You know that the Alaska oil pipeline is currently shut down due to a leak, but one thing that’s getting lost in this story is that this is not just an unpredictable mechanical problem.
This situation has been foreseen for years as Alaska oil production dwindles. Dwindling oil production means lower pressure inside the pipeline — lower pressure than what was anticipated when it was built — and thus more opportunity for structural breaks such as this one.
Thus the solution involves lots more exploration and oil production in Alaska, and it’s not obvious that that’s possible, at least anytime soon, or at current prices.
For now it’s likely the that this will be fixed soon — though in his morning letter Dennis Gartman talks a lot about how difficult this will be to due in current climate conditions — but expect more and more ruptures of this key artery going forward.
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