Bottleneck In US Pipeline Network Driving Up Cost Of Crude Imports

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A new report on the oil and gas sector by professional services firm Ernst & Young shows the U.S. pipeline network is increasingly out of sync with crude supplies.

The U.S. crude pipeline network was primarily designed to move crude from the Gulf Coast to the north. That’s creating a problem as output increases at unconventional fields in the northern U.S. and Canada.  

Marcela Donadio is Ernst & Young’s Americas oil and gas sector leader. She says it’s causing an increasing disconnect between the prices of West Texas Intermediate oil, the U.S. benchmark, and Brent crude, the standard for most international supplies.

“Right now, you’re seeing a discount of WTI pricing of about $15 when compared to Brent, and it is a reflection of that, the fact that there are abundant supplies that really cannot be readily moved from Cushing, Oklahoma, to the Gulf Coast to the East Coast.”

Donadio says the result is that U.S. businesses are paying more for feedstocks derived from imported crude. That’s adding to upward pressure on prices for gasoline, jet fuel and other petroleum products.

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...