According to CBS, because of oil production outstripping capacity to transport that oil to market, North Dakota producers are taking deep discounts for their products:
BISMARCK, N.D. — North Dakota oil production is outpacing the ability to efficiently move the product to market, causing drillers to take deep price cuts at a time when national gasoline prices are on the rise, the U.S. Department of Energy said.
Crude oil from North Dakota’s rich Bakken and Three Forks formations has traded at record price discounts in 2012 compared to West Texas Intermediate, the U.S. benchmark, according to the Energy Information Agency, a branch of the Energy Department.
The agency said Bakken crude reached a record price gap of $28 a barrel on Feb. 10. The price discount has thinned in recent weeks but remains well above historic levels, the agency said.
What’s driving a lot of this is the on-going delays in building the Keystone pipeline:
State Mineral Resources Director Lynn Helms said prices for North Dakota sweet crude generally mirrored West Texas Intermediate prices last year but began widening in January when President Barack Obama temporarily halted the $7 billion Canada-to-Texas Keystone XL pipeline, which would have carried 100,000 barrels of crude daily from North Dakota and Montana.
“The Keystone XL was slated for 100,000 barrels a day in volume, and with that delay, the oil traders picked up on that,” Helms said.
All avenues for transporting oil out of North Dakota – highways, rail, etc. – are running at full capacity. The Keystone pipeline would represent a huge new avenue for that oil, except that the Obama administration continues to roadblock it.