Office of Operations Freight Management and Operations

6.0 FREIGHT MOVEMENT BY PIPELINE

6.1 Introduction

Movements of crude oil and 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.

Map of the United States in five segments indicating the scope of the Petroleum Administration for Defense Districts, or PADDs. PADD 1 includes states on the east coast states; PADD 2 includes states in the Midwest; PADD 3 includes states on the Gulf Coast; PADD 4 includes Rocky Mountain states; and PADD 5 includes states on the west coast as well as Alaska and Hawaii.
Figure 6-1. Petroleum Administration for Defense Districts (PADDs)

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. Movements of crude oil and petroleum products are presented by pipeline, tanker, and barge between PAD Districts. This analysis focuses on movements by pipeline.

6.3 Estimation Methodology

Crude oil and petroleum movement data are aggregated at monthly and annual levels. 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. Furthermore, variations of the volume of crude oil and petroleum movements between origins and destinations (i.e., among PAD districts) from year to year are erratic. Based on this observation, the growth rate approach is used where it is assumed that trend between the two years preceding the estimating year will be maintained for the subsequent year.

Table 6-1. Data Availability for Freight Movement by Pipeline
From PAD (Origin) To PAD District (Destination)
I II III IV V
I 0 X X 0 0
II X 0 X X 0
III X X 0 X X
IV 0 X X 0 X
V 0 0 X* X** 0
X – data available; 0 – no movements between this pair;
X* - no shipments after February 2000 X** - no data available

6.3.1 Domestic Movements by Pipeline

The approach to developing the provisional estimates of domestic movements is based on the following assumptions:

  • In distributing the PAD volumes among the states in each PAD district, it is assumed that the state's share of the total volume originating from a given PAD district is directly proportional to the volume of crude oil production in that state.
  • A state's share of the total volume destined to a given PAD district is assumed to be proportional to the supply and sales volume reported in that state. The origin state-to-destination state total volumes for the estimation year are based on these shares.
  • In expanding state-to-state volumes for FAF zone to FAF zone volumes, assume that the percent share among FAF zones in a given state in the estimation year would be the same as for the previous year.

The following steps are used in developing the provisional estimates:

  1. Calculate the growth rates between the 2002 FAF2 benchmark year and the estimation year for each of the total volumes of commodities moved by pipeline.
  2. Apply the growth rates to the 2002 FAF2 data to obtain the total volume for the estimation year.
  3. Expand the total estimates to the FAF zones based on 2002 FAF2 distribution among the FAF zones for the pipeline mode.
  4. In estimating the dollar values of the volumes, calculate the weight/value ratios from the 2002 FAF2 benchmark data.
  5. Apply these ratios to the estimated volumes to derive the values in constant 2002 dollars for the estimation year. In order to derive the current dollar values, adjust the 2002 dollar value estimates by price indices obtained from BLS to account for changes in prices.

6.3.2 International Movements by Pipeline

A similar approach applies to developing the provisional estimates for international freight movements by pipeline, as outlined below.

  1. Group countries that import crude oil and petroleum products from or export such products to the United States in the 7 foreign origins/destinations (i.e., Canada, Mexico, Europe, Latin America, Middle East, Asia, and Rest of World).
  2. Calculate the total annual volumes of imports and exports of crude oil and petroleum products for the estimation year and base year 2002 from the data sources described above.
  3. Calculate the growth rates for total volumes between 2002 and the estimation year.
  4. Apply the growth rates in the previous step to the commodity O-D pairs for 2002 FAF2 data to generate the corresponding estimation year volumes.
  5. 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, apply commodity export and import price indexes to account for changes in price and inflation.

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