Repost from Oil Change International [Editor: Significant quote: “Put simply the oil boom has not insulated American consumers from the price spike that the violence in Iraq will cause. And Iraq is not the only major oil producer with ongoing political instability. Think about recent events in Nigeria, Venezuela and Libya, to name just three.” – RS]
US “Not Immune” to Oil Price Hike
Andy Rowell, June 16, 2014
For years the American oil industry has argued that the ongoing U.S. oil boom will bring about “energy independence” and drive gasoline prices down. Americans are supposed to be enjoying an era of cheap, plentiful energy.
As the oil industry has set about fracking America, decades of declining production has been reversed in just a handful of years. The US is now the world’s largest producer of oil and gas.
The oil industry has persuaded or forced communities across North America to compromise their water supplies and their health to allow the fracking revolution with the promise of lower prices and energy security.
So American consumers should apparently be appreciating the impact of the country’s shale revolution as crude oil and condensates production has just surpassed its previous peak, reached way back in 1970. A 44-year old record has just been broken.
Not so. As the Energy Policy Information Centre pointed out, at the end of last month. “Despite all the promise of the oil boom, for most Americans, its economic benefits remain an abstract concept in the absence of relief at the gas station.”
The sad truth is that despite the US economy being half as “oil intense” compared to the 1970s – as measured by barrels of oil consumed per $1,000 of GDP – American households and businesses still spend a staggering 900 billion dollars annually on petroleum. The average American household dedicates around 5.3% of its spending to petroleum, with the burden felt much more heavily by low income households.
And here comes the real irony. Despite the US reaching a record production peak, last week the price of Brent crude rose 4 per cent, its biggest one-week rise since July last year. Wholesale US gasoline rose with it and thus US consumers will notice higher pump prices probably as soon as this week (see chart).
Source: Financial Times
And the reason is the ongoing turmoil in Iraq. The escalating violence there is threatening supplies from OPEC’s second largest producer, which produces in excess of 3 million barrels of oil a day.
Bloomberg is quoting Societe Generale saying that if the violence escalates and production is affected, Brent crude may jump from its current position of $113 to $120 or even $125. It may go even higher.
“This is a serious situation in terms of the global oil market,” Victor Shum, a vice president at IHS Energy Insight in Singapore, told Bloomberg. “This situation in Iraq really threatens potential supply growth going forward.”
So far the fighting has not spread to the south, where the US Energy Information Administration estimates that three-quarters of Iraq’s crude output is produced. But if the Southern oil fields fall, the global oil price could skyrocket to unprecedented levels.
What this shows, as Ed Crooks, points out in today’s Financial Times is that, despite its own fracking revolution, “the US is not immune to the effects of disruption in world markets.”
Put simply the oil boom has not insulated American consumers from the price spike that the violence in Iraq will cause. And Iraq is not the only major oil producer with ongoing political instability. Think about recent events in Nigeria, Venezuela and Libya, to name just three.
The boom that is needed in order to truly insulate the American economy from the relentless turmoil in oil producing countries is a boom in efficiency, public transit, smart growth and electric vehicles. These technologies and policy initiatives are here now and ready to go, but the political and financial weight behind them has been overshadowed by the lure of oil boom riches.
Instead of “All of the Above“, we need energy policies that will help American’s reduce the amount of oil they need to buy, at any price.
Repost from DESMOGBLOG [Editor: The influential White House Office of Information and Regulatory Affairs (OIRA) is reviewing the newly-proposed oil-by-rail safety regulations rolled out by the DOT and PHMSA. Significant quote: “A DeSmogBlog review of OIRA meeting logs confirms that in recent weeks, OIRA has held at least ten meetings with officials from both industries on oil-by-rail regulations. On the flip side, it held no meetings with public interest groups.” See also important statements by BNSF and the DOT on the need for an entirely new tank car design near the end of this article. – RS]
Meeting Logs: Obama White House Quietly Coddling Big Oil on “Bomb Trains” Regulations
During his presentation at NYU, Shelanski spoke at length about how OIRA must use “cost-benefit analysis” with regards to regulations, stating, “Cost-benefit analysis is an essential tool for regulatory policy.”
But during his confirmation hearings, Shelanski made sure to state his position on how cost-benefit analysis should be used in practice. Shelanski let corporate interests know he was well aware of their position on the cost of regulations and what they stood to lose from stringent regulations.
“Regulatory objectives should be achieved at no higher cost than is absolutely necessary,” Shelanski said at the hearing.
With the “cost-benefit analysis” regarding environmental and safety issues for oil-by-rail in OIRA’s hands, it appears both the oil and rail industries will have their voices heard loudly and clearly by the White House.
A DeSmogBlog review of OIRA meeting logs confirms that in recent weeks, OIRA has held at least ten meetings with officials from both industries on oil-by-rail regulations. On the flip side, it held no meetings with public interest groups.
“He’s a University of Chicago Democrat, so he’s very attuned to the virtue of free markets and the risks of free-market regulation,” Sunstein told The Wall Street Journal about Obama in 2009. “He’s not an old-style Democrat who’s excited about regulations.”
The Washington Post described Sunstein as Obama’s “intellectual mentor” who “had a major influence on Obama’s view of government — stressing pragmatism over ideology.”
But of course, the “Chicago School” has its own ideological roots: neoliberalism.
Attendees of that meeting included Misty McGowen, Director of Federal Relations for API and Michael Yoham, Manager Rail Transportation Services for Chevron.
This API-Chevron White House visit parallels the one they made together when OIRA mulled over new rules on sulfur in gasoline. In 2012, a group led by API president Jack Gerard went to the White House to discuss this issue with another of President Obama’s closest advisers, Valerie Jarrett.
This visit clearly paid dividends for the industry when the new regulations were delayed.
Akin to what is currently happening with the oil-by-rail regulations regarding Bakken shale oil and the DOT-111 tank cars, it was coordinated with a big public relations push trashing the regulations as unnecessary.
History, as they say, has repeated itself in the oil-by-rail sphere.
“Can we have an intellectually honest discussion about mechanical and track integrity on the rails?,” AFPM president Charles Drevna asked rhetorically in a May 19 Railway Age article. “You shouldn’t blame the cargo for an accident.”
”[BNSF] believe[s] the next generation tank cars should exceed the 2011, stronger new standard known as the CPC-1232 tank car,” Roxanne Butler, a spokeswoman for BNSF told EnergyWire.
Butler did not respond to questions from DeSmogBlog about what BNSF discussed with OIRA in the meetings, nor did she specify what she meant by an “aggressive phase out.”
On the May 14 edition of The Rachel Maddow Show, Secretary of Transportation Anthony Foxx told Maddow that he does not believe the CPC-1232 is the solution. Secretary of Transportation Anthony Foxx interview with Rachel Maddow, via YouTube.
“I can tell you that I don’t have confidence in the DOT-111 [and] I’m unconvinced that the 1232 — which is the upgraded car — is the absolute solution,” said Foxx. “I think there’s going to have to be a new type of tank car established to keep this country as safe as possible.”
As his C2 Group biography explains, Cline has also passed through the revolving door, formerly working for both the White House and DOT.
“John served in the White House as a Special Assistant for Intergovernmental Affairs under President George H.W. Bush,” Cline’s bio states.
“Prior to his service in the White House, he was Director of the Office of Congressional Affairs for the U.S. Department of Transportation (DOT)… John entered public service in 1989 upon his selection by President Bush as Associate Administrator for the Federal Transit Administration at DOT.”
While Shelanski’s remarks at NYU discussed cost-benefit analysis, he also talked about how the question over regulatory policy often boils down to shifting costs.
“A more honest debate and better policy will emerge if the debate acknowledges the difference between creating costs and shifting costs back to their source to reduce harmful externalities,” he said.
Which raises the big questions on oil-by-rail regulations, or lack thereof: cui bono? And who pays the costs?
Exactly what API, Chevron, ExxonMobil, BNSF and other powerful factions discussed in their meetings with OIRA remains unknown for now.
But one thing remains clear: the only side OIRA has listened to so far in official meetings is Big Oil and Big Rail.
This is consistent with the trend-lines unpacked in the Center for Progressive Reform’s study titled, “Behind Closed Doors at the White House,” a comprensive review of OIRA meeting logs between 2001-2011.
“Over the last decade, 65 percent of the 5,759 meeting participants who met with OIRA represented regulated industry interests — about five times the number of people appearing on behalf of public interest groups,” stated the report.
“[E]ven under this ostensibly transformative President [Obama]…industry visits outnumbered public interest visits by a ratio of almost four to one.”
Jessica Knoblauch | June 2, 2014
Communities for a Better Environment Organizer Andrés Soto and Earthjustice Attorney Suma Peesapati look over the railyard in Richmond, where highly explosive and toxic crude oil is being brought into the city.
In March of 2014, Andrés Soto confirmed his nagging fears: Mile-long trains loaded with highly explosive crude oil had been rolling through his hometown of Richmond, California, unannounced, since the previous September.
Soto, a longtime activist and organizer for Communities for a Better Environment, had previously heard about the oil industry’s push to bring crude-by-rail to the west coast. In late January, his organization came across an industry report highlighting the local rail yard’s intentions to allow the practice. The following month, crude-by-rail popped back up on Soto’s radar after a woman from La-Mégantic, Quebec, spoke to Richmond residents about how her town was destroyed after 63 tankers filled with explosive crude oil derailed and exploded, creating a fireball that killed 47 people.
Though the woman’s eyewitness account terrified him, Soto figured he would deal with the issue if and when it came to Richmond. He assumed, as most people would, that local residents would get plenty of time and opportunity to weigh in on any decision to allow crude-by-rail next to their homes, schools and businesses.
He was wrong.
A Glut of Oil, Brought on By Fracking and Tar Sands
Since late 2012, as hydraulic fracturing and tar sands drilling created a glut of oil, the industry has scrambled to transport as much of it as possible from remote drill sites in North Dakota and Canada to the east and west coasts, where it can potentially be shipped overseas to more lucrative markets. Along the way, these trains run through many small towns and main streets, underneath large cities and over bridges, and even along steep mountainsides and wetlands in pristine wilderness areas like Glacier National Park. But while communities along the tracks take on the risk of these volatile visitors, which occasionally derail and explode, they often aren’t told what’s in them, or even when they’ll be charging through.
“This latest betrayal is just part of a lifelong experience,” says Soto, who, as a Richmond native, has seen firsthand the many environmental injustices forced upon residents of this industrial town. The city has around 400 pollution sites and the surrounding area has a high number of industrial accidents, making Richmond’s county, one of the most dangerous places to live.” Many Richmond residents suffer high rates of asthma, cancer and heart disease. Some of Soto’s own family members, who all grew up in Richmond, have been diagnosed with cancer and rare auto-immune diseases.
But the threat of crude-by-rail is not unique to industrial towns like Richmond. Because trains have played such a major role in shaping America over the past two centuries, today you can find them in every kind of community, carrying benign goods like grain, hogs and, of course, us. But with the growth in crude-by-rail, coupled with lax regulations, these icons of American culture are viewed more warily as their foreboding tank cars chug by, filled with crude oil and marked with barely perceptible warning signs.
Oil rail shipments have increased 6,000 percent from 2008 to 2014, which adds up to about 800,000 barrels of oil transported across America per day, according to the National Transportation Safety Board. The increase in rail traffic, however, has not been met with increased regulatory scrutiny. For example, oil trains are not subject to the same strict routing requirements placed on other hazardous materials, so while trains carrying chlorine are barred from travel through the middle of cities, trains carrying explosive crude oil can pass through with no problem.
Also, fire departments, police and first responders often don’t know basic safety information, like whether a train passing through their town will be carrying extremely flammable Bakken shale oil from North Dakota, or tar sands oil from Alberta, Canada, which is notoriously difficult to clean up. As a result, many communities learn of crude by rail projects by accident—or because of one.
More crude oil was spilled in U.S. rail incidents in 2013 than was spilled in the nearly four decades since the federal government began collecting data on such spills. Data: ESRI; Federal Railroad Administration; Bureau of Transportation Statistics
Lack of Environmental, Public Review, Despite Accidents
Given the lack of regulations and increased rail traffic, it’s not surprising that crude-by-rail accidents have skyrocketed, spilling oil, starting fires, causing explosions and tragically costing lives. The largest accident happened in July of 2013 in Quebec, but since then a number of derailments have occurred, including an accident in Lynchburg, Virginia, where a train carrying crude oil derailed in the downtown area, creating a 200-foot high fireball, prompting the evacuation of some 300 people, and spilling crude into the nearby river.
Yet, shipping crude-by-rail has, so far, escaped significant environmental and public review. This is partly because it is so new and partly because many of the permitting decisions—decisions that will impact thousands of citizens—are being made at the most local of planning levels. Only recently, in response to community outcry and litigation, have these decisions been brought to the public’s attention. And where full and complete environmental and public health reviews have begun, citizens, officials and scientists have largely been opposed to these projects and their risks.
Soto and Peesapati stand near crude oil rail cars. The city of Richmond is in the background. Chris Jordan-Bloch / Earthjustice
Richmond residents found out from news reports that crude-by-rail was going through their city only after local media spotted the trains in Richmond’s rail yard, about a half-mile from an elementary school. State officials with the California Energy Commission didn’t know about the project, and the only agency that did was the local air quality district, which issued an operating permit to Kinder Morgan in February of 2014 without any notice or public process. Though the California Environmental Quality Act requires regulatory agencies to conduct full environmental impact assessments of such projects, the air district avoided its responsibilities by putting the project in the same category as vehicle registration and dog licenses.
Earthjustice quickly sued Kinder Morgan and the air district on behalf of environmental justice and conservation groups for ignoring the well-known and potentially catastrophic risks to public health and safety, and for turning a blind eye to permitting the project in an already polluted and overburdened low-income community.
Similar stories of “discovering” these pipelines on wheels can be found all across the country.
In Hoquiam, Washington, a small town in Grays Harbor, people were largely unaware of plans to turn the major estuary, which is home to commercial and tribal fishing, into an industrial crude oil zone.
Members of the Quinault Indian Nation, outraged at plans to build three crude oil shipping terminals, which threaten the tribe’s treaty-protected fishing and gathering rights, turned to Earthjustice after local agencies permitted the projects based on the conclusion that they would have no significant environmental impact.
An aerial view of Grays Harbor, WA, where planned crude oil terminals threaten treaty-protected fishing and gathering rights. Photo courtesy of Quinault Indian Nation
“It makes no sense whatsoever to allow Big Oil to invade our region,” says Fawn Sharp, president of the Quinault Indian Nation. “We all have too much at stake to place ourselves square in the path of this onrushing deluge of pollution, to allow mile-long trains to divide our communities and jeopardize our air, land and waters.”
The Quinault and a group of conservation organizations appealed the permits. And in October of 2013, the Washington Shorelines Hearings Board agreed with the tribe, rejecting the permits for the proposed terminals for failure to address significant public safety and environmental issues. Two of the terminal projects have begun full environmental review processes, and the tribe and local community are fully engaged in opposing them.
On the other side of the country, many residents of a housing project in Albany, New York, discovered that crude-by-rail was coming only after they started seeing—and hearing—long lines of oil-filled rail cars chugging close to their homes and the community playground. They soon found out that in 2012 Global Companies LLC received state permits allowing it to double crude oil storage and loading capabilities at its Port of Albany terminal.
To access the port—which adjoins low-income communities and a playground and is within blocks of an elementary school, a senior facility and a center for the disabled—trains carrying the explosive crude travel a rail line that passes directly through the heart of the city. Yet, the State Department of Conservation approved the project without requiring a full environmental impact review and without complying with its own environmental justice policy, which requires community participation and input on such proposals.
“Some of our clients can literally stick their hand out of their kitchen window and almost touch the trains going by,” says Earthjustice attorney Christopher Amato, who, on behalf of a number of groups sent a letter to the New York Department of Conservation, asking the agency to require a full environmental assessment that takes into account not just the rail project but all of the impacts that will come with turning the Port of Albany into a major oil shipping hub.
In March of 2014, Albany residents successfully convinced the county to halt the expansion plans. The news followed pressure by a broad coalition—including community and environmental groups like Earthjustice.
Crude-by-Rail Proposals Continue, as Communities Take Action
Despite significant pushback from communities, the oil and gas industry continues to ramp up its crude-by-rail operations to take advantage of the current fracking boom around the country. In Washington, Oregon, and California, there are more than a dozen known proposals for new or expanded crude-by-rail capacity.
In addition, certain members of Congress are calling for the lifting or loosening of the ban on crude oil export to other countries.
“Both coasts are in the crosshairs of the oil industry,” says Kristen Boyles, an Earthjustice attorney who represents tribes and conservation groups in Washington and Oregon who are fighting crude-by-rail.
In February of 2014, the Department of Transportation took the first initial steps to making crude-by-rail safer now, issuing an order that requires railroads to inform state emergency management officials about the movement of large shipments of crude oil through their states and urging shippers to avoid using older model tanks cars that are easily ruptured in accidents.
Residents applaud at Berkeley City Hall, following a vote in March 2014, opposing a proposed crude-by-rail project. Mauricio Castillo / Earthjustice
In addition, communities, no longer content to just lie down on the tracks and hope for additional regulations, are taking matters into their own hands. In December of 2013, two Chicago aldermen proposed that its City Council declare the DOT-111 tank cars a “public nuisance” and ban them from the city. And in February and March of 2014, city councils in Spokane, Seattle and Bellingham, Washington, passed resolutions requiring greater disclosures by railroads on traffic and routes, while Minnesota and the Washington state legislatures debated rail safety bills. Most recently, the city of Richmond and the neighboring city of Berkeley passed resolutions demanding tighter regulations or outright bans of the shipping of crude-by-rail through their communities.
“We didn’t go looking for this fight,” says Soto, who has spent much of his life fighting social injustice and shows no signs of slowing down. “But we’re going to fight it all the same.”
California’s Not Ready for Influx of Oil Trains, Says Report
Molly Samuel, KQED Science | June 12, 2014
Trains carrying oil can pose serious risks to public safety and the environment, and California isn’t prepared, according to a report released by state agencies this week.
Crude-by-rail is a growing concern, as an oil boom in North Dakota has meant increasing amounts of crude traveling to refineries by rail. A series of fiery derailments in the past year, including one that killed 47 people in a Quebec town, has focused attention on the need to prevent accidents and be prepared for emergency response.
‘Even though we haven’t had an accident, which is great, we want to be able to respond to it when there is an accident.’– Kelly Huston, Office of Emergency Services
The report warns that a derailment in California could kill people, destroy neighborhoods, damage water supplies and threaten natural areas.
“Even though we haven’t had an accident, which is great, we want to be able to respond to it when there is an accident,” said Kelly Huston, a deputy director at the Governor’s Office of Emergency Services (OES). “With the increase in the amount of crude oil on rail coming through California’s cities and counties, we believe there should be some increased training for first responders.”
The report was released by an inter-agency group that includes the OES, the state Department of Fish and Wildlife and the California Public Utilities Commission (CPUC), among others. It recommends boosting funding for emergency responder training, and for equipment to handle hazardous material accidents. It also supports an item in Governor Jerry Brown’s proposed budget that would provide more money to the Office of Oil Spill Prevention and Response, which has focused on marine oil spills in the past, but is now preparing for the possibility of inland spills.
It’s not all about accident response; there are also recommendations for prevention. Most rail regulation is up to the federal government; the CPUC helps enforce safety rules with its own rail inspectors. There are 52 of them, responsible for monitoring more than 5,400 miles of track in the state. “This staffing level is seriously inadequate,” the report says.
Paul King, deputy director for the rail safety at the CPUC, said the Governor’s budget aims to help. “To meet the volume of trains and the magnitude of the risk that [crude-by-rail] presents,” King said, “the Governor has put in his budget for extra staffing.”
There are other gaps the state cannot fill alone. As the CPUC pointed out in a report released last year, there is only one federal railroad bridge inspector for 11 Western states.
The report also raised the need for more information. As of last weekend, railroads that are transporting large shipments of Bakken, the volatile crude oil from North Dakota, must notify states. Huston of the OES said he got the first batch of documents Monday, but he said they’re of limited use and not timely enough. He said the OES is following up with BNSF and the federal Department of Transportation, the agency that issued the notification order.
Huston said he’d also like to see a map that the public could access, showing where the oil train shipments are headed. The railroads are resisting releasing information about crude shipments to the public.
Most of California’s oil comes either from within the state or overseas, and travels to refineries here by pipeline or ship. And that’s still the case. According the the California Energy Commission, only about one percent of California’s crude came by train in 2013. But trains carrying oil are becoming more frequent, and the CEC projects that by 2016, trains could be bringing in about 23 percent of California’s crude.
For years the American oil industry has argued that the ongoing U.S. oil boom will bring about “energy independence” and drive gasoline prices down. Americans are supposed to be enjoying an era of cheap, plentiful energy.
Source: Financial Times
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