The U.S. oil boom has created a glut of crude in Cushing, Okla., a major oil storage hub. This sign dubs the city the "Pipeline Crossroads of the World."
Posted on 05/19/2012 1:51:53 PM PDT by Theoria
The U.S. oil boom has created a glut of crude in Cushing, Okla., a major oil storage hub. This sign dubs the city the "Pipeline Crossroads of the World."
For years, Cushing, Okla., has been on the receiving end of a 500-mile pipeline funneling oil from the Gulf of Mexico to the American heartland.
Starting this weekend, that pipeline will start moving crude in the other direction. That flow reversal could soon have implications at gas pumps around the country.
"For 40 years, crude oil flowed north," says Philip Verleger, a visiting fellow at the Peterson Institute for International Economics. "Today, oil flows south. It's as if we turned the world upside down."
Until recently, it was assumed the days of oil-drilling booms in the middle of North America were over. But controversial practices, like mining the oil sands of Alberta and hydraulic fracturing, are changing that.
Today, oil drilling booms are producing huge quantities of crude in places like North Dakota.
Increasing production in the middle of the country has oil gushing into huge tanks in Cushing, Verleger says. All that surplus means a barrel of oil in Cushing sells for $15 to $20 less than on the coasts — and that means there's a lot of money to be made by transporting that cheaper oil to refineries in Texas.
The two companies that own the Seaway Pipeline — Enterprise Products Partners and Enbridge Inc. — will move 150,000 barrels a day out of Cushing to Texas to start. Next year, the companies will boost that to 400,000 barrels a day.
Other energy companies have other pipelines planned, including TransCanada's controversial Keystone XL pipeline.
A year ago, Verleger says, "there was no capacity to move oil from Cushing down to the Gulf Coast." Now, Verleger expects to see "up to a million barrels a day of capacity" flowing within the next 18 months.
That should bring Cushing's relatively low oil prices more in line with world prices.
Higher prices will help small oil producers in places like Oklahoma, who will earn more money for each barrel they sell.
But big changes in the oil business often lead to losers as well as winners. Tom Kloza, an analyst with the Oil Price Information Service, says the oil reversal out of the middle U.S. will drive gasoline prices higher in some parts of the country.
"Drivers in the Midwest, Upper Midwest and the West — like Colorado and perhaps parts of Texas — may see a slight increase, relative to the rest of the country," Kloza says.
Drivers along the Gulf Coast and in the Southeast will end up on the winner's side, he says. All that cheap oil from Cushing moving to the Gulf will mean lower gasoline prices there.
Kloza predicts that some places with low gas taxes — like South Carolina — could see fuel as cheap as $3 a gallon in the coming months.
After 17 years of operation, the Seaway Pipeline will reverse flow and send oil from the U.S. heartland to refineries on the Gulf Coast.
What happened to those ‘peak oil’ folks that were posting on FR so much a few years ago?
What happened to those ‘peak oil’ folks that were posting on FR so much a few years ago?
Has Mutt endorsed the usurper like his predecessor did? He will.
Gas is still about $4.19/gal in our area
Read the article. “Drivers in the Midwest, Upper Midwest and the West — like Colorado and perhaps parts of Texas — may see a slight increase, relative to the rest of the country,” Kloza says.
Wisconsin is now considered a swing state. Raising gas prices here will help kick the Kenyan usurper back to Chicago for good.
I paid 3.27 a gallon here in Texas today. I’m sure other areas are cheaper. The latest drop in prices are in result of Europe, not any pipeline.
As has happened at least three times in the past, technology has passed them by.
We are at around $3.42 in NE Texas.
$3.45 here in northwestern North Carolina. Should be a good ten cents less over the border in VA, we’ve got an infernally high “road tax” on gasoline here, they don’t.
“What happened to those ‘peak oil’ folks that were posting on FR so much a few years ago?”
They peaked out and went bust.
Love your tagline.
The oil glut is from the depression. People are using a whole lot less gas then they were before Obama took office.
Obama promised change, here it is. Note in this chart it clearly shows a source for excess oil production, the world still produces it at the same level, but the refineries are simply not using it. We use 200,000 barrels of gasoline less a day now from this time last year! This month Alaskan tankers returned from the west coast with oil in their holds that they could not sell. Cited were "refinery problems". Yeah, its a problem when nobody can buy your product and your tanks are full.
Here is another look at the recent trend:
Its not just oil, here is an electrical usage chart, note that prior recessions had very little effect. This indicates that what we are experiencing is not a long recession but a full blown depression.
< snip >
Other energy companies have other pipelines planned, including TransCanada's controversial Keystone XL pipeline.
No bias on NPR at all...
Hmmm...I can't recall there being any "peak-oil" flat-worlders being here on FR.
Must have been a bunch of those marxist trolls that are all over the place here...
I can vouch for the fact that we and everyone we know are squeezing our electric usage as much as possible. Unfortunately, business slowdown accounts for some of the electricity use reduction.
Besides reducing usage, anyone who has to replace a major electric appliance is usually doing so w/one that is more efficient. I know our replacements over the past 3 1/2 years have shown up on the electric bill.
That's going to piss off the enviro-wackos.
No, you have it wrong. The price of the oil in the northern States will increase to match the rest of the country not the other way around.
So now we may be so blessed to have “gas as cheap as $3 a gallon”.
Wasn’t but a handful of years ago $3 a gallon gas was 24x7 headline news. We truly are like frogs in a pot.
4.39 a gallon for reg. here in commiefornia.
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