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Crude oil pipeline constraints: A tale of two shales

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  • Luong, Phat V.

Abstract

Permian and Williston Basins are both experiencing takeaway pipeline bottlenecks. The price of Bakken sweet crude in Williston is still cointegrating with the national West Texas Intermediate (WTI) benchmark and downstream gasoline market while the Midland crude price in Permian Basin is not. The Midland price only reintegrated with WTI as well as regional gasoline price after the takeaway bottleneck is alleviated. This is because of the rail system developed in the Williston Basin that allows Bakken crude to reach other trading hubs and downstream markets even when pipeline bottlenecks occur. Blocking the constructions of pipelines will not prevent the flow of oil because more oil will be moved by trucks, railways, and barges. These shipping modes are more expensive and are not as safe and efficient as pipelines.

Suggested Citation

  • Luong, Phat V., 2023. "Crude oil pipeline constraints: A tale of two shales," Resources Policy, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:jrpoli:v:80:y:2023:i:c:s0301420722006468
    DOI: 10.1016/j.resourpol.2022.103203
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    References listed on IDEAS

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