A cost of the energy boom

Clearly, North Dakota has changed our perceptions as to this country's ability to produce energy. Most of this energy is transported by rail. The number of carloads of ethanol produced each year has grown in ten years from 40,000 to 325,000. The growth in crude oil is even higher; from 9,500 carloads in 2008 to 200,000 in 2012.

More than 70% of the country's production of ethanol and crude oil moves by rail. Maybe that's why the number of train explosions has also grown. You remember the explosion in Quebec last year that destroyed a town and killed 47 people. While there were no deaths, there were derailments in Alabama in November and North Dakota this week.

The derailments involving North Dakota energy are particularly troublesome as this crude oil has a lower flash point than other forms of crude oil, meaning it’s easier to form vapors that could ignite. The Pipeline and Hazardous Materials Safety Administration said the oil posed “significant fire risk” if released and warned that it needs careful handling.

A large part of the shipping is done via DOT-111 tank cars. in 1991 the NTSB had concerns about the reliability of these cars. The chart below summarizes recent experience with DOT-111 cars.

The rail industry supports tougher safety requirements for new and existing tank cars, including thicker shells, puncture-resistant shields and stronger valve fittings to prevent spills and fires if the cars should derail. But new rules have been delayed amid concern about the estimated $1 billion cost of making the changes and the time it would take amid a surge in profitable shipments.