Reversing the Seaway Pipeline

Michael Giberson

The Seaway Pipeline is built to carry crude oil from the Gulf Coast to Cushing, Oklahoma, but with the current price differential between crude oil at the coast and crude oil at Cushing, each barrel delivered on the pipeline loses about $10-15 of value. The Streetwise Professor does a little back of the envelope calculation to conclude reversing the flow of the pipeline would create substantial economic gains. The (part) owner of the pipeline has substantial refinery assets in the Mid-Continent region, so it benefits from the low crude oil price at Cushing and is not interested in reversing the flow. The only way to reverse the flow may be for someone to buy the current owners out. Can somebody make this deal happen?