The reason: The United States is sitting on a greater quantity of oil — more than 500 million barrels at the end of January — than we have in living memory, according to data from the Energy Information Administration.
The nation hasn’t had so much crude oil in stock since 1930, according to a Feb. 28 Wall Street Journal article that suggests this has resulted in the filling up of much of the available petroleum storage space.
And this leads to a problem. When oil is so cheap — and as it continues to be produced in American oil at a swift pace — it makes economic sense to keep buying it to guarantee cheap fuel for the foreseeable future. But where can all that oil be stored?
One common and affordable space is in underwater salt caverns, while another, at triple the price, is aboard sea-borne storage facilities, according to the WSJ.
The crude is often moved around by rail, but the glut of cheap oil around the country has resulted in too little work for some 20,000 tank cars nationwide, the article says.
Too much crude and too little work for tanker trains is resulting in oil increasingly being stored in those railcars, generally on unused rails in the countryside.
Such “rolling storage” costs about twice as much as it does in salt caverns, but it is 50 percent cheaper than floating storage, the article says.
One takeaway from this creative use of resources: It will likely take a while for consumers to burn through all of this cheap fuel before prices rise in any sustained way.
You can read the full Wall Street Journal article here. (Note: If you have used up your allotment of free WSJ articles this month, you may hit a paywall.)
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