Proposed rail tank car rule could cost economy billions, report says
The US Pipeline & Hazardous Materials Administration’s proposed rail tank car rule could cost the US economy as much as $60 billion, a report commissioned by the Railway Supply Institute found.
The high economic cost is largely due to expenses associated with modal shifts from rail to highways, potential modifications to tank cars, early retirement of existing tank cars, and lost service time for tank cars under modification or awaiting modification, according to the report by The Brattle Group, an economic research firm.
“The numbers show that almost two thirds of rail tank cars will need to be idled for some period of time during the proposed modification program,” said Kevin Neels, a Brattle Group principal and a co-author of the report.
“Almost 1 million tank car years of capacity could be lost due to early retirement and idle time associated with cars awaiting modification,” he said.
The report said modal shifts to trucks could result in 65,000 of them carrying 1.4 million loads in 2018 alone, resulting in 11 million additional annual tons of carbon dioxide. It added that it is not clear if a modal shift of this magnitude is either operationally or economically feasible.
If it is not, up to 300 million bbl of crude oil and 100 million bbl of ethanol could be stranded or their production levels reduced, the report suggested.
Analyzed fleet data
Brattle conducted research for the report from September through November with support from RSI’s Committee on Tank Cars. It analyzed data on the current and proposed North American rail tank car fleet, and concluded that PHMSA underestimated the overall costs that would likely occur should the US Department of Transportation agency’s fleet modifications timeline is implemented as proposed.
RSI’s tank cars committee wants to help create a comprehensive industry response that will enhance safe transportation of crude and ethanol by rail, Tom Simpson, the group’s president, said. “Our experts have submitted a tank car-related proposal to PHMSA that will do just that,” he said. “We have been calling on DOT since 2011 to identify tank car standards that can be efficiently and rapidly implemented.”
The group said its Feb. 28 proposal to PHMSA supports nearly all of the elements of the prescribed requirements set forth in Option 3 of the proposed regulations as the modification requirements for existing tank cars.
Specifically, modifications would include jackets (if not already present), full-height, ½-in. head shields, the reconfigured bottom outlet valve handle, a reclosing pressure relief valve, and a thermal protection system that meets the 100-min pool fire requirement, RSI said.
It said its proposal’s timeline realistically accounts for the shop capacity available to carry out the required modification work and avoids many of the penalties, inefficiencies, and capacity shortages associated with an overly aggressive timeline.
Under the RSI tank car committee’s proposal, modifications would be prioritized to address tank cars which would benefit most from the modifications first. This would allow for a more efficient use of the available and incremental tank car modification capacity, RSI said.
Contact Nick Snow at [email protected].
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.
