Remember reading about WW-2 oil trains. Can anyone enlighten us on the differences from then to now ?
Actually rail is the alternative. Pipelines were the usual choice before oil companies realized there was a rail alternative. Pipelines have continued to be built to the Bakken, and more projects are in the works, including to the east coast. If rail gets too expensive, they will simply fall back on pipelines.
henry6 Euclid henry6Spiraling costs? Is this a fear or a reality? Or threat? It is a fear and a reality that justifies the fear. I am not sure what you mean by a "threat." A threat by who? The spiraling cost of new regulations is certainly a threat to the oil and railroad industries. It is also a threat to the public. Ironically, however, the public also plays a role in making the threat, to the extent that they fan the flames of new regulations. Of course prices will go up. But what are the alternatives? There are none. We either do it or we don't...but there is a price either way.
Euclid henry6Spiraling costs? Is this a fear or a reality? Or threat? It is a fear and a reality that justifies the fear. I am not sure what you mean by a "threat." A threat by who? The spiraling cost of new regulations is certainly a threat to the oil and railroad industries. It is also a threat to the public. Ironically, however, the public also plays a role in making the threat, to the extent that they fan the flames of new regulations.
henry6Spiraling costs? Is this a fear or a reality? Or threat?
It is a fear and a reality that justifies the fear. I am not sure what you mean by a "threat." A threat by who?
The spiraling cost of new regulations is certainly a threat to the oil and railroad industries. It is also a threat to the public. Ironically, however, the public also plays a role in making the threat, to the extent that they fan the flames of new regulations.
Of course prices will go up. But what are the alternatives? There are none. We either do it or we don't...but there is a price either way.
Sure there will be a price either way. But the issue is the amount of the price, not whether or not there will be a price.
And contrary to what you say, there definitely is an alternative to a product that is deemed to have too high of a price. That alternative is to not buy it, or to shop for a cheaper product.
I don't see how you can dismiss this by saying that it is all rhetoric and posturing. There is indeed a real issue here.
It is all rhetoric and posturing. Of course prices will go up. But what are the alternatives? There are none. We either do it or we don't...but there is a price either way. What all this is about is to who is to end up with the greatest amount of blame; watch the finger pointing...in a circle.
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Tank cars are already the most expensive production freight car on the rails. They also produce the biggest lease revenue! The shippers will have to bear the entire initial cost for these cars. The aAR has been pushing for this for several years, the car leasing firms have been fighting it. Now, with the 'Feds' involved, it will happen. How much 'over the top' safety features will be in the new regulation remains to be seen.
BNSF has a small fleet of 25,000 gallon tank cars(more than most railroads). They are taking quotes from car builders for 15,000 tank cars to meet the proposed new standards(what-ever they will be). I wonder if BNSF is serious about buying those cars, or is trying to 'push' the tank car leasing companies to action?
Jim
Modeling BNSF and Milwaukee Road in SW Wisconsin
selectorI see an early comment about the "spiraling costs" being a worry as well. That sobering reality changes the market.
Yes it does change the market. That much is inevitable from what we know about the cost of changing the tank car fleet so far. It also has the power to kill the market by pricing transportation out of the market. That part is the unknown that depends on the new tank car regulations that are not yet released. A lot of people say the oil has to move one way or the other. No it doesn’t have to move. Or at least Bakken oil does not have to move.
Bakken oil will stay in the ground if it doubles the cost of gasoline compared to gasoline produced from foreign oil.
Spiraling costs? Is this a fear or a reality? Or threat? What would it cost to provide the same level of safety for highway vehicles coupled with the actual costs of highway transportation? If rail is safer overall and if rail transportation is cheaper overall, then the costs and cost increases are inevitable. It is American business, so, yes, no matter what the price will go up. Of course, that is, unless somebody comes up with a safer and cheaper way to move the stuff. Move anything.
I see an early comment about the "spiraling costs" being a worry as well. It's simple economics; the new reg cars are non-extant, and yet the demand for them will be urgent and protracted. IOW, they are few where the demand is great. It follows that the urgency for them will make them costly for some time, but also that those costs will have to be borne at the far end of the distribution chain. That sobering reality changes the market.
-Crandell
Here is an article with several comments made by rail financing and leasing executives regarding two different subjects. The first one is about rail financing, and the second one is about regulation. Interestingly, much of the financing topic worries about new regulations on tank cars, and almost the entire regulations topic also worries about new regulations on tank cars. The two topic headings are in bold in the article as follows:
“What is the key issue facing the rail finance/leasing sector in 2014? Why?”
“On the regulatory front, what's your biggest near-term concern ... and why?”
http://www.progressiverailroading.com/rail_industry_trends/article/Rail-finance-and-leasing-What-are-the-key-issues-in-2014--39472
To say the least, the executives appear to be unconvinced that the current improved safety standards being incorporated into new tank cars being built will satisfy the newer standards coming soon. And, there is obvious apprehension about what the new standards will be.
I think these highly informed comments give great insight into the battle that is shaping up over the danger of hauling Bakken crude, and how that problem will be addressed. One comment worries about misguided regulations being foisted upon the railroad industry when it says:
“Public perception influences politics which make regulations and the public not fully informed."
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