HIGHLIGHTS
• Valero wants to bring trains carrying crude through Sacramento region to Benicia refinery
• Even without a catastrophe, oil trains pose a serious threat to public health and safety
• With clean energy and efficiency, California doesn’t need to take the risk
Railroad tracks lead to Valero’s refinery in Benicia. The company wants to ship oil there with two, 50-car trains a day. Manny Crisostomo Sacramento Bee file
If approved, proposed new oil train terminals at refineries in California would turn our railways into crude oil superhighways. Mile-long oil trains would haul millions of gallons of toxic, explosive crude through downtown Sacramento and dozens of other California cities and towns. An estimated 5 million Californians live in the one-mile evacuation zone along oil train routes.
In Benicia, city officials are close to a final decision on the proposed Valero oil train terminal. It’s essential that City Council members, who hold a hearing on Tuesday, understand why oil trains are too dangerous for our communities. There is no sure way to protect public health while transporting crude oil by rail.
Tom Steyer
Valero wants to bring two 50-car trains carrying about 3 million gallons of oil to its Benicia refinery every day. The environmental review of the proposal cites the “potentially significant” hazard of a spill and fire.
In 2013, the oil train explosion in Lac Megantic, Quebec, demonstrated the danger. It killed 47 people, destroyed dozens of buildings and poisoned a local lake. Three years later, residents still live with fear and anxiety, and scientists have recorded an “unprecedented” spike of fish deformities.
Steve Young
But it doesn’t take a catastrophe for oil trains to pose a serious threat to public health and safety. They disrupt traffic, delay emergency response and bring more poisoned air and increased disease. That’s why six counties and 22 cities around Sacramento have already said no to these trains. But the safety of all Californians living in the blast zone lies in the hands of Benicia city officials who will decide whether to approve Valero’s permit.
On Feb. 11, after days of testimony from experts and community members, the city Planning Commission voted unanimously to deny the permit. Valero has appealed to the Benicia City Council, which will make the final decision.
Something similar is happening in San Luis Obispo County, where the county staff and the California Coastal Commission recommended that the county reject the Phillips 66 oil train terminal proposal. The county Planning Commission must decide soon, but the final decision will rest with county supervisors.
Last year, NextGen Climate, the Natural Resources Defense Council, ForestEthics and Communities for a Better Environment released a report on oil industry plans to ship dirty Canadian tar sands crude to West Coast refineries. The report found that heavy crude would increase carbon pollution by as much as 26 million metric tons – the equivalent of adding 5.5 million cars to the road.
The good news is that we don’t have to live with these oil risks barreling through town. We can make our communities safer by transitioning to clean energy. A recent report by the Union of Concerned Scientists revealed that improvements in fuel efficiency and energy technology could help us cut oil consumption in half by 2030.
There’s no place for extreme tar sands or Bakken crude in California’s emerging clean energy economy – and there’s no place in our communities for dangerous, unnecessary crude oil trains.
Would Saving A Livable Climate Destroy Buffett’s Fossil Fuel Empire?
By Joe Romm, March 11, 2016 8:00 AM
BNSF oil train derailment in 2013. CREDIT: BRUCE CRUMMY, AP
Billionaire Warren Buffett has bet the future of his company Berkshire Hathaway on dirty energy. In recent years he has been building a vertically-integrated fossil fuel empire — one that develops, delivers, processes, and burns the most climate-destroying fuels.
The final part of this series on Buffett looks at how BNSF Railways is the engine of his carbon-intensive conglomerate, creating a massive risk for shareholders in this increasingly carbon-constrained world — a risk the “Oracle of Omaha” needs to be far more upfront about.
Is Warren Buffett “The Profiteer” of “Climate Killers”?
When Rolling Stone named Warren Buffett one of its 17 “Climate Killers” in 2010, they called him “The Profiteer.” They zeroed in on his recent purchase of “Burlington Northern Santa Fe railroad for $26 billion — the largest acquisition of Buffett’s storied career.”
Why? BNSF is “the nation’s top hauler of coal, shipping some 300 million tons a year.” That is especially convenient for Buffett because, as noted in Part 2, Berkshire Hathaway Energy has four major utilities that still rely on coal for over half their electricity generation.
CREDIT: BNSF
But BNSF is so much more than just the top hauler of coal. As their website proudly attests “BNSF is the largest transporter of crude oil in North America” — and we all know how well the whole crude-by-rail thing has been going.
2015 “has already been the costliest by far for crude train explosions,” BloombergBusiness reported in December. A “BNSF train that derailed and exploded in Illinois” last March “carrying highly explosive crude from North Dakota” created some $5.5 million in damage.
From 2010 through mid-2014, oil shipped by rail in the United States increased from about one million barrels of oil every month to 25 million! At the same time, Canadian imports increased 50-fold, as we’ve reported. BNSF was a driving force behind that explosion.
CREDIT: EIA DATA
Also, last October we learned about “what is believed to be the largest frac sand unit train to date in North America.” You guessed it: “The 150-car unit train, operated by BNSF, carried 16,500 tons of frac sand used in hydraulic fracturing.”
Warren Buffett Bets Big On The Tar Sands
But wait, there’s more. You may recall from Part 1 that last year, the billionaire spent $240 million buying another chunk of Canadian tar sands giant Suncor, upping his overall bet on the climate-destroying liquid fuel to $1.1 billion — a fact Buffett does not share with shareholders in his list of Berkshire Hathaway’s climate risks.
On top of that, as BNSF’s website also proudly attests, the railroad “is positioned to act as a gateway to the Canadian oil sands.” Seriously.
Indeed several years ago, a BNSF employee magazine explained how invested the railway was in all aspects of tar sands (aka bitumen) development. The key point is that “Before bitumen can move through a pipeline to its destination, it must be blended with diluents (diluting agents),” lighter weight hydrocarbons like natural gasoline or butane:
BNSF has been moving single carloads of diluents from U.S. refineries to the Canadian border…. The inbounds are then interchanged with Canadian railroads, then moved to Edmonton, with the final move to the oil sands’ processing center via pipeline.
Last year, BNSF moved about 9,000 carloads of diluents for the project, with the majority of loads originating from the Gulf Coast, California, and Kansas. This year, about 12,000 carloads are anticipated to move.
There’s more: Beyond shipping diluents, “BNSF has also transported turbines, other large machinery and pipes for use at the drilling sites.”
There’s still more to this empire. In 2015, Buffett “nearly doubled Berkshire’s position in Phillips 66,” one of the country’s leading oil (and gas) refiners and processors. The company has 15 refineries which can refine a total of 2.2 million barrels of crude per day.
In January of this year alone, Buffett spent a staggering $832 million to buy yet more Phillips 66 stock. At more than $5 billion, it is his sixth-largest holding. He now owns 14 percent of the “Number 7” company on the Fortune 500 list.
Phillips 66 is a major co-owner of the Wood River Refinery in Illinois, which in recent years made investments “to expand the capacity to handle the bitumen from the Alberta oil sands by nearly 700%.” Also not coincidentally, for the last year, Phillips 66 has been trying to get California planning commissioners to let it build a 1.3-mile rail spur to its Santa Maria refinery. Why? As the Sierra Club explained last month, “The oil giant seeks to transport tar sands crude from Canada in mile-long trains — each laden with over 2 million gallons of dirty crude.”
Both A Livable Climate And Buffett’s Empire Cannot Thrive
Yes, the Oracle of Omaha has a thing for the Canadian tar sands. But more than that, over the last several years he has built a vertically-integrated fossil fuel empire — one that develops, delivers, processes, and even burns the most carbon-intensive fossil fuels. It would be a brilliant strategy except for two small details.
First, climate science makes clear we have to leave most fossil fuels — and virtually all of the most carbon-intensive — in the ground to avoid global catastrophic warming. Second, over the past 18 months, the leading nations of the world unanimously agreed on a plan whose goal is to do just that, and the overwhelming majority of them made detailed pledges to slow or reverse carbon-intensive growth and replace it with carbon-free growth.
The domestic and international coal market has already collapsed as a result of growing environmental concerns and low-cost alternatives including renewables. If the world follows through on its plans to keep total warming below 2°C — a big “if,” for sure — then coal is going to continue to be squeezed out of the market in the coming decades and oil will almost certainly follow the same fate, peaking in demand by 2030, as I discussed last month.
Now whether or not you believe the world is going to achieve the plan it unanimously embraced in Paris in December, surely Buffett ought to at least mention to his shareholders the risks to Berkshire Hathaway if the world does. Yet, his latest annual letter to shareholders dismisses the risk of climate change.
Here is all Buffett says about the coal risk: “To begin with an obvious threat, BNSF, along with other railroads, is certain to lose significant coal volume over the next decade.” But he quickly dismisses this as a problem that is not “crucial to Berkshire’s long-term well-being.”
Last summer, BNSF executive chairman Matthew K. Rose noted the decline in U.S. coal transport and consumption. He said of his company’s major investment to upgrade its rail service to and from the coal-rich Powder River Basin, “That leaves us with millions of dollars in investment in what will eventually be stranded assets.”
Certainly, from a short-term business perspective, investing in oil-by-rail and tar-sands-by-rail to replace coal-by-rail appears to make sense. But what are the risks those investments will eventually become stranded assets, too? Low oil prices aren’t good for crude-by-rail, as BloombergBusiness explained in December. And aggressive climate action, which could well give us peak demand within 15 years, is not bullish for oil prices.
CREDIT: BLOOMBERG
Rather than informing shareholders about any of these risks, Buffett asserts the reverse: “Both BHE [Berkshire Hathaway energy] and BNSF have been leaders in pursuing planet-friendly technology.” Seriously?
I discussed in Part 2 how, despite BHE’s own investments in renewables, BHE is working to crush solar energy in Nevada and around the western United States. And it remains a huge user of coal. And as we’ve seen BNSF is a major deliverer of coal….
But here is how Buffett defends the fairly ludicrous claim that BNSF is somehow one of the “leaders in pursuing planet-friendly technology”:
BNSF, like other Class I railroads, uses only a single gallon of diesel fuel to move a ton of freight almost 500 miles. That makes the railroads four times as fuel-efficient as trucks!
Yes, BNSF is a very fuel-efficient way of delivering vast amounts of climate-destroying fuels to market.
Finally, is it only a coincidence that after outperforming the market for decades, the stock of Berkshire Hathaway has actually underperformed the S&P 500 over the last five years?
Again, if serious global climate action ultimately keeps oil prices low and renders much of the tar sands uneconomic, then Buffett’s carefully constructed fossil fuel empire is going to keep suffering — and deservedly so. After all, leading climate activists have been urging major investors to disinvest in fossil fuels for years. Buffett is doing the exact reverse!
BOTTOM LINE: Between Berkshire Hathaway and a livable climate, only one can thrive. That’s not a tough choice, is it?
ForestEthics has set up an easy online petition directed to the Sacramento City Council, asking for their support in opposing Valero Benicia’s Crude By Rail project. Sign below, add a personal comment if you wish, and click on ADD YOUR NAME. Thanks!
Don’t let Sacramento be the site of the next oil train disaster.
Right now, oil giant Valero is fighting to build a rail terminal at its refinery in Benicia to receive trains carrying highly toxic and explosive crude oil. If approved, mile-long oil trains will roll through Sacramento every day en route to the Valero refinery.
We’re urging our elected officials in Sacramento to oppose this project but, we need your help. Add your name to the petition now!
This is a crucial moment in the multi-year long fight to StopOilTrains in Benicia. They’ll soon be deciding whether or not to approve this dangerous project, and the Sacramento City Council must do everything in their power to protect our community.
Let’s make sure Benicia’s leaders know that Sacramento is watching.
Benicia decision makers need to hear from Sacramento residents and elected officials before a decision is made that will impact all of us. That’s why we must make sure the Sacramento City Council passes a resolution opposing this project.
Add your name to the petition now and we’ll demand they stop Valero from putting Sacramento’s health and safety at risk.
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To: Sacramento City Council
From: [Your Name]
Right now, oil giant Valero is fighting to build a rail terminal at its refinery in Benicia to receive trains carrying highly toxic and explosive crude oil.
If approved, mile-long oil trains will roll through downtown Sacramento every day en route to the Valero Benicia refinery.
We call on you to protect our public health and safety by voting to oppose the Valero oil trains terminal.
Repost from the East Bay Express [Editor: I am posting this excellent review by Jean Tepperman belatedly, with thanks for East Bay Express’ regional coverage of a Benicia story with huge regional and national implications. I’ve not read a better review of the Feb. 8-11 Benicia Planning Commission hearings. – RS]
Benicia Blocks Oil-By-Rail Plan
By Jean Tepperman, February 12, 2016
Valero Refinery in Benicia. – WIKIMEDIA COMMONS
The little town of Benicia is looking to become the next link in the chain barring crude oil from traveling by rail to the West Coast. After four evenings of contentious hearings, the Benicia Planning Commission on Thursday unanimously rejected Valero refinery’s proposal to build a rail spur that would allow it to import up to 70,000 barrels a day of “North American crude oil” — meaning extra-polluting crude from Canada’s tar sands and the highly explosive crude from North Dakota’s Bakken shale fields. Both fossil fuels have been involved in numerous derailments, explosions, and fires, including a 2013 fire and explosion in Lac Megantic, Quebec that killed 47 people.
Starting on Monday, planning commissioners, led by Commissioner Steve Young, grilled staff members about their decision to recommend approval of the Valero project, identifying inconsistencies and pointing to problems that the project would create, from blocking traffic to increasing pollution to potential oil spills and other emergencies that the city would not be able to cope with. The central issue that emerged, however, was whether the city had the authority to make decisions about the project.
The staff report actually said the benefits of the project did not outweigh the potential harm. Shipping crude oil by rail, the staff found, would have “significant and unavoidable” impacts on air quality, biological resources, and greenhouse gas emissions. These impacts would conflict with air quality planning goals and state goals for reducing greenhouse gas emissions. But the city can’t prevent any of this, the staff report said, because only the federal government has the authority to regulate railroads.
Bradley Hogin, a lawyer whom the city hired on contract to advise on this project, said federal law prevents local governments from interfering with railroads, a principle referred to as “preemption.” According to the interpretation of “preemption” described by Hogin and city staff, local governments are not permitted to take actions that “have the effect of governing or managing rail transport,” even indirectly. And they are not allowed to make decisions about a project based on impacts of rail shipping connected with that project.
“Hogin is making a case that would affect cities across the nation dealing with crude by rail,” said environmental activist Marilyn Bardet in an interview. “They were going to create a legal precedent on preemption here.”
Bardet reported that public testimony by representatives of environmental organizations and “two young women from the Stanford-Mills Law Project made it clear that “there are many people who would disagree with Hogin’s interpretation.”
Roger Lin, lawyer with Communities for a Better Environment, said in an email that, contrary to Hogin’s claims, the California Environmental Quality Act actually requires local governments to consider “indirect or secondary effects that are reasonably foreseeable and caused by a project, but occur at a different time or place.” Valero is not a railroad, he said, so the “preemption” doctrine does not bar the city from using its land-use power to reject the project.
However “preemption” is interpreted, Bardet said, “the commissioners seemed uncomfortable with being told they would have to approve the project based on considerations they couldn’t accept.” Late in the hearing process, commission chair Donald Dean said, “I understand the preemption issue on a theoretical legal level, but I can’t understand this on a human level.”
Bardet expressed appreciation for the commissioners’ concern. “My sense was that these guys are real human beings,” she said. “They all listened carefully. None of them was asleep.”
Project opponents packed the hearing room for four straight nights, filling two overflow rooms on the first night. People came from “uprail” communities, including Davis and Sacramento, as well as allies from across the Bay Area, Bardet said.
Opposition to the project has been led by a community group, Benicians for a Safe and Healthy Community, formed in 2013 when the city seemed ready to approve the project without requiring any environmental impact study. “We joined with other refinery communities in the Bay Area Refinery Corridor Coalition” and in a coalition working to persuade the Bay Area Air Quality Management District to pass tough new regulations on refinery pollution, Bardet said. She said support from the National Resources Defense Council and Communities for a Better Environment was also important. “The grassroots came alive together,” she said.
Many of these organizations, like the Benicia group, are concerned, not only about the hazards of shipping crude by rail, but by the impact of refining the extra-polluting crude oil from Canada’s tar sands, Bardet said. She noted that the city’s environmental review of the project made no mention of this issue, although it is well established that refining dirty crude oil, like oil from tar sands, emits more health-harming pollution as well as more greenhouse gases.
Valero is expected to appeal the planning commission decision to the city council, which could meet to decide on the issue as early as mid-March. “The city council is going to be hard-pressed to reject the views of their own planning commission,” Bardet said.
She emphasized the significance of this decision for the national and international issue of shipping crude oil by rail. “The whole world is watching,” she said. “I just got a message from a guy in New Jersey congratulating us.”
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