Last week, a major new oil pipeline was completed to connect processing facilities in Oklahoma with port refineries near Galveston, Texas, according to Platts.Drillers are celebrating.
But many Americans will soon begin to feel some pain at the pump.
Here’s the situation:
For years now, there’s been a massive bottleneck of crude at the deposit hub in Cushing, Okla. thanks to America’s domestic crude production boom.
It’s at Cushing that drillers send their product to be bought by refiners. (And it’s where the West Texas Intermediate benchmark price gets its name.)
But because of the supply glut, wholesalers have been able to bid down the price they’ve been paying.
As a result, states with easy access to Cushing product, especially in the Midwest, have enjoyed lower prices in recent years than other states on the East and West Coasts.
Those coast states must buy their oil at the worldwide Brent price.
But the new pipeline, called the Seaway, now has the capacity to carry all that new crude to the coast for export.
This means the bottleneck at Cushing will ease, which means less supply for people who buy at Cushing.
This means…higher gas prices.
SEE MORE: All The Factors That Affect Gas Prices >
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