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EIA: Logistics constrain U.S. oil benefits

July 17, 2013 at 8:13 AM   |   Comments

WASHINGTON, July 17 (UPI) -- Transportation constraints in the U.S. crude oil market mean it's going to take awhile before the average consumer sees any benefits, an energy director said.

New drilling methods are giving energy explorers access to oil deposits in North Dakota and Texas that were previously off limits. U.S. oil production is increasing to the extent that it is catching up with Saudi Arabia.

Senate Energy and Natural Resources Committee Chairman Ron Wyden, D-Ore., said in Tuesday testimony he was frustrated because U.S. consumers haven't seen many benefits from production gains.

"Oil supply is up, demand is down, but prices at the pump are stubbornly high and sometimes are as volatile as the gasoline itself," he said.

The average price for a gallon of regular unleaded gasoline has increased steadily since the July 4 holiday. AAA reports a Wednesday national average price of $3.65 per gallon, a 4.2 percent increase from a week ago.

Adam Sieminski, director of the Energy Department's Energy Information Administration, testified about the logistical constraints on the domestic market.

"Currently, transportation constraints are limiting the full impact of increased domestic crude production, but these constraints are expected to ease in the coming years," he said.

Oil production gains have strained existing pipeline capacity in the United States, making it more difficult for refiners to take advantage of the domestic oil boom.

EIA expects a seasonal average price for gasoline of around $3.53 per gallon. The average price for a gallon of gasoline at this time last year was $3.40.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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