Jet fuel costs could rise from new rules to improve air quality

Prices for jet fuel for later this year and into 2020 are expected to rise due to new marine fuel regulations - as the need for lower-sulfur fuels in ships cuts into the available supply for similar distillates like diesel or jet fuel. However, the global abundance of light crude could help offset that. Light crudes produce a byproduct known as naphtha, normally used to make plastics, but refiners can shift their processes to use it for jet fuel production instead. It may be necessary as air travel continues to rise, with travel between the US and other countries reaching an all-time high in 2018, according to Airlines for America (A4A). Prices for jet fuel are forecast to increase by 10c a gallon in 2020 from 2019, the US Energy Information Administration said in a May outlook, and airlines have been warning that International Maritime Organization (IMO) 2020 rules could hurt profits. In January 2020, New York Harbor jet fuel’s swap price is expected at $1.86 a gallon, compared with $1.84 this month, according to data from Argus Media. That price will ease to $1.84 a gallon in January 2021. The IMO’s 2020 rules require ships globally to use fuels with a sulfur content below 0.5% from 3.5% beginning Jan. 1, 2020. It aims to improve human health by reducing air pollution from sea-going vessels. Jet fuel is a relatively small part of a refinery’s overall output, often accounting for just 10% of US refiners’ fuel production. <br/>