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Joint ownership of pipelines was there before used by oil companies so that they can control oil production in certain areas and they would install their pipelines and pumps and in areas that others cannot reach. They could lower their cost for the oil production companies so that they can outdo the other in competition. Integrated ownership involves cost-sharing in maintenance and installation of any new machine or pump which is also acceptable in today's businesses to enhance development.
In the year 2006, there were almost 2,300 pipeline operators in total. That indicates that there are fewer pipeline operators than the motor and railroad. Analysis indicates that the reason there are few pipeline operators is similar to the reason there are few railroad operators, consolidations and entry barriers. In accounting for that difference bearing in mind that they have almost the same carrying volume one can use the numbers provided there to draw the picture. Though the pipeline operation seems safer and secures, it is somehow expensive that the railroad and motor operations. Moreover, the gross income for motor carrier industries is far much higher compared to that of pipeline companies thus people tend to invest more on motor carriers than pipeline despite them carrying almost the same volume of the commodity. Therefore, one is not in a position to anger the question because it is flawed with that sense in mind.
The cost structure of pipeline industry is high and fixed since it is factored by maintenance and installation of the pipes, installation of terminals and their maintenance, maintenance of the pumping stations, leasing or purchasing of lands that the pipes or the pumps have been installed, right away, property and equipment amortization, investor dividends and property taxes. Pipelines of large diameter help in lowering the cost per unit and creation of economies of scale. On the other hand, if the volume is forced down by the economy may be due to low demand causing reduced shipping of oil products oil, chemicals or may be gases the cost increases and the same applies when the pipeline diameters are smaller. Another factor that has been affecting the fixed cost is inflation of taxes on land prices. Some unseen problems occur in the pipeline industry since they do not give room for differential pricing because when the cost increases due to economic demands pipeline industry cannot defray that cost under whichever condition.
Apparently, the pipeline industry is viewed and said to be stable and mature regarding its expansion; thus if it does not change to the better or, the worse, then nothing will change on the low revenue it gives. Since the industry is part of the total revenue and unless its growth was to search, then it will still give a revenue that is lower than the competing and faster-growing transportation mode. A change to revenue can occur if the new commodity is most appropriate for pipeline shipping but to occurs only if there are no other modes of transport competing for transportation of the good. Thus, I agree that there is a little likelihood of pipeline growth in future because of the fixed costs for establishment and maintenance of the pipelines which are too costly for the country's economy.
Water carries have not been flowing well because of the domestic intercity freight since there is a dramatic change in the measurement of the ton-miles since deregulation of transport advent. Water carriers are second in efficiency in goods transportation although the energy cost for water transporters has risen in a more rapid way than all other modes of transportation per the market value of services and goods produced. Therefore, that makes it less preferable than other modes of transport to most manufacturers. Most manufacturers then go for other transportation modes that use lesser energy cost. However, the water carriers are still important in the transport system due to their safety compared to motor carries mostly. In addition, the competitors like the manufacturers and suppliers, find it difficult to maintain in the competition with others without water transportation, which has a lower cost.
The prices of transport would hike considerably due to the high fuel charges in the water transport industry. That would at long last cause the shippers and the competing manufacturers whose best method of transport that they depend on, that is water transport to find new modes of transportation. However, so that there can be a cover for the hiking fuel prices, competition in and taxes, the water transport industry must increase the user charges overall to help cover the rising fuel prices.
Technology mostly focuses on the most utilized modes. Technology has been key in every transportation mode with almost every mode making new changes based on the new technology. Railroad, pipeline, and motor carriers all provide a much reliable mode of transport, which is also less time intensive. That is quite the opposite of what the inland waterways offer. Technology may offer the potential to perfect effectiveness and efficiency of transportation in the companies, which is a shame that the water carrier industry has not made a significant improvement in this line.
Intermodal competition with the pipelines is regarded more important than the intramodal competition with different water carriers. These three modes compete mostly for movements in long distance for bulk commodities. Moreover, the intramodal competition in pipeline industry has a limitation because of the small number of companies, and the market they are oligopolistic thus causes a limited competition in price. In addition, the high fixed costs and economies of the pipeline industry have led to the limitation of intramodal competition causing a rise in intermodal competition. Personally would go for intermodal, as it seems better in an exponential way than other ways.
The expression, "Out of the picture, therefore irrelevant" can be utilized to clarify why pipelines are obscure to the overall population. Pipelines serve restricted geographic focuses and are either little or more ground or substantial and subterranean. Be that as it may, pipelines convey wares that are of noteworthy enthusiasm to the overall population: oil and oil items, gaseous petrol, coal, and chemicals utilized for composts, cleansers, and radiator fluid. At the point when a pipeline fizzles, the outcome is seen by people in general contrarily. It is valuable to the business to instruct the general population about the significance of how and what it conveys and how the pipeline business has a critical influence on each individual's vocation consistently. The general population would feel better realizing that pipelines are ease and proficient methods for transporting basic items with relatively low occurrences of misfortune and harm.
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