Oil Pipelines and Refineries

Earlier in the semester I posted about crude oil, and how it has to go through a refinery, and is often used quite close to the source.

Pipelines for water, oil, and natural gas are an essential part of the broader class of infrastructure.

Visual Capitalist has posted a map of North American pipelines and refineries. This is a screen capture:

 

The graphic on their site is interactive, and worth a visit. Lots more there.

Our local pipeline is not on here. It is big enough to be included, so perhaps the underlying data is old, or difficult to acquire in complete form. Also not on here is the Enbridge 5 pipeline from Michigan to Ontario, where needed upgrades are being blocked for political reasons (basically, a politician is against oil — which is OK, that's why we have elections — so they're blocking upgrades to something that's working fine ... which is kind of jerky). Also not shown is the partially built, but now cancelled, Keystone XL pipeline, which would have been just another one in the big complex going across the plains from Alberta to Texas.

So, a few macroeconomically important things here. 

First, pipeline work best where it's flat-ish: they're mostly across the middle of the country. This makes it easy for them to ship stuff all over, which means less price volatility in these regions. It does not usually mean lower prices: regional differences with that usually have a lot more to do with excise tax differences.

Second, the east and west coasts are isolated by mountains. Most of their oil is shipped in (on the right coast), or drilled in state (the left coast). This makes them subject to more volatile price fluctuations: they are oil islands.

Third, the biggest refineries are along the Gulf coast. This is only partially because Texas has a lot of oil. It's also because, historically, Venezuela was a huge input source for those refineries. Later on Mexico came online too. The economic suicide of Venezuela over the last 25 years has greatly reduced the workload at those refineries.

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A personal note here: if you know what to look for, you'll see a lot less oil trucks, oil train cars, and big storage tanks in the central part of the country. They're much more common east of the Mississippi and Ohio Rivers, and west of the Rockies. This is because the alternative to pipelines is not less oil, it's more truck and trains and tanks (and accidents). Most of you are economics majors, and you should always condition yourself to think about tradeoffs: lots of weak economic thinking by non-economists is not thinking enough about tradeoffs and alternatives.