Pipelines Provide the Supply for Lower Gas Prices

Supply and Demand

While many factors go into determining the price of gasoline at the pump, supply and demand is a big one. It’s basic economics: if supplies are higher, then prices will fall. Pipelines are the best way to deliver new supplies. The Federal Trade Commission has reported that prices in an area tend to fall when there are expansions to pipelines serving that area.

Pipelines Delivering New Production Supplies

Pipelines are connecting rising crude oil production from North Dakota, Texas, Canada and in between. This glut of new production kept American crude oil prices $10 to $20 below world crude prices throughout 2012, with Canadian crude prices $25 and more below world prices. Consumers can benefit from these lower crude prices, with lower gas prices or protection from even higher world prices. A study by the U.S. Energy Information Administration showed that when prices were at their highest point in 2012, consumers with good pipeline access in the Mountain West, Midwest and South paid lower gas prices than the rest of the country.

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