Question

The pipeline industry has approximately 100 companies, as compared to the motor carrier industry with more than 50,000. What are the underlying economic causes for this difference, given the fact that they both carry approximately the same volume of intercity ton-miles?

Answer 1

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The pipeline industry has approximately 100 companies, as compared to the motor carrier industry with more than 50,000. What are the underlying economic causes for this difference, given the fact that they both carry approximately the same volume of intercity ton-miles?

Motor Carrier refers to a vehicle used to carry products from one location to another for commercial purposes. Transportation by pipeline relates to transportation of products or content into a conduit. Together with some 150 odd pipeline sectors in the United States, there are more than 50000 motor carrier firms. They bring the same amount of intercity ton miles, almost the same.

This is largely attributed to the assumption that the pipes transmit only liquid and gaseous state of matter. In addition to that, neutral and solid substances are carried via the pipes too. Pipeline transport primarily deals with crude and processed petroleum and oil, natural gas, biofuels and other large-scale fluids generated at the manufacturing site that need to be transported to some other location as a matter of urgency.

Building of pipelines is costly industry and so is operation there. Gathering Pipes, Main Pipes, and Finished Oil Pipelines are the three key types of pipelines. You can move only voluminous fluid of the same type at one time. Along a path the pipes are fixed framework and the path can not be modified at will. Despite small flexibility it provides high fixed costs.

Any type of goods may be transported at any point by motor carrier, if the path is open. With large variable it provides low fixed cost. While variations in the number of organizations both are equally important for their position and function.

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