Oil-by-Rail Reality: Watch What Industry Does, Not What They Say

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โ€œIn the past month, there have been numerous public relations efforts suggesting that much is being done to improve oil by rail safety. Unfortunately, it seems these efforts will not involve much more than press releases and hollowย promises.โ€

Those words were first published on DeSmogBlog in March of last year in an article titled Why Nothing Will Happen On Oil by Rail Safety.

In that article, one particular public relations effort wasย highlighted:

โ€œOne of the more popular talking points in the recent PR effort was that BNSF, the railroad that is the largest transporter of oil by rail, had volunteered to buy 5,000 new rail tank cars that exceed any existing safetyย standard.โ€

This statement was referring to articles such as the one in the Wall Street Journal last February stating, โ€œBNSF Railway said it plans to buy as many as 5,000 new tank cars to transport crude oil, an unusual move that marks the latest effort by the rail industry to improve safety after a spate of accidents.โ€ Similar articles appeared in Reuters (โ€œExclusive: BNSF to move into tank car ownership with safer oil fleetโ€) and CNBC.

It was a clear message. The rail industry was not waiting on new regulations to improve safety and would take steps immediately to make the movement of oil by rail safer. Tough to argue with that,ย right?

Except it was nothing more than a public relationsย campaign.

This past weekend, Matt Rose, the Chairman of BNSF, spoke at the annual conference for the Transportation Research Board. Almost a year after the press releases about buying 5,000 new cars, Rose had an update on theย project.

The reality is that BNSF never moved forward with purchasing the safer tank cars and the company is now re-evaluating plans to do so because their clients donโ€™t want them to buy safer cars. Their clients are the oilย companies.

A Bloomberg headline sums up the reality: โ€œBNSF Railway Re-evaluates Plan for Safer Cars Amid Client Talks.โ€

As Matt Rose explained to Bloomberg, โ€œWeโ€™re going to go back and talk to our customers and see what they want us toย do.โ€

In an email response to questions from DeSmogBlog, BNSF Railway spokesperson Roxanne Butler explained the newย development.

โ€œThere is a rulemaking now underway for tank cars and we have been waiting for that process before we determine the next steps for the RFP we issued last year for the next generation tankย cars.โ€

Regarding that rulemaking process, here is what BNSF had to say last year during the safety pressย blitz.

โ€œOur tank car RFP represents an important milestone in the improvement of safety standards for the transportation of crude by rail. It is a significant voluntary commitment that may help accelerate the transition to the Next Generation Tank Car and provide tank car builders a head start on tank car design and production, even as the Department of Transportation, railroads, and shippers continue to engage in the formal rulemaking process. BNSF believes that the RFP process will provide market participants more certainty,ย sooner.โ€

So last year BNSF was well aware that the rulemaking was in process, but a good story about safety needed to be told. And it was. And the media repeatedย it.

Only now is BNSF going to go back to its customers for input on their plans for saferย cars.

It is important to note that the oil companies typically own or lease the rail cars used to transport the oil. Butler, the BNSF spokesperson, told DeSmog that โ€œBNSF does not currently own tank cars.ย  Those are either leased or purchased by theย shippers.โ€

According to Bloomberg, BNSF Chairman Matt Rose was not able to provide specifics on what the customers wanted regarding tank car safety. However, recently released notes from a meeting Exxon had with the Pipeline and Hazardous Materials Administration (PHMSA) in October of 2014 make it quite clear what Exxon and the rest of the oil industryย want.ย 

In the meeting, Exxon argued against one of the biggest safety features of the tank cars BNSF proposed buying โ€“ a 9/16thโ€™s inch tankย shell.

The last bullet point of that page of the presentation includes the two words critical to this conversation: โ€œreducing capacity.โ€

Pursuing safer tank car design adds weight to the rail cars. Thicker and safer tank cars weigh more, reducing the volume of oil they can carry due to total tank car weight restrictions. That means the oil companies make less money. Which is why they are lobbying against safetyย improvements.

To the industry, itโ€™s simply a math problem: making things safer means the oil and rail companies make lessย money.

In the second quarter of 2012, Exxon set a record for the most profits ever by a corporation in a quarter, $15.9 billion. In comparison, in 2014 Exxon only made $8.8 billion in profit in the second quarter. You can see how the company might be reluctant to spend on safety in these hardย times.

Decade ofย Delay

PHMSAโ€™s own notes from the Exxon meeting reveal that Exxon thinks it will take ten years to remove or retrofit all of the unsafe DOT-111 tank cars currently being used to transport oil andย ethanol.

That is what was predicted in the conclusion of the DeSmogBlog article from lastย March.ย 

Given the lack of regulation, the industryโ€™s influence over regulators and the industryโ€™s track record of ignoring NTSB safety recommendations for decades โ€” the reality is that it is highly likely that much of the Bakken Crude will be shipped in unsafe DOT-111โ€™s for the nextย decade.

PHMSA is supposed to release the agencyโ€™s new rules for oil-by-rail transport sometime soon.

Expect a very extensive public relations effort to follow from the industry, and for the media to repeat industryโ€™s commitment to safer oil-by-railย transport.

But then expect business as usual for the oil and rail companies โ€” until the next lethal โ€œbomb trainโ€ accident, when the process will start all over again.ย 

Image credit: Lac Megantic oil train disaster by meunierd / Shutterstock.com“>meunierd via Shutterstock.

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Justin Mikulka is a research fellow at New Consensus. Prior to joining New Consensus in October 2021, Justin reported for DeSmog, where he began in 2014. Justin has a degree in Civil and Environmental Engineering from Cornell University.

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