Following the Tragedy at Lac-Mégantic shipping Crude Oil by Train in Canada will be more Costly

Posted by PITHOCRATES - April 27th, 2014

Week in Review

On July 6, 2013, a 4,701 ft-long train weighing 10,287 tons carrying crude oil stopped for the night at Nantes, Quebec.  She stopped on the mainline as the siding was occupied.  The crew of one parked the train, set the manual handbrakes on all 5 locomotives and 10 of the 72 freight cars and shut down 4 of the 5 locomotives.  Leaving one on to supply air pressure for the air brakes.  Then caught a taxi and headed for a motel.

The running locomotive had a broken piston.  Causing the engine to puff out black smoke and sparks as it sat there idling.  Later that night someone called 911 and reported that there was a fire on that locomotive.  The fire department arrived and per their protocol shut down the running locomotive before putting out the fire.  Otherwise the running locomotive would only continue to feed the fire by pumping more fuel into it.  After they put out the fire they called the railroad who sent some personnel out to make sure the train was okay.  After they did they left, too.  But ever since the fire department had shut down that locomotive air pressure had been dropping in the train line.  Eventually this loss of air pressure released the air brakes.  Leaving only the manual handbrakes to hold the train.  Which they couldn’t.  The train started to coast downhill.  Picking up speed.  Reaching about 60 mph as it hit a slow curve with a speed limit of 10 mph in Lac-Mégantic and jumped the track.  Derailing 63 of the 72 tank cars.  Subsequent tank car punctures, oil spills and explosions killed some 47 people and destroyed over 30 buildings.

This is the danger of shipping crude oil in rail cars.  There’s a lot of potential and kinetic energy to control.  Especially at these weights.  For that puts a lot of mass in motion that can become impossible to stop.  Of course, adding safety features to prevent things like this from happening, such as making these tank cars puncture-proof, can add a lot of non-revenue weight.  Which takes more fuel to move.  And that costs more money.  Which will raise the cost of delivering this crude oil to refineries.  And increase the cost of the refined products they make from it.  Unless the railroads find other ways to cut costs.  Say by shortening delivery times by traveling faster.  Allowing them an extra revenue-producing delivery or two per year to make up for the additional costs.  But thanks to the tragedy at Lac-Mégantic, though, not only will they be adding additional non-revenue weight they will be slowing their trains down, too (see Rail safety improvements announced by Lisa Raitt in wake of Lac-Mégantic posted 4/23/2014 on CBC News).

Changes to improve rail safety were announced Wednesday by federal Transport Minister Lisa Raitt in response to recommendations made by the Transportation Safety Board in the aftermath of the tragedy in Lac-Mégantic, Que.

The federal government wants a three-year phase-out or retrofit of older tank cars that are used to transport crude oil or ethanol by rail, but will not implement a key TSB recommendation that rail companies conduct route planning when transporting dangerous goods…

There are 65,000 of the more robust Dot-111 cars in North America that must be phased out or retrofitted within three years if used in Canada, Raitt said, adding, “Officials have advised us three years is doable.”  She said she couldn’t calculate the cost of the retrofits, but told reporters, “industry will be footing the bill…”

The transport minister also announced that mandatory emergency response plans will be required for all crude oil shipments in Canada…

Raitt also said railway companies will be required to reduce the speed of trains carrying dangerous goods. The speed limit will be 80 kilometres an hour [about 49 mph] for key trains, she said. She added that risk assessments will be conducted in certain areas of the country about further speed restrictions, a request that came from the Canadian Federation of Municipalities…

Brian Stevens head of UNIFOR, which represents thousands of unionized rail car inspectors at CN, CP and other Canadian rail companies, called today’s announcement a disappointment.

“This announcement really falls short, and lets Canadians down,” he told CBC News.

“These DOT-11 cars, they should be banned from carrying crude oil immediately. They can still be used to carry vegetable oil, or diesel fuel, but for carrying this dangerous crude there should be an immediate moratorium and that should have been easy enough for the minister to do and she failed to do that.

“There’s a lot of other tank cars in the system that can carry crude,” Stevens explained. “There doesn’t need to be this reliance on these antiquated cars that are prone to puncture.”

Industry will not be footing the bill.  That industry’s customers will be footing the bill.  As all businesses pass on their costs to their customers.  As it is the only way a business can stay in business.  Because they need to make money to pay all of their employees as well as all of their bills.  So if their costs increase they will have to raise their prices to ensure they can pay all of their employees and all of their bills.

What will the cost of this retrofit be?  To make these 65,000 tank cars puncture-proof?  Well, adding weight to these cars will take labor and material.  That additional weight may require modifications to the springs, brakes and bearings.  Perhaps even requiring another axel or two per car.  Let’s assume that it will take a crew of 6 three days to complete this retrofit per tank car (disassemble, reinforce and reassemble as well as completing other modifications required because of the additional weight).  Assuming a union labor cost (including taxes and benefits) of $125/hour and non-labor costs equaling labor costs would bring the retrofit for these 65,000 tanks cars to approximately $2.34 billion.  Which they will, of course, pass on to their customers.  Who will pass it on all the way to the gas station where we fill up our cars.  They will also pass down the additional fuel costs to pull all that additional nonrevenue weight.

Making these trains safer will be costly.  Of course, it begs this burning question: Why not just build pipelines?  Like the Keystone XL pipeline?  Which can deliver more crude oil faster and safer than any train can deliver it.  And with a smaller environmental impact.  As pipelines don’t crash or puncture.  So why not be safer and build the Keystone XL pipeline in lieu of using a more dangerous mode of transportation that results in tragedies like that at Lac-Mégantic?  Why?  Because of politics.  To shore up the Democrat base President Obama would rather risk Lac-Mégantic tragedies.  Instead of doing what’s best for the American economy.  And the American people.  Namely, building the Keystone XL pipeline.

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