Global Impact on the US oil pipeline supply chain configuration

An article in the New York Times (17 Nov, 2011) describes the ripple effect of decreased Venezuelean crude supply (due to the political stress in Venezuelan-US relations) on capacity utilization at Texas refineries that process heavy crude. The alternative crude source from Canada that reaches Cushing, Oklahoma, faces decreased pipeline capacity to Texas refineries. The large stockpiles of Canadian crude in Cushing has depressed prices. The alternative – buy a pipeline that used to ship from Texas refiniries to Cushing, and reverse flow. But the Canadian pipeline owner expects to add more capacity thus generating excess pipeline capacity from Cushing to Texas refineries.  Why would the Canadian pipeline owner, who ships the crude to Cushing, create excess pipeline capacity to Texas? If this pipeline decreases oil dependency on Middle East sources, should the potential environmental impact of the pipeline route be compared to the current supply route’s impact or be treated in isolation? How robust is this new pipeline supply chain to changes in geopolitical relationships i.e., with Venezuela?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Supply Chain Issues and tagged , , , , . Bookmark the permalink.

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