Crude by Rail, Option Value, and Pipeline Investment / Thomas R. Covert, Ryan Kellogg.

Format:

Book

Author/Creator:

Covert, Thomas R.

Contributor:

National Bureau of Economic Research.

Kellogg, Ryan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23855.

NBER working paper series no. w23855

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

The U.S. shale boom has profoundly increased crude oil movements by both pipelines-the traditional mode of transportation-and railroads. This paper develops a model of how pipeline investment and railroad use are determined in equilibrium, emphasizing how railroads' flexibility allows them to compete with pipelines. We show that policies that address crude-by-rail's environmental externalities by increasing its costs should lead to large increases in pipeline investment and substitution of oil flows from rail to pipe. Similarly, we find that policies enjoining pipeline construction would cause 80-90% of the displaced oil to flow by rail instead.

Notes:

Print version record

September 2017.