An announcement you may not have heard this last Wed. may have a lot to do with how much we are going to pay at the pump.
First, the worldwide price of oil is usually either quoted as the Brent Sea price (close by the U.K.) or WTI, meaning West Texas Intermediate as measured in Cushing, Oklahoma where a lot of U.S. oil refining is done. About a year ago the two prices diverged sharply with Brent Sea crude going up 40% at one point and WTI rising only half as much. As recently as early October the gap between the two prices was as much as 40%. Since the U.S. uses mainly oil processed in the Southern U.S., our prices were largely based on the lower West Texas price.
Now, a little company named Seawater Crude Pipeline Co. has bought a pipeline near Cushing, OK from Conoco Phillips. They plan to pump oil in the opposite direction Conoco did – pumping it away from Cushing rather than to it, thus relieving the oversupply of oil in Cushing that had depressed the price there.
Just recently, WTI crude has closed 1/3 of the gap with Brent crude and over the next few months will probably close it entirely. If Brent crude’s price stays where it is, that would mean the price of WTI crude, the one most gasoline pumps in the U.S. are priced on would go up by another 20%. Get set for higher gas prices.