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Pipeline Flip Turns U.S. Oil World 'Upside Down'
NPR ^ | 18 May 2012 | Jeff Brady

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.


TOPICS: Business/Economy; US: Colorado; US: Oklahoma; US: South Carolina; US: Texas
KEYWORDS: anwr; climatechange; colorado; cushing; economy; energy; gas; globalwarminghoax; keystonexl; oil; oklahoma; opec; peakoil; pipeline; southcarolina; texas

1 posted on 05/19/2012 1:52:02 PM PDT by Theoria
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To: Theoria

What happened to those ‘peak oil’ folks that were posting on FR so much a few years ago?


2 posted on 05/19/2012 1:59:10 PM PDT by PAR35
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To: Theoria

What happened to those ‘peak oil’ folks that were posting on FR so much a few years ago?


3 posted on 05/19/2012 1:59:17 PM PDT by PAR35
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To: Theoria
Just in time to turn the economy around for the 2nd coronation.

Has Mutt endorsed the usurper like his predecessor did? He will.

4 posted on 05/19/2012 1:59:40 PM PDT by rawcatslyentist ("Behold, I am against you, O arrogant one," Jeremiah 50:31)
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To: Theoria

Gas is still about $4.19/gal in our area


5 posted on 05/19/2012 2:06:52 PM PDT by goodnesswins (What has happened to America?)
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To: rawcatslyentist

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.


6 posted on 05/19/2012 2:08:26 PM PDT by UB355 (Slower traffic keep right)
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To: goodnesswins

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.


7 posted on 05/19/2012 2:11:36 PM PDT by Theoria (Rush Limbaugh: Ron Paul sounds like an Islamic terrorist)
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To: PAR35
What happened to those ‘peak oil’ folks that were posting on FR so much a few years ago?

As has happened at least three times in the past, technology has passed them by.

8 posted on 05/19/2012 2:13:13 PM PDT by okie01
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To: goodnesswins

We are at around $3.42 in NE Texas.


9 posted on 05/19/2012 2:21:20 PM PDT by Red_Devil 232 (VietVet - USMC All Ready On The Right? All Ready On The Left? All Ready On The Firing Line!)
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To: Red_Devil 232

$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.


10 posted on 05/19/2012 2:24:08 PM PDT by RegulatorCountry
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To: PAR35

“What happened to those ‘peak oil’ folks that were posting on FR so much a few years ago?”

They peaked out and went bust.


11 posted on 05/19/2012 2:25:19 PM PDT by Sea Parrot (I'll be a nice to you as you'll let me be, or as mean as you make me be.)
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To: Sea Parrot

Love your tagline.


12 posted on 05/19/2012 2:34:21 PM PDT by null and void (Day 1215 of our ObamaVacation from reality [and what dark chill/is gathering still/before the storm])
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To: Theoria
There is a glut of crude, but not because of so much production. Oil sands and shale take huge facilities to produce, facilities that are not yet built.

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.


13 posted on 05/19/2012 2:54:42 PM PDT by American in Israel (A wise man's heart directs him to the right, but the foolish mans heart directs him toward the left.)
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To: Theoria
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.

< snip >

Other energy companies have other pipelines planned, including TransCanada's controversial Keystone XL pipeline.

No bias on NPR at all...

14 posted on 05/19/2012 2:59:53 PM PDT by aposiopetic
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To: PAR35
"What happened to those ‘peak oil’ folks that were posting on FR so much a few years ago? "

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...

15 posted on 05/19/2012 3:15:29 PM PDT by SuperLuminal (Where is another agitator for republicanism like Sam Adams when we need him?)
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To: American in Israel

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.


16 posted on 05/19/2012 3:28:43 PM PDT by reformedliberal
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To: Theoria
Cheaper oil.
Cheaper gasoline/diesel/avgas/JetA

That's going to piss off the enviro-wackos.

17 posted on 05/19/2012 3:30:17 PM PDT by grobdriver
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To: rawcatslyentist

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.


18 posted on 05/19/2012 3:30:24 PM PDT by galloway15
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To: aposiopetic

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.


19 posted on 05/19/2012 3:37:01 PM PDT by phoneman08 (Reagan conservative union member. Not a s rare as you think!)
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To: Theoria

4.39 a gallon for reg. here in commiefornia.


20 posted on 05/19/2012 3:37:38 PM PDT by US_MilitaryRules (Unnngh! To many PDS people!)
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To: phoneman08

I want gas to be less than $2.00 per gal.

BTW, have you heard the scam politicians are trying to pull to move taxes from per gallon to percentage of sale?

For years and years, they had it per gallon because they got more that way. Now, with more efficient cars and higher costs per gallon, the scamsters want to switch the game.


21 posted on 05/19/2012 3:42:45 PM PDT by FreeAtlanta (Liberty and Justice for ALL)
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To: Theoria

“...as cheap as $3 a gallon...”

Not nearly cheap enough.


22 posted on 05/19/2012 3:43:18 PM PDT by pallis
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To: Theoria

$4.35 in San mateo California yesterday.


23 posted on 05/19/2012 3:52:43 PM PDT by funfan
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

Thanks Theoria.
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.
Remember in November -- Zero has set us up to fail, again and again.


24 posted on 05/19/2012 4:05:43 PM PDT by SunkenCiv (FReepathon 2Q time -- https://secure.freerepublic.com/donate/)
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To: funfan

Paid $4.35 in Sunnyvale yesterday — $125 to fill up my Expedition (which was on fumes). An all-time record for a fill-up. I just love the wisdom of Obamanomics.


25 posted on 05/19/2012 4:46:31 PM PDT by ProtectOurFreedom
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To: PAR35
Hmmm. Brent oil $110.00 a barrel when it used to be $2.00 less than WTI oil which is our oil. We pipe our oil to Cushing Oklahoma where it is piled up. No ports in Cushing. If we could only turn that pipeline around and send the oil to New Orleans, then we could ship it to Europe for about a buck a barrel, nice profit. Now do you see peak oil raising its head again for oil prices in The US?
26 posted on 05/19/2012 4:51:28 PM PDT by The Old Commander (Anyone who votes for Obama is either delusional or a moron)
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To: PAR35
Hmmm. Brent oil $110.00 a barrel when it used to be $2.00 less than WTI oil which is our oil. We pipe our oil to Cushing Oklahoma where it is piled up. No ports in Cushing. If we could only turn that pipeline around and send the oil to New Orleans, then we could ship it to Europe for about a buck a barrel, nice profit. Now do you see peak oil raising its head again for oil prices in The US?
27 posted on 05/19/2012 4:51:34 PM PDT by The Old Commander (Anyone who votes for Obama is either delusional or a moron)
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To: goodnesswins
Gas is still about $4.19/gal in our area

The price of gas isn't reflective of supply these days. 

28 posted on 05/19/2012 5:06:45 PM PDT by zeugma (Those of us who work for a living are outnumbered by those who vote for a living.)
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To: FreeAtlanta

Yeah, Georgia Gasoline tax has been a percentage of price for as long as I remember. Figures the Feds want to move this way as well. Sure it will sold to us as revenue neutral.


29 posted on 05/19/2012 5:49:34 PM PDT by phoneman08 (Reagan conservative union member. Not a s rare as you think!)
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To: ProtectOurFreedom
This really ticks me off because I do not hear anything about it from either side. The prices started going up right after Obama took office and pretty much have gone
upward ever since. I feel bad for my kids one has an Explorer and the other has an Escape and it is eating up their income. When my kids were in school we were paying for their gas so I was glad it was on the lower end and was happy when they moved out and took charge of paying for their own gas but now that it is so high it is as if we are not seeing any cost reduction. It seems like every time we get a little ahead here comes the government to screw it all up. They all suck especially Obama!!!!!!!!! Just wait till the Bush tax cuts go away then it will be even worse and my kids rates will go up 12%--you know the tax cuts for the rich funny my kids are from for rich about 60K. Those so called tax cuts for the rich really benefited the lower and middle incomes now that will be gone too and gas will go to $5.00 a gallon. Ugh sorry for the rant
30 posted on 05/19/2012 9:35:21 PM PDT by funfan
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To: RegulatorCountry

It’s all over the place here in Durham...some stations on the north side of town last weekend were at $3.52, but our corner station here on the southwest side isn’t budging from $3.70. Gas getting more expensive the closer one gets to Chapel Hell, imagine. Who knew?

}:-)4


31 posted on 05/20/2012 5:10:40 AM PDT by Moose4 ("Oderint dum metuant" -- "Let them hate, as long as they fear." (Lucius Accius, c. 130 BC))
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To: Theoria

Fracking is saving the U.S. economy.


32 posted on 05/20/2012 5:17:32 AM PDT by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: aposiopetic
No bias on NPR at all...

I swear these writers have to occasionally do a symbolic "Heil Hitler". These writers put in words like this to demonstrate their "fairmindedness" (actually loyalty to the cause - just like a Heil Hitler) to their other "fairminded" peers.

33 posted on 05/20/2012 5:46:20 AM PDT by BRL
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To: American in Israel
Bears repeating, with emphasis :

"The oil glut is from the depression. People are using a whole lot less gas then they were before Obama took office."

$3.49 in central PA this weekend.

34 posted on 05/20/2012 5:50:46 AM PDT by tomkat (:^)
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To: Moose4
The lower sales volume stores here still have premium at $3.92 when I know for a fact that it can be had for twenty cents less per gallon, so I have to pay close attention when filling up the car that needs it.

Some of the variation is local tax, or so I understand. Some of it is sales volume, they've still got their tanks full of gas for which they paid more than the current retail price.

The variation is inverted from recent patterns here, too. For the past several years, you'd get nailed buying gas anywhere near an interstate, but now it's cheapest near an interstate.

Why that is, I couldn't say, unless it's the sales volume thing and they're benefitting from rapidly falling wholesale while the slower sales volume places aren't yet.

35 posted on 05/20/2012 5:59:46 AM PDT by RegulatorCountry
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To: Southack
Fracking is saving the U.S. economy.

It's helping a lot despite the efforts of the most ignorant ungrateful POS in America, the Democrat party that despises oil, gas, coal and electricity producers. Total idiots whose patron saint is that wrecker of economies, Robert Mugabe.

36 posted on 05/20/2012 7:37:19 AM PDT by dennisw
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To: American in Israel

Your chart: “Monthly US Total Gasoline Retail Sales by Refiners” is very misleading.

Only a small portion of the Gasoline Retail Sales is by the Refineries. As your first chart and second chart together show, far more Gasoline is sold to Retail by Blenders, not Refiners. The Refineries mostly sell to the Blenders, not direct to retail.

If you want to see total gasoline sales in the US, the total data is found at:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS2&f=M


37 posted on 05/21/2012 5:19:43 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

Thanks for the link! Great data. I notice that the downturn still shows, but in a much more realistic way. I wonder what triggered the odd chart I posted.


38 posted on 05/24/2012 1:07:26 PM PDT by American in Israel (A wise man's heart directs him to the right, but the foolish mans heart directs him toward the left.)
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To: tomkat
$3.49 in central PA this weekend.

Its $4.45 this weekend in Alaska.

39 posted on 05/24/2012 1:10:05 PM PDT by American in Israel (A wise man's heart directs him to the right, but the foolish mans heart directs him toward the left.)
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To: American in Israel
On vacation, or need to change yer nick ?   ;-)
40 posted on 05/24/2012 1:29:13 PM PDT by tomkat (:^)
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To: American in Israel
I wonder what triggered the odd chart I posted.

That chart is from this data set:

U.S. Total Gasoline Retail Sales by Refiners
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M

What has happened is the way the sales market is sent to retail has changed. It used to be a higher percentage of the sale to the local retailer was direct from the refinery.

Now much more of the gasoline is sent first to a blender, then the blender sells the finished product to the local retailer.

I think two items have created this trend. The blending of ethanol and the addition of more special gasoline requirements in different areas.

The ethanol does not ship well through pipelines used for gasoline due to it being miscible with water. As a consequence, ethanol tends to be added downstream of the refinery at a local blender. More refineries now produce more gasoline blending products in place of finished motor gasoline.

You can see the drop started ~2004 and became more significant with the new ethanol requirement by 2007.

41 posted on 05/24/2012 2:09:04 PM PDT by thackney (life is fragile, handle with prayer)
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To: American in Israel

I should have included this link:

U.S. Total Gasoline All Sales
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=C100000001&f=M

When we look at ALL SALES and not just “Retail Sales by Refiners”, you see a much different curve and a much greater volume.


42 posted on 05/24/2012 2:12:34 PM PDT by thackney (life is fragile, handle with prayer)
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