SMITH BRAIN TRUST — After nearly one year of legal and political wrangling, oil starting flowing this week through the Dakota Access Pipeline without much fuss. “There’s nothing to talk about anymore because the pipeline is invisible,” says professor Charles E. Olson at the University of Maryland’s Robert H. Smith School of Business. “It will just run silently underground with much more efficiency than a train does. We won’t see it. We won’t hear it. It will have virtually zero environmental impact. And the pipeline probably is good for 50 years.”
One way or another, crude oil must get to a refinery before the black goop can emerge as gasoline, diesel or jet fuel. Some oilfields rely on trains and trucks for transportation, but Olson says pipelines cost less and carry fewer risks. “Pipelines can leak,” says Olson, a former energy industry executive who has testified in hundreds of utility cases. “But trains can derail, and trains have a bigger environmental impact — running above ground and spewing smoke.”
Oilfield companies and surrounding restaurants, hotels and entertainment venues are experiencing an economic boomlet in North Dakota, but consumers elsewhere won’t see much difference when the pipeline reaches full capacity in the coming weeks. “There will be more profit for producers and more tax revenue for state and federal governments,” Olson says. “But consumer prices probably won’t move much. They’re going to get the same gallon of gasoline out of the refinery that they did before.”
The pipeline will keep oil flowing to refineries in central Illinois, which have relied on crude supplies from the Gulf Coast region. “Increasingly, the Gulf oil is being exported since we allowed the export of oil late in the Obama administration,” Olson says. “It’s much more economical to export that oil, being on the water already, than oil that moves over land. So the Dakota pipeline essentially displaces — or partially displaces — the oil volumes that would have moved through the pipelines that brought the crude up from the Gulf.”
Related: Considering that the United States is a net importer of crude, why export anything at all? Olson explains...
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About the University of Maryland's Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and flex MBA, executive MBA, online MBA, business master’s, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.