STATEMENT G
MARKET POWER MEASURES
FOR THE REVERSED SEAWAY PIPELINES
DESTINATION AND ORIGIN MARKETS
TABLE OF CONTENTS
FOR STATEMENT G
Section Page
I. Discussion of the Market Power Statistics Used ............................................................................... 1
II. Cooperative Behavior by Oil Pipelines is Unlikely to Be Successful Even With
High Concentration .................................................................................................................................... 3
III. Interpreting the Capacity-Based and Delivery-Based Market Share and HHI
Statistics ....................................................................................................................................................... 5
A. THE AVAILABILITY OF RECEIPT AND DELIVERY DATA ................................................................................. 5
B. THE CAPACITY AND DELIVERY DATA AVAILABLE IN THIS MATTER ............................................................ 6
IV. Threshold Criteria for the Market Power Measures ........................................................................... 7
A. EVALUATING ALTERNATIVE HHI THRESHOLDS........................................................................................... 7
B. MARKET SHARE THRESHOLDS .................................................................................................................. 12
C. EXCESS CAPACITY MEASURE THRESHOLDS FOR DESTINATION AND ORIGIN MARKETS ........................ 13
V. Additional Competition to the Reversed Seaway Pipeline from Rail, Barges, and
Upper-Midwest Refinery Expansions .................................................................................................. 16
A. INCREASING CRUDE OIL PRODUCTION IS SPURRING GROWTH IN TRANSPORTATION AND
REFINING INFRASTRUCTURE .............................................................................................................. 16
B. RAIL-BASED CRUDE OIL TRANSPORTATION PROJECTS .......................................................................... 19
C. BARGE-BASED CRUDE OIL TRANSPORTATION ......................................................................................... 24
D. REFINERY CAPACITY EXPANSION PROJECTS IN THE UPPER MIDWEST ................................................... 25
E. INCREMENTAL COMPETITION TO REVERSED SEAWAY FROM RAIL, BARGES, AND
INCREASED REFINERY CAPACITY ...................................................................................................... 25
VI. MARKET SHARE, HHI, AND EXCESS CAPACITY RATIO ANALYSES FOR THE
REVERSED SEAWAY PIPELINES DESTINATION AND ORIGIN MARKETS ............................ 27
A. DEFINITIONS OF EFFECTIVE CAPACITY AND ADJUSTED CAPACITY .......................................................... 27
1. Destination Market Capacity Definitions ....................................................................................... 28
2. Origin Market Capacity Definitions ....................................................................
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