So much for the economic laws of supply and demand or "drilling our way" to cheap gas prices. It's not that simple when it comes to oil. Dan Strumpf explains what's behind the latest surge in oil prices. Oil markets and infrastructure play key roles.
It's well known that the U.S. is experiencing an unprecedented boom in oil production due primarily to hydraulic fracturing of shale basins in Texas and North Dakota which doubled and tripled production, respectively, since 2010 according to the Energy Information Administration (EIA). By 2020, the U.S. should overtake Saudi Arabia as the world's top producer, the Paris-based International Energy Agency reported last November.
Only more recently has light been shed on the lack of infrastructure to take all this new oil to refineries. Lesser known is how the price differentials between the two oil markets for trading oil, the U.S. benchmark West Texas Intermediate (WTI) and the global crude-market benchmark, North Sea Brent, affect what motorists pay at the pump.
The spread, which was more than $23 per barrel ($/bbl) in mid-February, fell to under $9/bbl in April, and has ranged between $6/bbl and $10/bbl since then. [EIA, June 28, 2013]
The glut of domestic oil that had trouble finding its way to refineries caused the WTI price to lag well behind Brent which in turn affects oils futures prices on the New York Mercantile Exchange (Nymex). The price difference was as great as $28 in October, 2011. But that's changed now, as infrastructure, while still lagging, has begun to catch up, reducing stockpiles of oil which in turn affects oil prices in the U.S..
The jump in prices (in mid-July) was sparked by data showing a bigger-than-expected drop in U.S. crude-oil supplies last week, according to the federal EIA. Several recently opened pipelines and rail routes are helping oil companies tap into the huge pool of supplies that were previously trapped in the middle of the country.
Increased oil delivery to Gulf refineries means they are churning out increased refined petroleum products, e.g. diesel and gasoline, much of which is being exported where demand is indeed increasing.
Now, money managers with bets on U.S. oil prices once again have to contend with the appetite for gasoline and diesel around the world, and especially in emerging markets. The oil that was trapped in and around Cushing, Okla., a key storage hub, is flowing more or less freely to the Gulf Coast, where refiners are taking it, processing it and shipping it overseas in increasing volumes.
The price gap has changed rapidly. On July 10, the date Strumpf wrote his article, oil was priced at $106; $2 less than Brent. Reuters reported on July 19 that not only had the gap closed, but that "U.S. oil futures traded above the global crude-market benchmark, North Sea Brent, for the first time since 2010 as signs of strong demand from U.S. refiners boosted spread trading and bets that the era of the U.S. discount was ending." The closing price on July 19 for WTI was "near a 16-month high above $108, while Brent settled lower."
FULL STORY: U.S. Oil Soars Above $106 to 15-Month High

Rethinking Redlining
For decades we have blamed 100-year-old maps for the patterns of spatial racial inequity that persist in American cities today. An esteemed researcher says: we’ve got it all wrong.

Planetizen Federal Action Tracker
A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

Walmart Announces Nationwide EV Charging Network
The company plans to install electric car chargers at most of its stores by 2030.

Knoxville Dedicates $1M to New Greenway
The proposed greenway would run along North Broadway and connect to 125 miles of existing trails.

Philadelphia Launches ‘Speed Slots’ Traffic Calming Pilot
The project focuses on a 1.4-mile stretch of Lincoln Drive where cars frequently drive above the posted speed limit.

NYC Delivery ‘Microhubs’ Aim to Cut Down on Truck Pollution
The hubs are designed to provide parking for large delivery trucks, which can pass on their cargo to bikes or other zero-emission vehicles.
Urban Design for Planners 1: Software Tools
This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.
Planning for Universal Design
Learn the tools for implementing Universal Design in planning regulations.
City of Moorpark
City of Tustin
City of Camden Redevelopment Agency
City of Astoria
Transportation Research & Education Center (TREC) at Portland State University
Regional Transportation Commission of Southern Nevada
Toledo-Lucas County Plan Commissions