Train in Vain

While much attention has gone to the plane crash in San Francisco, a more significant disaster took place in Quebec over the weekend, when a tanker train full of crude oil from North Dakota derailed and caught fire. The death toll stands at 13 and there are a lot of people who are still missing. And now people are starting to realize that maybe, just maybe, rail isn’t the best way to transport oil:


Canadian investigators are trying to determine what caused a parked train with 72 tank cars to begin rolling and then derail early Saturday morning, triggering fires and explosions in Lac-Mégantic, Quebec, that killed at least 13 people. Many others are still missing.

The tank cars were loaded with oil in New Town, N.D., by Wayzata-based rail carrier Dakota Plains Holdings, and were destined for a refinery in New Brunswick, according to World Fuel Services Corp., the shipper’s parent company.

New Town to New Brunswick is a long way to go. And there’s a pretty good chance this ill-fated train traveled through the Twin Cities before it reached Quebec.

Why are the trains transporting oil? I can think of three reasons:

  • Environmentalists don’t much like pipelines, as the contretemps over the Keystone XL pipeline prove, and fight construction every step of the way.
  • Rampant NIMBYism and the aforementioned environmentalists have essentially stopped the construction of new oil refineries in the United States.
  • Politically connected people who own railroads benefit from the first two reasons:

Warren Buffett’s Burlington Northern Santa Fe LLC is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanada Corp. (TRP)’s Keystone XL oil pipeline permit.

With modest expansion, railroads can handle all new oil produced in western Canada through 2030, according to an analysis of the Keystone proposal by the U.S. State Department.

“Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.”

So what do the environmentalists propose? Keeping the oil in the ground, of course, and rely on wind and solar, which aren’t going to keep things running.

In this case, you can’t put the blame on Buffett, since the carrier was Canadian Pacific. And unsurprisingly, no one is saying much, as the Star Tribune reports:

Much of the rail industry remained silent Monday. Canadian Pacific, whose U.S. headquarters is in Minneapolis, said it had no comment out of respect for the Lac-Mégantic victims. Dakota Plains officials did not return phone calls, and directed them to the shipper and venture partner, World Fuel Services, which said it “is deeply concerned for all those impacted by loss of life and destruction caused by the tragic accident.”

Blame will get meted out in due course, since it always does. The larger, more important question is finding a way to minimize the potential for future disasters of this sort. The bottom line is that the oil won’t be staying in the ground and it will be used.

Cross-posted and comments welcome at Mr. Dilettante’s Neighborhood.