6.0 FREIGHT MOVEMENT BY PIPELINE

6.1 Introduction

Movements of petroleum products by pipeline between Petroleum Administration for Defense (PAD) Districts include trunk pipeline companies (operators of interstate, intrastate, and intra-company pipelines). PAD Districts are geographic aggregations of the 50 states and the District of Columbia into five districts, established by the PAD in 1950. These districts were originally defined during World War II for purposes of administering oil allocation. Figure 6.1 shows the PAD districts.¹⁴

Figure 6-1. Petroleum Administration for Defense Districts (PADD)

6.2 Data Sources

The primary source of data on freight movement by pipeline is the Petroleum Supply Annual (PSA) published by the U.S. Department of Energy, Energy Information Administration (EIA). http://tonto.eia.doe.gov/dnav/pet/pet_move_pipe_dc_R20-R10_mbbl_m.htm. This publication contains information on the supply and disposition of crude oil and petroleum products. EIA also publishes the Petroleum Supply Monthly (PSM) that contains monthly information on supply and disposition of crude oil and petroleum products by PAD District. Movements of crude oil and petroleum products are presented by pipeline, tanker, and barge between PAD Districts. This analysis focuses on movements by pipeline.

Movements of crude oil and petroleum products by pipeline among PAD districts are not disaggregated to state levels. Similarly, import and export data are presented for movements between the PAD districts and foreign origins/ destinations and between the entire United States and the foreign origins/destinations. Therefore, disaggregating the PAD volumes to state level requires some simplifying assumptions.

6.3 Estimation Methodology

Petroleum imports, exports, supply and disposition of crude oil supply and disposition are presented by PAD districts while production of crude oil is presented by state. These data are aggregated at annual levels. Furthermore, data are available for a limited number of inter-PAD movements by pipeline as shown in Table 6.1. No data are available for intra-PAD movements by pipeline.

Examination of the data revealed that the volume of crude oil and petroleum movements between origins and destinations (i.e., between PAD districts) fluctuates and does not increase or decrease monotonically from year-to-year. Based on this observation, the use of a growth rate approach was used to develop estimates for future years.

6.3.1 Domestic Movements by Pipeline

The approach to distributing the PAD volumes among the states in each district is based on the assumption that the state's share of the total volume originating from a given PAD district is a direct function of the volume of crude oil production in that state. Similarly, a state's share of the total volume destined to a given PAD district is proportional to the supply and sales volume reported in that state. The origin state-to-destination state total volumes for the estimation year were calculated based on these shares.

The estimated total volumes of crude oil and petroleum products for each state O-D pair were distributed among the four main commodity groups that are moved by pipeline according to the SCTG classification based on percent share of each commodity group in each PAD district.  These commodity groups are (i) crude petroleum oil, (ii) gasoline and aviation turbine fuel, (iii) fuel oils, and (iv) coal and petroleum products not defined elsewhere (n.e.c.).  The percent shares for the estimation year were derived from the previous year’s distribution of the total among the four commodity groups.

The growth rates between the 2002 benchmark year and the estimation year for each of the 4 commodities were then calculated.  The growth rates were then applied to the 2002 FAF data to obtain the estimates for the estimation year. The state-to-state estimates by commodity were then expanded to FAF zones based on 2002 FAF distribution among the FAF zones for the pipeline mode.  It was assumed that the percent share among FAF zones in a given state in the estimation year would be the same as for the previous year.

In estimating the dollar values of the volumes, the weight/value ratios were calculated from the 2002 FAF benchmark data. These ratios were applied to the estimated volumes to derive the values in constant 2002 dollars for the estimation year. In order to derive the current dollar values, the 2002 dollar value estimates were adjusted by price indices obtained from Bureau of Labor Statistics to account for changes in prices.

6.3.2 International Movements by Pipeline

A similar approach was adopted in developing the provisional estimates for international freight movements by pipeline, as outlined below.

1. Calculate the total annual volumes of imports and exports of crude oil and petroleum products for the provisional estimation year from the data sources described above.
2. Distribute the total volumes among the states in each PAD district and the 7 foreign origin/ destinations (Canada, Mexico, Europe, Latin America, Middle East, Asia, and Rest of World).  The shares of these 7 international regions were based on the previous years’ data.   
3. Distribute the total imports and exports of crude oil and petroleum products for each O-D pair among the 4 commodity groups [i.e., (i) crude petroleum oil, (ii) gasoline and aviation turbine fuel, (iii) fuel oils, and (iv) coal and petroleum products not defined elsewhere (n.e.c.)] based on their previous year’s shares of the total volume. This approach assumes that the percent share among the 4 commodities in the previous year will be the same in the estimation current year.
4. Repeat the above steps for the 2002 benchmark year using data from the same sources described above. 
5. Calculate the growth rates for each commodity and O-D pair between 2002 and the provisional estimation year.
6. Apply the growth rates in the previous step to the 2002 FAF data to generate the provisional estimation year volumes.
7. Repeat the above steps to generate the provisional estimates of the dollar values of commodities moved by pipeline to and from foreign destinations.  This approach expresses the estimates in 2002 dollar values. To derive current dollar values however, commodity export and import price indexes were applied to account for changes in price.