The oil-train boom is waning almost as quickly as it began.
Rail became a major way to move crude after companies began unlocking new bounties of oil from shale formations, with volumes rising from almost nothing in 2009 to more than one million barrels a day by 2014, according to the U.S. Energy Information Administration.
But those numbers began falling after oil prices started tumbling two years ago, and aren’t projected to recover anytime soon. In April, just 430,000 barrels of oil rode the rails each day, according to the latest federal figures.
Some of the decline came from a drop in U.S. oil production, but oil and rail executives say the drop-off may be permanent. “At least some portion, and it could be a pretty large portion,” of the rail business won’t return, said Union Pacific Corp. Chief Executive Lance Fritz.
More pipelines have begun reaching North Dakota and other shale regions, giving producers a cheaper way to move their oil to market.
Also, a string of fiery crude-freight-train derailments—including one in Lac Mégantic, Quebec, that killed 47 people in 2013—have prompted a host of new and expensive regulations, and fueled opposition that has helped delay major rail projects on the West Coast, where a dearth of pipelines makes rail useful. Regulators have mandated new safer tank cars, and older tank cars are being phased out—adding to future costs for transporting oil.
We don't need this; but then after Megantic and all the others that got on to Page 1, as well as after the capital has been committed, pipelines can move the stuff cheaper and safer, I can't be too surprised.
How much more bad news can the industry handle before it's "back to the Dark Ages"? Isn't Coal, Neo-PANAMAX, PTC, possible "re-reg" enough?
No wonder my disclaimer now reads in its entirety;