Panama-Oil Pipeline

The trans-isthmian oil pipeline served as a transshipment point for Alaskan North Slope oil en route to the east coast of the United States. The pipeline, completed in October 1982, was 81 kilometers long and had a capacity to move 850,000 barrels of oil a day. The pipeline joined two terminals owned by Petroterminales de Panamá, a joint venture between the Panamanian government and a United States company, Northville Industries.

In 1982 the pipeline generated US$69 million, a figure that rose to US$138.8 million in 1986. The pipeline accounted for 7.4 percent of Panama's GDP in 1985, when value added peaked at US$158.7 million; in 1986 its share of GDP fell to 6 percent. In fact, the pipeline's net contribution to GDP has been small. Despite the increase in activity since 1982, the pipeline has never reached capacity; its daily throughput in mid-1987 was 575,000 barrels. Moreover, if the pipeline had not been built, the transportation of oil across the isthmus could still be accommodated by the canal. The pipeline did, however, free up the canal, and was expected to make a greater net contribution to GDP.

Panama's oil pipeline faced competition from the All American Pipeline, which extended from Santa Barbara, California, to McCarney, Texas, where it connected with other pipelines that led to the east coast of the United States and to the Gulf of Mexico. Nearly completed in 1987, the new pipeline, owned by Celeron Oil Company, was the longest in the United States. Whether the American pipeline would be able to compete effectively with Panama remained uncertain; overland pipeline transport was generally more expensive than sea transport in large tankers.

Data as of December 1987