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Oil and other petroleum-derived liquid fuels are very easy to transport and distribute. Crude oil is an energy-dense and stable liquid that is economical to transport
long distances using freighters and pipelines—or when necessary, at a higher cost
using railcars. Refined fuels like gasoline are also economical to transport in this
fashion, but the economics favor moving crude oil and then refining the fuel close
to the target market. Refined fuels are transported in bulk with a mixture of modes
including rail, pipeline, and tanker trucks running on public roads.
Refined fuels like gasoline are economical to store, and oil companies commonly
keep months of crude oil or gasoline on hand at refineries and transportation hubs in
large steel storage tanks. Refineries are capital intensive to build and they operate at
a fixed rate (like coal and nuclear power plants), so storage is used to balance out
seasonal changes in supply, demand, and price of oil and refined fuels. Countries
like the USA maintain large strategic reserves of crude oil that can supply months
or years of national demand, for emergency purposes. Because gasoline is less stable than crude oil and degrades over a span of months, there is a preference for
stockpiling crude oil in bulk and maintaining smaller reserves of gasoline to keep
the age of the fuel low. Gasoline in the USA is usually distributed to filling stations
using tanker trucks running short distances over public roadways, to bring the gasoline from refineries and pipelines to retail sales locations in cities.
Soft infrastructure for petroleum-based fuels involves consumers, owners,
financiers, and regulators.
Gasoline is mostly consumed by private citizens for the operation of personal
vehicles. There is a preference for diesel over gasoline for heavy vehicles like trucks
and construction equipment, and for military applications, because diesel is more
energy-dense and is more shelf-stable than gasoline. Kerosene is preferred for aviation fuels because it is the most energy-dense, and weight is critical for aircraft. The
liquid fuel infrastructure is privately owned and operated, or owned and operated by
state-owned companies. In the USA the system is privately owned by a large number of large and medium sized companies and is largely market-driven.
Internationally, many major petroleum operations are state-owned. The liquid fuel
infrastructure tends to be privately capitalized except in state-owned circumstances,
and operates for profit at each stage of the system (crude oil production, transportation, refining, distribution, retail sales). In the USA, fuel prices are largely unregulated and follow market dynamics, but the government has occasionally applied
pressure to suppress price spikes during emergencies.
Price fluctuations for gasoline in the USA are driven mostly by constraints on
refinery capacity, but also by crude oil prices. Many oil-producing countries subsidize gasoline and liquid fuels for their own residents, selling the fuel far below
market price. Internationally, many of the countries that export a large amount of oil
have state-owned oil companies that operate to fund the government, to build citizens’ support for the government through fuel subsidies and handouts, and as tools
of diplomacy and economic warfare, rather than as for-profit private concerns.
Because oil is an international market for a critical FEW resource, governance is a
fundamentally political issue. Because a large fraction of crude oil production and
transportation crosses national boundaries, crude oil has frequently been used as a
10 Infrastructure
Oil and other petroleum-derived liquid fuels are very easy to transport and distribute. Crude oil is an energy-dense and stable liquid that is economical to transport
long distances using freighters and pipelines—or when necessary, at a higher cost
using railcars. Refined fuels like gasoline are also economical to transport in this
fashion, but the economics favor moving crude oil and then refining the fuel close
to the target market. Refined fuels are transported in bulk with a mixture of modes
including rail, pipeline, and tanker trucks running on public roads.
Refined fuels like gasoline are economical to store, and oil companies commonly
keep months of crude oil or gasoline on hand at refineries and transportation hubs in
large steel storage tanks. Refineries are capital intensive to build and they operate at
a fixed rate (like coal and nuclear power plants), so storage is used to balance out
seasonal changes in supply, demand, and price of oil and refined fuels. Countries
like the USA maintain large strategic reserves of crude oil that can supply months
or years of national demand, for emergency purposes. Because gasoline is less stable than crude oil and degrades over a span of months, there is a preference for
stockpiling crude oil in bulk and maintaining smaller reserves of gasoline to keep
the age of the fuel low. Gasoline in the USA is usually distributed to filling stations
using tanker trucks running short distances over public roadways, to bring the gasoline from refineries and pipelines to retail sales locations in cities.
Soft infrastructure for petroleum-based fuels involves consumers, owners,
financiers, and regulators.
Gasoline is mostly consumed by private citizens for the operation of personal
vehicles. There is a preference for diesel over gasoline for heavy vehicles like trucks
and construction equipment, and for military applications, because diesel is more
energy-dense and is more shelf-stable than gasoline. Kerosene is preferred for aviation fuels because it is the most energy-dense, and weight is critical for aircraft. The
liquid fuel infrastructure is privately owned and operated, or owned and operated by
state-owned companies. In the USA the system is privately owned by a large number of large and medium sized companies and is largely market-driven.
Internationally, many major petroleum operations are state-owned. The liquid fuel
infrastructure tends to be privately capitalized except in state-owned circumstances,
and operates for profit at each stage of the system (crude oil production, transportation, refining, distribution, retail sales). In the USA, fuel prices are largely unregulated and follow market dynamics, but the government has occasionally applied
pressure to suppress price spikes during emergencies.
Price fluctuations for gasoline in the USA are driven mostly by constraints on
refinery capacity, but also by crude oil prices. Many oil-producing countries subsidize gasoline and liquid fuels for their own residents, selling the fuel far below
market price. Internationally, many of the countries that export a large amount of oil
have state-owned oil companies that operate to fund the government, to build citizens’ support for the government through fuel subsidies and handouts, and as tools
of diplomacy and economic warfare, rather than as for-profit private concerns.
Because oil is an international market for a critical FEW resource, governance is a
fundamentally political issue. Because a large fraction of crude oil production and
transportation crosses national boundaries, crude oil has frequently been used as a
10 Infrastructure