With production capacity for high-quality, low-sulfur crude offline in Libya, Yemen and Sudan, the cartel is unable to compensate.
FORBES: Could We See A Summer Oil Shortage? This Economist Says Yes.
Its Green Shipping Initiative offer incentives such as reduced port fees for ships in return for using low-sulfur fuel.
In some areas of Europe and the U.S., ships have been required by law for years to use low-sulfur fuel when in port.
Blankenship, making a contrarian bet that the supply of low-sulfur coal will fall even faster than demand as more eastern miners fold up shop, has bought mines in West Virginia.
Maersk say that despite the financial sweeteners from Singapore's Maritime and Port Authority the company is actually losing money by using low-sulfur fuel that can cost twice as much as ordinary bunker fuel.
In other words, U.S. refiners are exporting U.S. high-sulfur distillates instead of refining it into low-sulfur diesel fuel than can be sold in the U.S. Chile, Mexico and several other countries in Central America have been the leading export markets for high-sulfur U.S. diesel.
Ironically, while U.S. exports of high-sulfur diesel have risen from roughly 1% to nearly 12% of the total domestic diesel supply, U.S. imports of low-sulfur diesel have jumped from less than 1, 000 barrels per day in the first half of 2006 to well over 100, 000 barrels per day.
In June 2006, the U.S. Environmental Protection Agency required 80% of highway diesel fuel sold in the U.S. to meet new ultra-low sulfur standards similar to those needed for low-polluting gasoline.
As much as 150, 000 gallons of ultra-low sulfur diesel and about 12, 000 gallons of other petroleum products are on board the Kulluk, a double-hulled steel vessel with a helicopter landing pad and tower in the middle designed for drilling in Arctic waters.
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