Energy saving and consumption reduction in the transportation of petroleum products: A pipeline pricing optimization perspective

Abstract

Pipeline transportation is a low-energy and economical mode of transporting petroleum products in the downstream supply chain, however, there is almost no theoretical research on its pricing strategies. The unreasonable pricing strategy has resulted in low utilization of multi-product pipeline capacity as well as high energy consumption of petroleum products transportation. Therefore, this paper aims to improve pipeline turnover and promote the low-carbon transportation market from the perspective of pipeline pricing optimization. We propose an integrated framework for multi-product pipelines that couples pricing strategy and logistics optimization model. This framework simulates the pricing behavior of the pipeline carrier and the corresponding logistics planning behavior of the oil shipper. We apply the framwork to 10 pipeline pricing schemes for two regions in China with different logistics structures, and analyze the economic and environmental benefits of the new strategy. The results show that the well-performing scheme can increase pipeline carriers' revenue by 11.41 million CNY per month, significantly improve the competitive advantage of long-distance pipelines, and reduce energy consumption by 272 tce. Based on these findings, we provide recommendations for policymakers at four levels. In conclusion, the new pricing strategy will help reverse the disadvantageous situation of the pipeline in the competitive market and promote energy conservation in the petroleum products logistics industry.