of state organizations representing the independent crude producers, the refiners association organization, and several refiners are spending millions on a PR programme in an effort to block presidential actions.” Between the lines, then, the CAES members would not complain (unlike Trump’s base) if the low sulphur versus high sulfur spreads moved back out, bucking a trend in recent months. What better way to recoup all that investment, after all?

Posted 26 March 2019

© Copyright 2019 Seatrade (UBM (UK) Ltd). Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade.

Barry Parker

New York correspondent, Seatrade Maritime

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