The flood of new oil production throughout the middle of the country has created a backlog in Cushing while shippers wait in line to move the crude to refineries on the Gulf Coast.
A slew of new pipelines promises to relieve the glut, but most of the planned lines are still under construction.
Full relief is not expected until 2015.
The excess crude has suppressed prices for local producers, driving down the sales price as much as $20 a barrel as compared with international prices.
“It's a good problem to have for the country. We're finding lots of hydrocarbon,” said Jeff Hume, vice chairman of strategic growth initiatives at Oklahoma City-based Continental Resources Inc. “There's going to be a few hiccups along the way. You get one piece of pipe built and just move the glut from one point to the next until the entire system is upgraded. When you get everything flowing, it should be really good for the country.”
Until then, however, producers in much of Oklahoma, Texas and surrounding areas likely will continue to see their sales prices depressed relative to the rest of the world. West Texas International, priced at Cushing, closed at $97.31 per barrel Thursday. Brent crude, priced in London, closed at $118.
“What you're getting here is still a good price, but the world price is set higher,” Hume said.
Local producers have looked to the expanded Seaway Pipeline as one of the first large upgrades to move more oil from Cushing to the Houston area.