April 18th, 2014
by Chad Wilkerson, Vice President and Oklahoma City Branch Executive, and Nida Cakir Melek, Economist - Federal Reserve Bank of Kansas City
Oil transportation in the central United States is undergoing an historic realignment in response to the recent shale oil boom. Rising oil production in the middle of the country increased inventories due to inadequate pipeline capacity, which caused a spread between the benchmark U.S. crude oil price in Cushing, Oklahoma, and the global benchmark, Brent. These motivated the usage of alternate but costlier modes of transportation, such as rail, as well as increased pipeline capacity.