Originally posted by: Boilerman
Guys, I did some digging into oil transportation costs. On average, it costs $3 per barrel to move product by pipeline, however it costs an average $13 per barrel to move oil by train. Every $10 increase in oil cost drives up the refiner's gasoline cost by 24 cents per gallon. Plus, this oil is sour and would be used within the US, meaning that we would import far less crude in tankers from ugly countries. That would save an additional $3 per barrel in transportation costs.
Those figures can't be even remotely correct, because they don't factor in the respective distances involved. Pipelines consume energy--oil doesn't flow through them by magic.
(And Boiler may not realize this--but oil flowing from Canada to the US doesn't actually flow "downhill," even if it looks that way to him on a map.)
Here's the killer. Oil has to be trucked from wells to the pipeline inlet(s); then it has to be trucked from the pipeline outlet to refineries. There are thousands of railheads in the US but there will only be a few pipeline outlets, no matter what.
So comparing moving oil by pipeline to moving it by rail must take in the greater efficiencies of the latter, or the comparison is GIGO.