With pump prices reaching record levels for this time of year, consumers often ask the question why oil companies make these unprecedented levels of income, while consumers get the shaft. While many reasons exist, pipelines seldom get a mention.
Protests to block the construction of the XL Keystone pipeline, which would carry Alberta crude oil to Texas, were front and center in the headlines early this week. Meanwhile pump prices in the US are nearing $5 a gallon and oil producers have claimed the normal reasons for the increase. These include refinery maintenance and the switch to summer fuels. What is seldom discussed is how pipelines and and inability to move oil to refineries is affected. As one looks into pipeline politics, one becomes aware of the hypocrisy of it all.
It doesn't take rocket science that high fuel prices affect every aspect of our life, from our driving habits to the price of food and the overall effect on the economy. There are many factors that affect the price of oil and often people seek to blame a politician as the scape goat, but there is no easy answer to the oil price puzzle.
A Tip News report has added another factor into the mix. According to the report the Seaway pipeline operators have been troubled by distribution problems, but plans to pump 295,000 barrel a day between the end of February to mid-May.
US crude prices advanced "on reports of increasing oil volume through the Seaway pipeline," IG Markets Singapore said in a report, referring to the pipeline serving Gulf Coast refineries.
The Seaway pipeline has recently been troubled by distribution problems but plans to pump 295,000 barrels a day between late February and the end of May, media reports said.
Seaway is seen as a critical component in addressing a glut of oil at the bottlenecked US hub in Cushing, Oklahoma.
The pipeline's capacity was recently expanded to 400,000 barrels a day from 150,000 barrels, but the operator has encountered technical problems that have limited the volume.According to Wikepedia the Seaway Crude Petroleum Pipeline System (SCPPS), transports oil from Cushing, OK and Freeport, TX near Port Arthur, TX. The pipeline, which originally transported cheap foreign oil from seaports to Cushing, had its flow reversed in June 2012. With an initial capacity of 150,000 barrels a day, the operator has upgraded it to 400,000 barrels a day.
Taking politics aside, despite all the protests against the XL Keystone pipeline, the demand for oil and distribution problems have pushed up prices at the pumps. While not the only factor, it is an important one. Currently the Keystone pipeline already carries 450,000 barrels of oil a day to Illinois. The XL Keystone pipeline, once completed, would double the volume of oil transported to TX and alleviate a critical supply distribution problem.
While consumers pay the price at the pumps, with few other options but to cut consumption, approval of pipelines are in limbo. It seems the more you dig the more you find. There are good reasons to move to green energy and to move away from fossil fuels, but for the time being that option is limited. With fossil fuel remaining the main energy source in the foreseeable future and given the consumption habits in North America, the move toward energy independence, which includes wind, solar power and bio fuels becomes more relevant.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com