After the Nov. 8 oil tank train derailment in Alabama, it is time to reconsider the approval of new pipeline construction in North America.
Pipelines are the safest way of transporting oil and natural gas, and we need more of them, without delay.
Every time I write this, the rail industry attacks me. Then, three or four months later, another rail accident involving hazardous materials hits the headlines.
In Pickens County, Alabama, approximately 25 rail cars derailed, bursting into flames. The volume of oil spilled was fortunately contained by a beaver dam, which slowed the flow of oil. Rail cars burned for days, impeding the accident investigation.
The latest accident comes four months after a rail accident in Lac-Mégantic, Quebec, where the derailment of 73 rail cars carrying crude oil from North Dakota to Maine claimed 47 lives.
Rail cars became detached from the parked engine, slid backwards into the town of Lac- Mégantic, and exploded.
In both June and September, rail cars carrying flammable material derailed in Calgary, Alberta, where, fortunately, no lives were lost.
If oil had been carried through pipelines instead of by rail, the accidents — and deaths — would have likely not occurred.
Pipelines have been used to transport American natural gas or oil, including from Canada to the United States, for three-quarters of a century.
Almost 500,000 miles of interstate pipeline crisscross America, carrying crude oil, petroleum products and natural gas.
Data to compare the safety of transportation of oil and gas by pipeline, road and rail in the United States are published by the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration.
U.S. data on incident, injury, and fatality rates for pipelines, road and rail show that road and rail have higher rates of serious incidents, injuries and fatalities than pipelines, even though more road and rail incidents go unreported.
President Obama has delayed approval of TransCanada’s Keystone XL pipeline, which would transport Canadian oil to U.S. refiners on the Gulf of Mexico.
Canada is the major trading partner of the United States, and it is beyond surprising that the Keystone XL pipeline has not been approved.
A new report from the Energy Policy Research Foundation by Director of Upstream and Midstream Research Trisha Curtis describes the costs of America’s fragmented infrastructure.
Entitled "Pipelines, Trains and Trucks: Moving Rising North American Oil Production to Market," it describes how lack of infrastructure, especially pipelines, is lowering the value of the oil in Canada and in North Dakota because the oil cannot get to the refineries.
If North Dakota oil brings in $1 less per barrel than West Texas Intermediate oil, the price difference reduces North Dakota tax revenues by $3 million a month. The lower price of Canadian oil lowers royalties to Canada by $1 million a day.
The report concludes, “If crude oil cannot be moved to refining centers efficiently, the higher transportation costs will ultimately be reflected in lower wellhead values, potentially lost production, and ultimately lost opportunity to the United States and Canada.”
Because pipeline capacity is simply unavailable, crude oil shipments via rail have continued to expand at an accelerating rate.
In 2012, U.S. Class I railroads delivered 233,811 carloads of crude, compared to 66,000 in 2011 and 9,500 in 2008.
As North America continues to ramp up production of oil and natural gas, and Obama’s Environmental Protection Agency continues its war against coal, pipeline infrastructure becomes even more important.
Inhibiting pipeline growth will result in growth in oil and gas transportation that is less safe, including water-borne tankers of oil from countries that are not necessarily our friends.
The lesson from Alabama: Obama should not only approve Keystone XL, but encourage additional pipeline development.
Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow and director of Economics21 at the Manhattan Institute for Policy Research. You can follow her on Twitter here.