The Politics of U.S. Oil Pipelines: The First Born Struggles to Learn From the Clever Younger Sibling

11 November 2016
By Dr. Jeff D. Makholm and Dr. Laura T. W. Olive

NERA Managing Director Dr. Jeff D. Makholm and Senior Consultant Dr. Laura T. W. Olive published an article in the Energy Law Journal examining attempts by the Federal Energy Regulatory Commission (FERC) to square what it knows about regulating gas pipelines as a highly competitive transport business with its oil pipeline duties. Thus far, the FERC has not been particularly successful in its endeavor. The core issue frustrating the FERC’s efforts to regulate the US oil pipeline industry is its maladapted original regulatory legislation, which is outdated—it was written in 1906 and follows a railroad model that is ill-suited to the technology and related industrial organization of pipelines. The authors conclude that it seems unlikely that the FERC can mimic in oil transport the kind of competitive and regulatory success it has had in gas.