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article imageOp-Ed: Oil trains and the new regulations — It all comes down to money

By Karen Graham     Jul 18, 2014 in Business
America's energy boom is still going strong, and the oil trains continue to roll, moving millions of gallons of black gold from North Dakota's Bakken oil patch to refineries on the East Coast. But, will new safety rules lead to the end of oil trains?
In a few weeks, the Obama Administration will be unveiling a new set of safety regulations aimed at overhauling the standards written well before the shale-oil industry took off, and at a time when most people had never seen a mile-long oil train.
Billions of dollars are riding on the release and acceptance of the new regulations, with lobbyists from the railroads, tank car manufacturers, oil, ethanol and chemical industries having met with the White House and the Pipeline and Hazardous Materials Safety Administration 13 times since March of this year.
The need for safer tank cars and tighter control of safety regulations is needed due to the alarming number of fiery train derailments across the U.S. and Canada. Since 2008, there have been 10 what the press has been calling "significant" derailments in the two countries in which crude oil has poured from ruptured tanker cars, often erupting into huge fireballs.
According to Reuters, looking at individual parts of the soon to be released regulations, the changes to the standards are incremental, "a question of a fraction of an inch of steel in tank cars, a few miles an hour of speed or rerouting trains; stripping explosive gases out of the oil would be costly but not complex."
But if one disregards individual pieces of the regulations, and instead looks at the overall impact of what they will have on the industry, a far different picture begins to take shape. The railroads, refineries, oil producers and even Wall Street have become so dependent on the oil trains running that the new regulations could easily upset what was once a cozy little apple-cart.
The affects of the new standards on some peoples profit lines will cut across many different parts of the oil industry, and some say, they may even affect the shipments from one-tenth of U.S. crude oil refineries. All those meetings in Washington since March may have been "working meetings," but quite often, they were used to express resistance to the regulations, and sometimes, to offer alternatives, often placing the responsibility for exercising the changes on a different industry.
The American Petroleum Institute, a major voice for oil producers, and the Association of American Railroads, the political arm of the rail industry, reached an agreement on oil tanker safety on Monday, according to industry sources. The agreement specifically dealt with working out a schedule for retiring older tank cars and a tougher design for newer cars carrying fuel out of North Dakota’s Bakken shale oil fields.
But the U.S. refining industry is balking at coming to any agreement. A spokesperson for the American Fuel & Petrochemical Manufacturers (AFPM), Rebecca Adler pointed out on Tuesday that it is the refining industry that relies the most on the tank car to deliver crude oil safely, and they were not part of any deal. "Our members own or lease the lion’s share of rail tank cars used to transport crude oil. AFPM members have not yet considered the API/AAR specification car and have not seen the data showing the costs and benefits.”
What the oil refineries seem to be saying is: Don't make us pay for rail safety, it's some other industry's problem. This leaves the government in a precarious position, do they water-down the regulations to appease "big oil," or do they stick to their guns and make oil trains safer for the country and the environment?
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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