February 2011, Vol. 238 No. 2

In The News

ExxonMobil Wants Hike In Rate To Move Alaskan Oil

ExxonMobil has asked Alaskan regulators to increase the rate it charges to ship oil on the trans-Alaska oil pipeline to in-state destinations by about 22%.

ExxonMobil is the third of the five owners of the 800-mile pipeline to ask for an increase to intrastate shipping rates. The Regulatory Commission of Alaska approved increases for ConocoPhillips and Koch on a temporary basis.

ExxonMobil proposes charging $3.07 to ship a barrel of oil from the North Slope to North Pole and $4.83 to ship to Valdez, depending on the final destination: the PetroStar refinery or the Valdez tanker port. ExxonMobil said the increase is needed because the pipeline’s oil flow is declining while operating costs and property taxes are rising.

The proposed rates would bring ExxonMobil $3.3 million per year compared to the $2.7 million it now earns on in-state markets. The rate increases would make ExxonMobil the most expensive carrier for in-state markets. By comparison, ConocoPhillips and Koch requested 12% increases in 2010, bringing their rates to roughly $2.87 per barrel to North Pole and $4.50 to Valdez.

The request is the third time since November 2008 that Exxon has asked the RCA to increase in-state shipping rates. If approved, it would represent a 146% jump in shipping rates over the past two years. In late 2008, four of the five owners, including Exxon, asked for a 57% increase to in-state shipping rates in place since 2002.

If the RCA ultimately decides that any or all of the rate increases it has temporarily approved since 2008 aren’t justified, the carriers would be forced to issue refunds. BP is the only pipeline owner that hasn’t asked for an increase to in-state shipping rates. Unocal did not request an in-state rate increase in 2010, but did in 2008 and 2009.