There is a glut of oil in the U.S., and a pipeline operator has introduced a new plan to get oil out of storage and further reduce declining oil imports, according to a report in the Wall Street Journal.
Enbridge Inc. recently announced it would reverse the direction of flow in the Seaway pipeline, which links the oil supply hub in Cushing, Okla., with the world's largest refinery complex along the Gulf Coast.
Over the past two years, the U.S. has started producing so much oil that existing pipelines have been unable to move it to refineries, according to the Journal. That has led to oversupply in the center of the country, keeping the price of American crude far below that of petroleum traded overseas.
Enbridge is seeking to move oil out of Cushing, which is expected to create jobs, reduce oil imports and increase gasoline exports, according to the Journal article. "It's hard to overestimate the significance" of reversing the pipeline, said Antoine Halff, lead industry economist at the U.S. Energy Information Administration. It is the start of a process to reconfigure the U.S. pipeline system to carry increased domestic oil production to the Gulf Coast, he told the Journal.
For decades, oil has been imported from overseas to the Gulf Coast, then either refined there or moved elsewhere in the U.S. for processing, but booming U.S. oil production and declining imports mean oil now needs to move from north to south. U.S. oil production, which had been declining since the 1970s, is climbing again, according to the Journal article.
After bottoming out at five million barrels a day in 2008, domestic production has jumped by 10% in the past couple of years. To read the Wall Street Journal story, click here. To read a Businessweek article on the Seaway pipeline, click here.