The hidden costs of cheaper oil

[Louis Proyect <lnp3@xxxxxxxxx>]

NY Times, June 26, 2004
China Pays a Price for Cheaper Oil
By KEITH BRADSHER

HONG KONG, June 23 - With toxic lead finally disappearing from most of
the world's gasoline, a new air pollution fight is emerging around the
globe over how much sulfur to allow in fuel. Rapidly developing
countries like China, India, Thailand, Mexico and Brazil, where
ownership and use of cars and trucks is soaring, are on the front lines.

High levels of sulfur contamination occur naturally in some crude oil,
especially from the Mideast and Russia. This "sour" oil is ordinarily
harder to sell and fetches a lower price than "sweet" low-sulfur crude,
because it is more difficult to refine and because environmental laws in
the United States and Europe already impose tight ceilings on sulfur in
fuel, limits that are set to grow still tighter over the next decade.

But this year, oil producers are pumping and selling all the oil they
can to meet surging demand, and the extra oil they are able to bring to
market is, to a great extent, high in sulfur. With sweet crude
commanding the highest prices, many refineries in China and elsewhere
are buying cheaper sour crude, and turning it into fuels that may
contain many times more sulfur than the gasoline and diesel sold in the
United States or Europe.

Environmentalists call sulfur the world's biggest single contributor to
air pollution. It forms noxious gases like sulfur oxides, and it causes
diesel engines to spew more soot. And high-sulfur fuel quickly ruins the
catalytic converters installed on new gasoline-powered cars, defeating
one of the main efforts in countries like China to cut down on the harm
that vehicles do to air quality.

"Sulfur is definitely the lead of the future," said Robert Cox, the
fuels manager at the International Petroleum Industry Environmental
Conservation Association, a London-based trade group supported by oil
companies.

The oil industry has called on automakers to develop new catalytic
converters that are more sulfur tolerant, while acknowledging that
sulfur is a significant problem, especially in developing countries with
limited budgets. Mr. Cox said that in September or October the trade
association would issue its recommendations for what levels of sulfur
are attainable for countries at various levels of economic development,
adding that "sulfur has got to be the next issue."

The problem is especially acute in China, where car sales have been
rising by close to 80 percent a year, creating huge traffic jams and
contributing to some of the world's worst air pollution. At the same
time, Chinese refineries have emerged as the world's most aggressive
buyers of high-sulfur crude oil.

"They really need to ratchet down very quickly on their emissions
standards, or their cities are going to become unbearable," said Michael
P. Walsh, a former top American air-quality regulator who now works as a
consultant to the Chinese government and other developing countries on
air-quality issues.

full: http://www.nytimes.com/2004/06/26/business/worldbusiness/26sulfur.html

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