This article first appeared at The McAlvany Intelligence Advisor on Monday, October 20, 2014:
Some contend that the Keystone pipeline delay is having consequences that were intended from the beginning. Others contend that those urging the president to delay approval of Keystone weren't smart enough to anticipate the negative consequences that delay is having.
But there they are, nevertheless. In an ironic coincidence, the Manhattan Institute published its report claiming that pipelines are far safer for the transportation of oil and gas than railroads in June 2013, the same month of the tragic derailment in Lac-Megantic near Québec, which killed 47 people and destroyed half the town. According to Senior Fellow Diana Furchtgott-Roth, author of the study, pipelines are safer than trucks barges or rail cars by a factor of 30 to 1. She wrote:
In addition to enjoying a substantial cost advantage, pipelines result in fewer spillage incidents and personal injuries than road and rail. Americans are more likely to get struck by lightning than to be killed in a pipeline accident.
By putting a crimp in the final leg of the Keystone XL pipeline, the president has, perhaps unwittingly, forced the oil industry to use other modes of transportation in moving its crude from places like north dakota and Texas to refineries on the East and Gulf coasts. Those other modes include over-the-road tractor-trailers and railroad tank cars, both of which, it turns out, are experiencing vastly higher rates of “incidents” – an accident involving an explosion or fire, a release of five gallons of crude oil or more, an injury requiring hospitalization, a fatality, or property damage in excess of $50,000. And this despite the fact that more than 70% of the oil still moves through pipelines with trucks and railroads carrying less than 10% (tanker and barge traffic make up the balance).
As John Edwards, a senior analyst and director at Credit Suisse, put it:
If you look at the safety record of crude oil pipelines versus alternatives, pipelines come out on top.
Release rates, as of 2012, were roughly 25 barrels per billion barrel miles … a very, very low rate of incidence taken over the hundreds of thousands of miles of pipelines and the transport millions of barrels of oil every day.
None of this, however, seems to have impressed the bureaucrats at the Pipeline and Hazardous Materials Safety Administration (PHMSA), who have decided to mandate that the 335,000 rail cars hauling oil from sources to refineries must be heavily modified with additional sheet metal, better brakes and the like to help prevent another Lac-Megantic. The consequences of those mandates will simply be to put more pressure on over-the-road truckers to pick up the slack. Some have voiced the opinion that the combination of the Obama administration's intransigence over Keystone and his agency's mandates are attempts to shut down the oil industry altogether.
America's energy needs are so enormous that more than 18 million barrels of crude oil course through over 500,000 miles of pipelines every day, either from sites like Bakken, Eagle Ford, or the Permian Basin, or from ports on the East and Gulf Coasts importing oil from abroad. The largest importer of crude into the United States, Enbridge Energy Partners, has moved more than 13 billion barrels through its system of 50,000 miles of pipelines over the last 10 years and its incident rate is almost immeasurably small. Just .0007 percent of its oil fails to arrive at its destination due to an incident.
But even that isn't good enough for Enbridge according to Bradley Schamla, senior vice president of US operations:
I could talk about our safety record in terms of the [incident rate], but we don't talk a lot about that, because we're really focused on the very small percentage … no leak is acceptable.
Our focus is really on eliminating all leaks with the goal of zero in our pipeline system.
To keep things in perspective, since 2008 there have been 10 reported railroad tank car incidents involving the spillage of three million gallons of crude, but the horrific derailment at Lac-Megantic was responsible for half that spillage.
In November last year, the Canadian think tank Fraser Institute picked up the Manhattan study, expanded it, and came to the same conclusion: crimping crude oil transportation is forcing its producers to use other modes of transport “that pose higher rates of spills and personal injuries such as rail and road transport.”
This didn't sit well with Peter Goelz, the former managing director of the US National Transportation Safety Board and now a senior VP for a public relations firm out of Boston. Goelz relieved himself in an editorial published by the Huffington Post in which he called both studies “misguided” and “discredited.” He claimed those studies were designed only to promote the use of pipelines and had twisted the data to support their conclusions. Wrote Goelz:
The Fraser Institute tries to make two broad points: that pipelines are both a safer and more environmentally “friendly” way to transport crude oil than railroads. Fraser is wrong on both accounts. But in making their thinly supported political attack, they miss the real truth: both pipelines and railroads deliver better than 99.5% of their crude oil products safely.
They are both safe.
While President Obama claims that a pending lawsuit in Nebraska is preventing him from approving the Keystone XL pipeline until (conveniently) after the November elections – this is called plausible deniability – it's clear that he's responding to pressure from his environmental extremist supporters who are claiming that the proposed pipeline would cause some irreversible environmental damage there. And so, while the president is out saving the environment, his unintended consequences are unnecessarily killing and maiming people in the oil industry trying to supply needed product to their customers.
Fraser Institute: Pipelines pose fewer risks for workers and fewer spills compared to transporting oil by rail or truck
Fraser Institute: The study
CNBC: After billions spent, are pipelines safe?
Manhattan Institute: Pipelines Are Safest For Transportation of Oil and Gas
Huffington Post: Oil by Rail Vs. Pipelines: Comparing the Safety Records of Both
Huffington Post: Oil Train Accidents Spur Worry About Future Of Shipping Crude By Rail