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U.S. Rail Transportation of Crude Oil: Background and Issues for Congress

CRS – U.S. Rail Transportation of Crude Oil: Background and Issues for Congress, May 5, 2014

“North America is experiencing a boom in crude oil supply, primarily due to the growth of heavy crude production in the Canadian oil sands1and the recent expansion of shale oil production in North Dakota, Montana, and Texas. North American production now supplies 66% of U.S. crude oil demand, displacing crude from Latin America, Africa, and the Middle East. This shift has led to significant challenges in transportation, as refineries that once received crude oil principally from oceangoing tankers are now seeing increasing deliveries by domestic transport. Existing pipeline capacity is, in some cases, insufficient to carry growing crude oil from some production areas, or does not link to the refineries needing the oil. The domestic barge network does not serve some key production regions located far from navigable waterways. As a quicker, more flexible alternative to new pipeline projects, North American crude oil producers are increasingly turning to rail as a means of transporting crude supplies to U.S. markets. Increased exports of refined products—and, if Congress changes the law, of crude oil—could lead to even larger volumes of oil being transported by rail. According to rail industry officials, U.S. freight railroads are estimated to have carried 434,000 carloads of crude oil in 2013, or roughly 300 million barrels, compared to 9,500 carloads in 2008.2In 2014, 650,000 carloads of crude oil are expected. Crude imports by rail from Canada have increased more than 20-fold since 2011. The rapid increase in crude oil shipments by rail will likely increase the number of oil spills from rail transportation. However, the most recent data available indicate that railroads consistently spill less crude oil per ton-mile transported than other modes of land transportation. The amount of crude spilled per ton-mile of rail transport declined significantly between the early 1990s and the 2002-2007 period, the most recent years for which data are available. Nonetheless, the increase in rail shipments of crude has raised safety and environmental concerns. These concerns have been underscored by a series of major incidents involving crude oil transportation by rail, including a catastrophic fire and explosion in Lac Mégantic, Quebec, in July 2013 and a derailment in Casselton, ND, in December 2013 that led to a mass evacuation. Consequently, government agencies in the United States and Canada have issued new regulations and are considering others related to oil transport by rail, and some Members of Congress have called for tighter rules governing crude oil railcars as well as a broader reconsideration of the role of rail in the nation’s oil transportation infrastructure.”

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