This study uncovers these segments for the first time, taking up such basic subjects as the structure of pipeline markets, pricing strategies and the level of competition in the industry, and the effects of public policy alternatives - ranging from uniform, industry-wide regulation to complete deregulation - on market performance.
The silent flow of millions of gallons of oil and petroleum products every day just beneath the surface of the United States is a vital link in the energy and production chain that makes modern industrial society possible. The interstate oil pipelines traverse more than four times the mileage of the interstate highway system, and represent a capital investment of over 21 billion dollars. And yet important segments of the industry have been as hidden from view as the pipelines themselves. This study uncovers these segments for the first time, taking up such basic subjects as the structure of pipeline markets, pricing strategies and the level of competition in the industry, and the effects of public policy alternatives - ranging from uniform, industry-wide regulation to complete deregulation - on market performance. In eight chapters, the book covers the structure of the industry and the physical properties that determine the economic constraints of oil pipelining; the historical development of the industry and its regulation; the various types of geographic and product markets and the level of competition within them; patterns of price changes based on available rate data; the rate of return on invested capital as a function of the manner in which regulations are applied; recent profit levels in the industry as an index of monopoly power; and the impacts of various policy options (partial deregulation, complete deregulation, disintegration, and other policies are explicitly evaluated). Many of the book's findings apply to public utility regulation in general and can be used by regulators of any industry who are concerned with promoting economic efficiency while simultaneously protecting the public interest.
