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- Title
Decomposing Crude Price Differentials: Domestic Shipping Constraints or the Crude Oil Export Ban?
- Authors
Agerton, Mark; Upton Jr., Gregory B.
- Abstract
Over the past decade the primary U.S. crude benchmark, WTI, diverged considerably from its foreign counterpart, Brent, sometimes selling at a steep discount. Some studies pointed to the ban on exporting U.S. crude oil production as the main culprit for this divergence. We find that scarce domestic pipeline capacity explains half to three quarters of the deviation of mid-continent crude oil prices from their long-run relationship with Brent crude. We are unable to find evidence that mismatch between domestic refining configurations and domestic crude characteristics contributed significantly to this deviation. This implies that the short-run deleterious effects of the export ban may have been exaggerated.
- Subjects
PETROLEUM industry; PETROLEUM sales &; prices; PETROLEUM export &; import trade; PETROLEUM refining; PETROLEUM pipelines
- Publication
Energy Journal, 2019, Vol 40, Issue 3, p155
- ISSN
0195-6574
- Publication type
Article
- DOI
10.5547/01956574.40.3.mage