ABC News: Low Oil Prices Unlikely to Hurt Railroads Much

Repost from ABC News
[Editor: Significant quote: “…even with oil prices falling off a cliff, industry analysts and railroad executives point out that crude shipments still make up just a sliver of the overall freight delivered by rail. What’s more, because fuel is such a huge cost in the industry, railroads are a direct beneficiary of those falling prices.”  – RS]

Low Oil Prices Unlikely to Hurt Railroads Much

By Josh Funk, AP Business News, Jan 5, 2015

The stunning collapse in oil prices over the past several months won’t derail the railroads’ profit engine even if it does slow the tremendous growth in crude shipments seen in recent years.

Carloads of crude oil spiked well over 4000 percent between 2008 and last year — from 9,500 carloads to 435,560 — as production boomed and the cost for a barrel of oil soared into the triple digits.

Those prices have tumbled severely, to just above $50 per barrel Friday, and that has rattled some of the investors who have plowed money into companies like Union Pacific, Norfolk Southern and CSX.

All three of those companies have seen their stock prices slip over the past month, along with major U.S. stock markets.

But even with oil prices falling off a cliff, industry analysts and railroad executives point out that crude shipments still make up just a sliver of the overall freight delivered by rail. What’s more, because fuel is such a huge cost in the industry, railroads are a direct beneficiary of those falling prices.

Crude oil shipments remain less than 2 percent of all the carloads major U.S. railroads deliver. Sub-$60 oil might force producers to rein in spending but railroads ? which spend hundreds of million of dollars every quarter on fuel? will see their costs fall away.

Those falling energy prices have also proven to be the equivalent of a massive tax cut for both consumers and businesses, and railroads stand to benefit from that as well.

Fueled by a rebounding employment as well as rising consumer and business confidence, U.S. economic growth reached a sizzling 5 percent annual rate last quarter, the government reported this month. The rebounding economy is likely to drive even greater demand for shipping.

Edward Jones analyst Logan Purk says the importance of crude oil shipments by rail seems to have been inflated by investors.

“It seems like whatever loss in business they see will be offset by the drop in fuel costs,” Purk said.

The crude oil business has provided a nice boost for railroads at a time when coal shipments were declining. Profits at the major U.S. railroads have been improving steadily along with the economy, reaching $13.4 billion in 2013, up from $11.9 billion in 2012 and $10.9 billion in 2011.

Officials from Union Pacific Corp, Norfolk Southern Corp., CSX Corp. and Canadian Pacific all tried to reassure investors about crude oil shipments during their latest investment conferences.

“I don’t think that we are going to see any knee-jerk reaction. I don’t think we are going to see anything stopped in the Bakken,” said Canadian Pacific CEO Hunter Harrison said of the massive oil and gas fields that stretch from North Dakota and Montana into Canada.

The Bakken region is one of the places where railroads are hauling the majority of the oil because pipeline capacity hasn’t been able to keep up with production.

Through the fall, North Dakota oil drillers remained on pace to set a sixth consecutive annual record for crude oil production.

Justin Kringstad, director of the North Dakota Pipeline Authority, said the lower prices will prompt oil companies to look for ways to reduce costs, but he’s not yet sure how much of an effect it will have on production in the region.

“It’s still a little early to make any firm assessments,” Kringstad said.

Oil Trains: The Industry Speaks for Itself – a record of denial and deceit, in photos

Repost from Sightline Daily
[Editor: These images would be great for posters  (see below) – and the author speaks for me when he writes, “Government regulators have been slow to act, their responses painfully milquetoast. As a result, much of what I do involves research into the often-complex details of federal rulemaking procedures, rail car design standards, insurance policies, and the like—all the issues that Sightline is shining a light on….Yet on some level it’s not about any of that. It’s about a reckless and unaccountable oil industry that—in the most literal and obvious way—profits by putting our lives at risk. Every time I hear one of their accountability-shirking lines, I can’t help recalling images from those tragedies and near-tragedies.”  – RS]

Oil Trains: The Industry Speaks for Itself – a record of denial and deceit, in photos

By Eric de Place and Keiko Budech, December 30, 2014

A year and a half after an oil train inferno ended 47 lives in Lac-Megantic, Quebec, the crude-by-rail industry rolls on, virtually unimpeded. It’s hard not to feel horrified when, one after another, we register the place names of oil train explosions—Aliceville, Alabama; Casselton, View PostNorth Dakota; Lynchburg, Virginia—as grim warnings of what could happen in so many other North American communities.

Government regulators have been slow to act, their responses painfully milquetoast. As a result, much of what I do involves research into the often-complex details of federal rulemaking procedures, rail car design standards, insurance policies, and the like—all the issues that Sightline is shining a light on.

Yet on some level it’s not about any of that. It’s about a reckless and unaccountable oil industry that—in the most literal and obvious way—profits by putting our lives at risk. Every time I hear one of their accountability-shirking lines, I can’t help recalling images from those tragedies and near-tragedies. The juxtaposition is startling that we decided to undertake a small photo project to capture it. We hope that you’ll find the following useful in your own work, and if so, that you’ll share the images with your own networks.

It’s a practically a given that we’ll hear more empty reassurances and lies from oil and rail executives in the new year, and as growing numbers of oil trains crisscross the continent, there’s every likelihood we’ll have another catastrophe to catalog. To grasp the magnitude of the oil industry’s cynicism, it’s best to hear them in their own words.

Lynchburg, VA, Derailment by LuAnn Hunt
Lynchburg, VA, Derailment by LuAnn Hunt
Aliceville, AL, Derailment, by John Wathen
Aliceville, AL, Derailment, by John Wathen
Lac-Mégantic Derailment by TSB Canada
Lac-Mégantic Derailment by TSB Canada
Lac-Mégantic Derailment by TSB Canada
Lac-Mégantic Derailment by TSB Canada
Lac-Mégantic Derailment by David Charron
Lac-Mégantic Derailment by David Charron
Lac-Mégantic Derailment by TSB Canada
Lac-Mégantic Derailment by TSB Canada
Lynchburg, VA, Derailment by Michael Cover
Lynchburg, VA, Derailment by Michael Cover

Crude by rail on the 2015 Congress’ legislative agenda

Repost from Politico
[Editor: this story ranges across all modes of transportation.  I have highlighted in red all references to crude by rail.  Note the significant roles to be played by “Rep. Bill Shuster (R-Pa.), who as chairman of the House Transportation Committee is tasked with writing each of the transportation bills and and shepherding them through the lower chamber…. and Rep. Peter DeFazio (D-Ore.), incoming ranking member of the committee.”  – RS]

Loaded transportation agenda could easily be derailed

By Adam Snider, 1/2/15

There’s a laundry list of things transportation lawmakers want to get done in 2015, but they could easily be stymied by old foes, primarily a lack of money and partisan wrangling ahead of the 2016 presidential election.

Lawmakers from both chambers face a to-do list that includes major legislation affecting just about every mode: aviation, passenger and freight rail, highways, bridges, transit and water resources.

Not all the action will be on Capitol Hill — there will be plenty to do a mile down New Jersey Avenue at the Transportation Department.

Regulators are hoping to put out rules early in the year on hot-button issues such as commercial drones and the safety of rail cars that carry volatile crude oil. Also pending is a rule that would ban cellphone conversations on planes and a slew of policy changes mandated by the last surface transportation bill two years ago.

“Every one of the subcommittees has the potential to do a pretty significant piece of legislation,” said Rep. Bill Shuster (R-Pa.), who as chairman of the House Transportation Committee is tasked with writing each of the transportation bills and and shepherding them through the lower chamber.

“We’re going to be busy,” Rep. Peter DeFazio (D-Ore.), incoming ranking member of the committee, said after ticking off a long list of major bills the panel faces.

Shuster and other top lawmakers aren’t worried about a time crunch, though, because, they say, they’ve put in a lot of work on all the major bills. But the price tag of the highway and transit measure — around $100 billion just for six years of status quo funding — could easily steer it off course. And it could also get bogged down in another round of debates over how the money is divvied up among the states as well as transit’s slice of gas tax dollars.

There’s a strong and diverse coalition of groups — including business, labor and motorists — that have pushed for a gas tax increase as a way to increase federal spending on roads, bridges and transit systems. But that idea is largely a nonstarter on Capitol Hill; instead, support is building for using portions of revenues raised from corporate tax reform as a way to pay for increased infrastructure spending.

That path, however, has its own set of roadblocks. While it enjoys bipartisan support, including from polar opposites such as President Barack Obama and Sen. Rand Paul (R-Ky.), getting it done on the Hill is no sure thing. Some lawmakers could push for a broader tax overhaul package, an ambitious goal that could further complicate issues as members bicker over the nation’s overall tax structure. Even infrastructure boosters complain that it would be onetime revenue, and not a long-term fix.

No matter what happens, though, lawmakers will have to address the Highway Trust Fund early in 2015 — the fund that pays for road, bridge and transit work will go insolvent by May. Even a simple one-year extension, which must be enacted by May 30, would cost around $15 billion because the trust fund takes in far less in gas tax revenues than it is authorized to spend each year.

Another major reauthorization, of the Federal Aviation Administration, doesn’t face the same money problem — the Airport and Airway Trust Fund that pays for over 80 percent of the bill isn’t in the same financial peril. It is increasingly under strain, however, and discussions have begun about whether and how to switch to some new system of financing, including possible privatization.

But the FAA bill brings its own set of policy disputes. West Coast lawmakers will undoubtedly again push to increase the number of long-distance flights into and out of Ronald Reagan Washington National Airport, the airport closest to the Capitol used by the vast majority of lawmakers. Republicans will scrutinize the multibillion-dollar cost of NextGen, a new air traffic control system that is taking years to implement. The airport and airline lobbies will scrap over whether to raise the current cap on fees passengers pay to use certain airports. And members of both parties will prod the FAA to chart a clear path forward on drones, which to date have been addressed through a series of one-off rulings.

Lawmakers also want to address Amtrak, which saw its congressional authorization expire in 2013. The House Transportation Committee unanimously approved a bipartisan measure in 2014, but things could get more complicated when the full House takes it up. Some hard-line lawmakers want to end Amtrak’s $1.4 billion-per-year federal subsidy, while some Democrats would like to boost the railroad’s funding to help it address a backlog of deteriorating infrastructure.

The Amtrak bill could also ignite a regional battle — the House measure ensures that money made by the profitable Northeast Corridor, the area between D.C. and Boston, gets plowed back into that region’s operations. For the rest of the country, where nearly all Amtrak routes lose money, keeping service levels intact would mean states — facing their own budget shortfalls — would need to offer more money.

Hill politicians also face work on another water resources bill in 2016, though the overwhelming bipartisan support for the 2014 version makes that less of a concern. There’s also a rail safety bill on the horizon that could offer a chance to deal with the rising number of trains carrying crude oil, several of which have had headline-grabbing accidents and spills.

The DOT will also be grappling with how to stem the tide of oil train accidents. Officials hope to put out a rule in early 2015 that would set a new standard for the tank cars that carry crude and other volatile materials. The so-called cromnibus, which was recently enacted, moved the deadline for that rule up by about two months, to Jan. 15. However, most regard that as a statement from Congress more than a hard and fast deadline considering the timing.

That’s not the only regulation expected in early 2015 — regulators also aim to issue a broad rule on drones use and licensing to address the rising number of remote-controlled aircraft that can pose a major safety hazard if they get near large passenger planes. That rule was supposed to come out in 2014, but the complicated nature of the issue led the FAA’s assistant chief counsel to recently say the goal of putting it out by then was “slipping away.”

2015 could also see regulatory action to ban cellphone conversations on planes. The FCC kicked off the issue by ruling that there was no reason to continue its technical ban on in-flight calls, which set off a firestorm of worry and headlines about loud, obnoxious yakkers on flights. That led the DOT to begin its own proceeding, evaluating whether calls should remain banned under DOT’s consumer protection authority.

A string of high-profile disputes over reclining airline seats only added to the worry that phone-based brawls would be breaking out every week. And with the support of a number of lawmakers on the Hill, DOT shouldn’t run into much resistance when it formalizes the ban on in-flight cell conversations.

DOT is also facing a long list of rules implementing various parts of MAP-21, the highway and transit bill enacted in 2012, including setting performance measures to gauge how effective certain projects are at meeting each state’s transportation goals — a topic bicycle and pedestrian advocates have used to push for better safety measures.

CBS News: Kansas derailment raises vital rail safety questions

Repost from CBS News
[Editor: Apologies for the commercial ad in the otherwise excellent video.  – RS]

Kansas derailment raises vital rail safety questions

January 3, 2015

Rail safety is back in the spotlight after a new warning from federal regulators.

The National Transportation Safety Board is urging railroads to take immediate action following its investigation of a derailment in Kansas. No one was hurt in the derailment, but it raised new questions about whether America’s rail network — carrying cargo and passengers — is as safe as it could be, CBS News’ Mark Albert reports.

The collision in September between two Union Pacific freight trains in Galva, Kansas, may have come down, in part, to a light bulb.

In a news release Friday, the NTSB said a green LED light was so bright it out-shined the old-fashioned, incandescent red stoplight nearby. The engineer accelerated, plowing into an oncoming train.

The NTSB now wants all railroads to eliminate any lighting hazards nationwide. It’s the latest in a string of safety issues in the past 18 months on America’s 140,000 miles of rails.

“What we know is the regulators are behind the curve,” said former NTSB chair Deborah Hersman, who sounded the alarm about crude oil shipments in April. “We’re losing cars. We’re losing millions of gallons of petroleum, and we aren’t prepared.”

Eight days later, train cars carrying crude oil derailed and caught fire along the James River in Virginia.

In December 2013, a derailment in North Dakota caused a huge fireball. And in July 2013, 47 people died after a derailment in Quebec, Canada. The train was carrying oil from North Dakota’s booming Bakken oil region.

McClatchy correspondent Curtis Tate acknowledges that the government and the railroads are making strides to make rail travel safer.

“Absolutely, they are,” he said. “The problem is it was too late for 47 people in Quebec.”

Tate published an investigation this week that found gaps in rail oversight, including:

The government lets railroads do their own bridge inspections.
There is no federal database on those bridge conditions, like there is with roads.

New rules that make railroads tell states when large oil shipments pass through only apply to higher-risk Bakken crude — not other types of oil.

“I’d like to think that they’re doing the best they can,” Tate said. “But the question is, will that be enough?”

In a statement to CBS News, the Association of American Railroads said the industry spends half a billion dollars per week on safety.

The Department of Transportation is expected to issue new federal rules by spring that may include stronger tank cars, tighter speed restrictions and tougher braking requirements.