According to the Association of American Railroads, shipments of oil by rail this year will top 540,000 carloads, which will be a 46% increase over last year’s count of about 370,000 carloads. And the number of train cars carrying oil this year will be almost double the number of carloads in 2010.
The Associated Press has a story today about how the U.S. oil boom has created a huge boom for U.S. railroads to transport the oil from oil fields in North Dakota and Montana to refineries around the country, here’s an excerpt:
Energy companies behind the oil boom on the Northern Plains are increasingly turning to an industrial-age workhorse – the locomotive – to move their crude to refineries across the U.S., as plans for new pipelines stall and existing lines can’t keep up with demand.
Union Pacific Railroad CEO Jack Koraleski said hauling oil out of places like North Dakota will be a long-term business for railroads because trains are faster than pipelines, reliable and offer a variety of destinations.
“The railroads are looking at this as a unique opportunity, a game-changing opportunity for their business,” said Jeffery Elliot, a rail expert with the New York-based consulting firm Oliver Wyman.
Delivering oil thousands of miles by rail from the heartland to refineries on the East, West and Gulf coasts costs more, but it can mean increased profits – up to $10 or more a barrel – because of higher oil prices on the coasts. That works out to roughly $700,000 per train.
HT: Don Geng