But this new source of revenue has a troubling side.
Rapid growth strains the capacity of railroads to move crude oil.
And, safety has become an even bigger issue following the tragic derailment of a crude oil train in Quebec in July 2013 that killed 47 people and leveled a town.
Other spectacular derailments that followed have created public concern and regulatory scrutiny over crude-by-rail traffic.
Environmental groups are fighting crude-by-rail in Chicago and in the Pacific Northwest.
At the same time, new, tougher federal regulations are on the way for tank cars as well as limits for train speeds and crew size.
If that wasn’t enough, the dramatic drop in oil prices in 2014 and 2015 upset the dollars and cents calculations that made crude-by-rail work.
The lower prices discourage drillers from digging new wells in the Bakken fields, and made foreign oil an attractive alternative for East Coast refineries that had been buying Bakken output by the trainload.
But crude-by-rail won’t be going away.
Barges and pipelines, the primary competitors for transporting oil, because rail transport provides a flexibility the others can’t, allowing producers to stay profitable.
And there’s still untapped potential for bitumen, the product from the tar-sand fields in Canada.
Bitumen is so thick it can’t be moved by pipeline without mixing other chemicals with it to make it flow, while heated tank cars can move it without problems.
So far, oil companies and railroads have yet to build sites to load bitumen in tank cars.
But if they do, this Canadian goo is well suited for refineries on the U.S. Gulf Coast.
Incidentally, one of the most interesting oil moves around is Montana Rail Link’s *Gas local*
In 1995, the Gas local replaced a pipeline that had been around since the mid-1950s.
The train carries gasoline, diesel fuel, and jet or aviation fuel.
That’s cool.
