The risks posed by shipping crude oil by rail were highlighted last week when the Department of Transportation announced new proposals to increase the safety of tank cars. But according to a new report by the Congressional Research Service, shipping domestic crude oil by water poses a number of safety and financial challenges that are often overlooked in debates over oil pipelines and tank car derailments.
The report, written by transportation policy specialist John Frittelli, notes that new sources of crude oil from North Dakota, Texas and parts of western Canada have forced the U.S. transportation industry to find new ways of shipping it. Pipelines can no longer accommodate the rise in domestic oil production, the report says, placing greater demands on railroads, barges and tankers.
The report found that the U.S. Coast Guard has yet to implement effective safety inspections for barges, as it has for tanker ships in years past in response to oil spills like the Exxon Valdez. But despite calls from Congress a decade ago to create comprehensive barge-safety rules, a related proposal is not yet in place, the report says.
In addition to safety concerns, U.S. refineries face a problem in the form of the Jones Act, a law passed in 1920 that requires domestic water-borne transport be conducted by U.S.-built and -crewed vessels, according to the report. Shipping oil via U.S.-built tankers happens to cost around four times as using foreign-built tankers. As a result, some oil producers in Texas have chosen to ship directly to Canada on less expensive foreign-built tankers, bypassing refineries in the northeastern U.S., the report found.
Due to the relatively short supply of U.S. tankers, more refineries may also resort to the use of tank cars, an increasing amount of which have derailed with the rise of domestic crude oil production in recent years. "Existing railroad tank cars are inadequately designed to prevent release of product during derailment," Frittelli writes, "and the transportation of crude oil in unit trains, a new development, has meant that a single incident can involve a large quantity of flammable and explosive material."
The industry group American Petroleum Institute didn't immediately respond to a request for comment.
As Frittelli points out, several bills related to waterborne transport of oil are now pending in Congress. The Coast Guard and Maritime Safety Act of 2014, for instance, asks the DOT to submit a "national maritime strategy," the report says, which would request recommendations on how to boost the competitiveness of U.S.-built vessels.
As more crude oil is shipped domestically, the Coast Guard Authorization Act for fiscal years 2015 and 2016 would also require that the Coast Guard create a publicly accessible website with its oil spill response plans, among other information.
The report was published two days before the DOT announced new measures intended to prevent oil spills and explosions caused by trains transporting crude oil, ethanol and other flammable materials around the country. The proposed rules included lowering speed limits, upgrading brakes and phasing out older, more vulnerable tank cars like the DOT-111 model.