Marine Atlantic, like many other transportation providers, charges a fuel surcharge to help offset the cost of fuel to operate our service.
While international crude oil prices are currently trending downward, that doesn’t mean Marine Atlantic is seeing any cost savings. In actual fact, the price per litre Marine Atlantic is paying today for fuel is more than it has been anytime in the past five years. Confused? It has to do with our requirement to meet new environmental regulations that dictate lower emissions and sulphur content for vessels in European and North American waters. As a result, we have to use cleaner, more expensive fuel to operate our vessels, and that means our fuel costs are increasing, not decreasing.
Marine Atlantic is subject to international and national regulations governing emissions from fuel used to operate vessels. We have phased in targets to meet Canada’s Vessel Pollution and Dangerous Chemicals Regulations, with the requirement of reducing sulphur content to 0.1 per cent. We have been changing our fuel blends to a cleaner burning fuel, with the eventual composition to be 100% marine diesel by 2018.
Marine Atlantic has been concerned about the increasing cost of fuel, combined with the costs associated with the new emissions regulations for some time. As a result, we have undertaken a number of initiatives in recent years, including powering ships from shore while in port and improved voyage planning. This has allowed us to avoid increasing the fuel surcharge despite the rise in the cost of fuel. If oil prices continue to trend downward as we are implementing the changes required to meet the new regulations, then future fuel surcharge increases will not be as significant as otherwise would have been necessary. The cost of fuel is expected to be an ongoing challenge for Marine Atlantic into the foreseeable future.
So while there may currently be a downward trend in oil prices, Marine Atlantic is seeing a significant increase due to our requirement to meet new regulations. The benefits of these changes will mean a cleaner environment and less pollution from our vessels. Unfortunately, the downside will likely mean a higher cost for our customers.
We will continue to monitor our fuel surcharge, oil prices and our regulatory commitments to determine what, if any, adjustments may be required in the short-term future. However, due to the above mentioned facts, there is no planned reduction to the current fuel surcharge.