It’s January, which means that analysts are trying to figure out the trends for gas prices in 2020 and how they will impact the trucking industry. However, the new year also being the roll-out of the International Maritime Organization’s low-sulfur fuel mandate, which would affect gas prices for truckers in a major way.
The International Maritime Organization’s low-sulfur fuel mandate has been on the horizon for quite some time. The mandate makes it so that ships of all types must start using low-sulfur fuels to reduce the impact on the environments as well as the people who work near the engines of ships. The mandate has already caused a spike in the purchase of low-sulfur fuels ahead of 2020. The production of low-sulfur fuels, the demand from the shipping industry, and the rate at which those fuels are consumed may drive up gas prices for the trucking industry.
Gas Prices Along the Coast
The demand for low-sulfur fuels has many petroleum production companies increasing their output for the seafaring vessels, with distributors making sure that California, New York, and other coastal commerce hubs are stocked to supply ships. As international shipping companies scramble to meet the requirements of the mandate, analysts are projecting that fuel prices for the trucking industry may increase slightly. This is not the fear-mongering that was projected when the low-sulfur mandate was first introduced, with some experts expecting prices as high as $15/gal. Instead, expect the price to go up by a few cents, especially along coastal states which will be ordering more low-sulfur fuel for ships in addition to regular diesel for land-based commercial vehicles.
Pennies Add Up
Even if gas prices increase by a few cents at the pump, there is an impact on operating costs for the trucking industry. Carriers are already reconfiguring their budgets to account for a possible increase in gas prices. Industry experts expect that the buzz surrounding low-sulfur fuels and gas prices will eventually level off as both shippers and petroleum companies get a better feel for demand and production.
Express Freight Finance will be following this issue and the impact on gas prices as 2020 unfolds.