Crude oil production is up, and there’s a glut of oil bottle-necked in Cushing storage tanks.
Producers want free-flowing oil, but some refiners say the pipelines might mean higher prices at the gasoline pump.
For a long time, the price of oil in Cushing — which is known as the West Texas Intermediate — was higher than its sweet light sibling, the Brent Crude, which comes from the North Sea.
In recent years, that trend has flipped, with WTI selling for as much as $30 a barrel less than Brent. On Friday, WTI closed at $103.17 a barrel, $19.90 lower than the Brent price of $123.07 a barrel, reports the The Oklahoman’s Adam Wilmoth.
That discrepancy is costly.
Mid-continent producers make less money. So does Oklahoma itself. That price difference means the state is losing about $100 million in gross production taxes, Oklahoma Energy Secretary Michael Ming tells the paper.
Mid-continent producers say new pipelines will help close the gap between the two crude prices without increasing gasoline prices.
But refiners like Valero say the price gap is the very reason Oklahoma and the rest of the Mid-continent have such relatively low gasoline prices. If the price of West Texas Intermediate increases, regional pump prices might follow.
“If anything, consumers particularly in the Rocky Mountain region may see prices increase as the price in these regions align with international prices,” Lorne Stockman, a spokesman for the Washington-based Oil Change International, a group that promotes renewable energy, tells The Oklahoman.