WASHINGTON — Today, the Renewable Fuels Association (RFA) testified at a Surface Transportation Board (STB) public hearing in Washington, D.C. explaining that crude oil from the Bakken has reduced the flexibility of the rail system to deal with adverse conditions such as challenging weather conditions. The resulting rail congestion is hurting the economy by driving up the cost of a slew of consumer products, including gasoline.
Today’s testimony echoes a letter sent by the Renewable Fuels Association to Ed Hamberger, the president and CEO of the Association of American Railroads, on April 3.
At today’s hearing, Ed Hubbard, general counsel at the Renewable Fuels Association, testified before the STB, stating, “Due to an uncharacteristic winter, rail shipments of all commodities have been significantly delayed across the country. For ethanol, the congestion has led to a dramatic delay in ethanol shipments to fuel terminals, and caused shutdowns of operations at ethanol plants because they can’t continue to store product while awaiting rail carriers to move their product.”
Hubbard pointed toward the railroad’s failure to adequately prepare for increased shipments and a harsh winter as the reason for the congestion, but explained that winter alone cannot be blamed because harsh winters are common. Increasing shipments of crude oil are causing a redistribution of railcars, leading to a shortfall of railcars available for other commodities such as ethanol.
“What the data tells us that is different about this year, as opposed to the countless other winter seasons, is the recent dramatic and explosive growth in railcar shipments of Bakken and Canadian crude oil,” said Hubbard.
He continued, “The growth in crude oil shipments has reshuffled the existing fleet of railcars and locomotives, pressured lease rates, changed normal rail traffic patterns, and generally exerted significant stress on the rail system. And with this congestion crisis, it is becoming more and more apparent that surging crude oil shipments are coming at the expense of other goods and commodities, like ethanol.”
The rail congestion must be solved quickly and in a way that does not prioritize the shipment of oil. Hubbard noted, “Rail operators must respond in a way that treats the vast array of other goods and commodities competing with crude oil on the rails fairly and equitably.”
Using statistics from the Association of American Railroads, RFA found that:
• Rail shipments of ethanol have stabilized over the past four years, while shipments of crude oil have increased 1363 percent since 2010 (See graph).
• Train speeds were approximately 12 percent slower than normal in late February, while dwell times jumped 40 percent in late December and remained approximately 25 percent above normal through the first quarter (See graph).
• Train speeds have improved in recent weeks but remain below normal for all carriers (See graph).
• Dwell times have significantly improved for some railroads (NS, CSX), but dwell times remain much higher than usual for others (UP, BNSF, CN) (See graph).
RFA’s full testimony before the Surface Transportation Board can be found here.