200 Million Barrels Of Crude Sitting In Texas Tank-Farms

200 Million Barrels Of Crude Sitting In Texas Tank-Farms

Can't sell it overseas, can't ship it to the U.S.
by John Pendleton  |   Thursday, April 10, 2014
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The tank farms are filling up from Alabama to New Mexico. The reserves stockpiled in that region, with Houston at its center, are at record-setting highs totaling more than 200 million barrels.

The final stretch of the Keystone XL pipeline has yet to be completed, but there are other pipelines bringing oceans of light, sweet oil to the coast. Bank of America Corp. forecasts suggest that the glut will make West Texas Intermediate oil $13 per barrel less expensive than Brent, which is the international benchmark. For the first time in 25 years American oil production has hit 8.23 million barrels of crude per day.

The problem is that other than shipping oil by railroad taker car, there are few options when it comes to getting the oil from the refineries and tank farms near the gulf to the East and West coasts of the United States.

Out of the roughly 2,400 oil tankers that comprise the global fleet, there are only 13 that qualify as "Jones Act" vessels. The Jones Act was passed nearly a century ago and requires all seaborne trade, between one U.S. port and another, to be shipped on vessels crewed by American citizens and owned, flagged and built in the U.S.

There just isn't anywhere near the shipping capacity that is needed to move the oil to refineries on the coasts.

Foreign markets would be glad to buy our oil but a law passed in 1975 bans the export of most U.S. crude.

California, home to about 12% of the nation's population, has become highly dependant on imports of crude by rail. The state's own production is unable to keep up with demand at the same time that production from its traditional go-to source, Alaska has been declining.

In 2009, 45,000 barrels of oil came into California by rail, but by 2013, that number had skyrocketed to 6.2 million barrels.

Until Congress takes some kind of action to repeal outdated laws, the backlog of crude will continue growing in the tank farms and more and more trains will keep rolling west to California.

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JAMES | Sunday, June 08, 2014
Amazing how outdated laws and attitudes are handicapping our
Country's economic growth.
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