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Pipeline Flip Turns U.S. Oil World 'Upside Down'

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Pipeline Flip Turns U.S. Oil World 'Upside Down'


Pipeline Flip Turns U.S. Oil World 'Upside Down'

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.


And I'm Melissa Block. The Seaway Pipeline is used to move oil from the world market into the middle of America. The oil travels 500 miles north from the Texas coast to Oklahoma for storage and distribution, but starting this weekend, oil will travel the other way, south. That's one symbol of an American oil boom and, as NPR's Jeff Brady reports, the change at the Seaway Pipeline could have implications at the gas pump.

JEFF BRADY, BYLINE: The reason is because where America's oil comes from is changing. Controversial practices, like mining the oil sands of Alberta and hydraulic fracturing, are creating oil booms in the middle of North America.

For decades, oil in this country flowed from the south to the north.

PHILIP VERLEGER: Today, oil flows south. It's as if we turned the world upside down.

BRADY: Philip Verleger is a visiting fellow at the Peterson Institute for International Economics. He says increasing production in the middle of the country has oil gushing into huge tanks in Cushing, Oklahoma. All that surplus oil means a barrel in Cushing sells for $15 to $20 less than on the coasts. There's lots of money to be made by transporting that cheaper oil to refineries in Texas.

The two companies that own the Seaway Pipeline will ultimately move 400,000 barrels a day out of Cushing to Texas. Verleger says other companies also have pipelines planned, including TransCanada's Keystone XL.

VERLEGER: Where, a year ago, there was no capacity to move oil from Cushing down to the Gulf Coast, I suspect, in a year, year and a half, that it's going to be up to a million barrels a day of capacity.

BRADY: That should boost oil prices in Cushing, which will help small oil producers in places like Oklahoma, but big changes in the oil business often lead to winners and losers.

Tom Kloza is an analyst with the Oil Price Information Service and he says some gasoline prices will be higher.

TOM KLOZA: Drivers in the Midwest, upper Midwest and the West, like Colorado and perhaps parts of Texas, may see a slight increase relative to the rest of the country.

BRADY: Kloza says back on the winner's side will be drivers along the Gulf Coast and in the Southeast. All that cheap oil from Cushing moving to the Gulf will mean lower gasoline prices there. He says some places with low gas taxes, like South Carolina, could see fuel as cheap as $3 a gallon in coming months.

Jeff Brady, NPR News.

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