Rail shipments of crude oil triple; coal declines

2013-02-21T12:00:00Z 2013-02-21T18:01:10Z Rail shipments of crude oil triple; coal declinesFrom wire reports JournalStar.com
February 21, 2013 12:00 pm  • 

The amount of crude oil U.S. freight railroads hauled last year more than tripled as shale oil production surged in North Dakota and other locations.

The Association of American Railroads trade group said Thursday that U.S. freight railroads hauled 233,811 carloads of crude oil in 2012. That's up from 65,751 carloads the previous year.

Crude oil shipments still represent less than 1 percent of all the carloads railroads haul, but it has been growing significantly in recent years. Each railroad tank car holds about 700 barrels of crude oil.

The railroads have been an attractive option for oil producers because pipelines have not been able to keep up with production, and railroads offer the ability to ship crude to different destinations.

According to the Energy Information Administration, U.S. crude oil production increased by a record 780,000 barrels of oil per day in 2012.

Another ripple effect in the energy markets: Freight railroad operators show a big decline in the amount of coal transported by train in the United States last year. 

The trend may be disruptive to freight rail operators, such as BNSF Railway and Union Pacific, because according to the Association of American Railroads, "no single commodity is more important to America's railroads than coal." Coal accounted for 43.3 percent of freight rail tonnage and 24.7 percent of rail gross revenue in 2011, AAR said on its website.

Even after the decline, coal remained the dominant category of commodities moved by rail in 2012, accounting for 41 percent of total carloads.

EIA data released Tuesday shows that coal had the biggest decline in railcar loadings of any commodity moved by train in 2012, with an 11 percent drop, which amounts to a loss of about 726,000 carloads compared to 2011.

Crude oil and other petroleum products had the biggest increase in railcar loadings among commodities last year, with a jump of 46 percent compared to 2011. Crude oil was responsible for nearly all of the increase, accounting for an estimated 38 percent of the combined deliveries in oil and petroleum products during 2012, up from 3 percent the year before.

In recent years, electric utilities have moved to take advantage of more price-competitive natural gas, which has reduced coal use nationwide.

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