Essay: Marathon Petroleum Company

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Essay: Marathon Petroleum Company

Sample Essay

According to The Time It takes website, a number of pipelines that can be expanded. These are:

  • 48-inch pipeline transporting oil to the shore from the LOOP
  • 40-inch pipeline connecting that carries oil from Louisiana to Midwest and some Marathon refineries.

At ceteris paribus, the crude oil takes approximately14 days to reach Robinson refinery at Illinois and takes about additional 4-8 days to be refined into gasoline and other petroleum products and is stored for about 2-4 days in the refinery. Gasoline is then shipped to a terminal within 3-5 days but can take as much as 50 days. A 721 miles pipeline is thereby used to transport oil form Texas to Illinois. It takes a maximum of 34 days for the petroleum products to reach the retailers from the terminals. Upon reaching the terminus, it is transported by trucks to the retailers (Marathon Petroleum Company, 2009).

Based on the available information, it is evident that most of the production time is spent during transportation through the Capline Pipeline that transports almost a million barrels of crude oil a day from St James, La, to Illinois at Patoka (Midwest). It only takes about 4-8 days and the rest, more than 24 days are spent while transporting the oil. This means that the production time can be reduced by improving the pipeline transport system. Marathon, that owns 50% of the Capline Pipeline, can invest on the expansion of the pipeline diameter and the speed of crude oil and refined oil from the refineries. Even though a heavy investment is required to complete this project, in the long run, the production process time will be cut drastically. More so, the firm will begin to enjoy economies of scale from the increased efficiency in the production process as reflected by reduced time spent while transporting the crude oil and the refined gasoline and other petroleum products ((Marathon Petroleum Company, 2009).

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