Pipeline: The Worst Transportation Method of Oil, Except for All the Rest

Abstract

This paper studies the safety and environmental impacts of different crude oil transportation methods. The frequency, spillage volume, and environmental damage costs of pipeline accidents seem to be significantly higher than of trains and trucks. However, after adjusting for the distance and volume of oil transported by each method, pipeline has the lowest number of accidents, the least amount of oil discharged and the smallest environmental damage and clean-up cost per ton-mile. Moreover, lacking oil transmission pipeline hinders the producer's ability to collect associated gas. Consequently, the gas is flared or vented. The Granger causality between the excess takeaway capacity of oil pipeline and natural gas flaring confirms the impact of having inadequate transmission pipeline capacity.

Keywords: Pipeline, oil spill, gas flaring

JEL Classification: G12, G14, G18