The Real Cost of Transporting Oil: The Journey of a Molecule

Posted by Bob Kessler

Transportation is a key component to the cost of every gallon of gasoline we buy.  This starts at the wellhead and ends at the pump.  To appreciate the full journey (and the cost of that journey), let’s follow an oil molecule from a well in the Bakken shale region to your tank. crude oil molecules resized 600

The molecule reaches the earth’s surface and is placed in a small holding tank near the well waiting for transport to a refinery.  This journey will have more than one leg.  The first leg will either be a pipeline gathering network or a truck ride to a larger gathering facility.  At the gathering facility the molecule has a few options depending on availability.  It could move by pipeline, truck or rail.  In most cases, the oil will move via pipeline or rail.  Tank stops at terminals and additional transfers to barge are very possible on the molecule’s way to the refinery if there is a waterway along the route.  As the molecule approaches the refinery, it needs a place to stay until processing time.  This is a storage tank either owned by the refinery or a neighboring 3rd Party terminal. 

Once refined, the processed molecule leaves the refinery destined for your gas tank - however it still has a complex journey to complete.  Pipeline, ship or Barge to a tank in a nearby fuel terminal and a truck from the terminal to your local gas station.  All these logistics cost money.  It is estimated that 8-10 cents of every dollar of gasoline is associated with the journey of an oil molecule from the well to your tank.  Midstream companies recognize this and are always looking for more cost effective ways for transporting oil.  Hence the large demand for pipelines right now.  Moving oil via pipeline is substantially cheaper than any other form of transport.

PortVision provides products and services to support that oil molecule along many legs of its journey.  If you would like to learn how PortVision can help your “molecules”, contact us today.

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Posted on Oct 8, 2013, 12:21:00 PM

Topics: Blog