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ConocoPhillips Q3 Loss Lower Than Expected

Rail Companies Ordered to Reveal Details of Oil Shipments

Chicago has long been the crossroads of the U.S. economy -- a teeming center of commerce geographically positioned at the nation’s midway point with access to the Atlantic via the Great Lakes.

In the 19th century, Chicago was arguably the most important rail hub in the country, carrying grain, meat, lumber, and other agricultural commodities from the Midwest to markets on the east coast. The city’s phenomenal growth since then was built on this rail economy, with manufacturing, finance, and a vibrant service sector springing up as a result.

Chicago today remains a critical organ in America’s economic circulatory system. Every day, around 37,500 rail cars, or one quarter of the total U.S. freight traffic, travel through what Carl Sandburg called the “City of Big Shoulders” in his famous poem, “Chicago.”

The cargo of those trains is still mainly agricultural commodities, but these days they’re just as likely to be carrying oil or coal.

And because oil production is booming in the U.S., rail traffic in and around Chicago is also booming. Earlier this year, some freight trains took more than 30 hours to pass through Chicago because the rails were so crowded.

But delays were the least of the problems. Trains carrying crude oil over the past year have demonstrated a frightening tendency to derail and explode. State and federal regulators have been slow to respond, even as the frequency of oil-by-rail shipments has skyrocketed.

With much of these potential bomb-trains passing through Chicago, the city has tried to intervene where the federal government has so far failed to. Two Chicago aldermen have pushed legislation to ban oil trains from passing through the city, but the measure failed to gain momentum. Chicago Mayor Rahm Emanuel has also supported levying a new fee on the movement of hazardous materials through the city, but that, too, went nowhere.

The city, like most communities, does not have adequate resources to deal with an emergency. Jim Arie, the fire chief of Barrington, a Chicago suburb, told The Chicago Tribune about the difficulty of preparing for a huge incident that might not even occur. “It's truly the worst-case scenario for a fire department and it's not the kind of thing you can staff for or have enough equipment for.”

Related Article: Safety Concerns Mount As Rail Shipments Of Oil Grow

But up until now, even a minimum amount of planning was difficult because rail companies have refused to inform state officials about when and how much oil they move across the country, insisting that the sensitive information is kept secret to ensure the safety of shipments.

On June 18, however, U.S. transit regulators overruled that argument and ordered rail companies to tell state officials things like what route trains will take, when they will pass through certain places, and other logistical details.

The June 18 decision by the Federal Railroad Administration will allow states to better prepare emergency response plans. Some states, including Montana and Washington, intend to publish the details to the public.

Not surprisingly, rail companies are not happy. “We must be cognizant that there is a real potential for the criminal misuse of this data in a way that could cause harm to your community or other communities along the rail route,” Patrick Brady, the director of hazardous materials at the major rail company BNSF, wrote in a letter to Montana regulators. BNSF said it would consider legal action if Montana made oil shipment details public.

The FRA decision was a small but important victory for public safety, and it will be felt here in Chicago. Across the U.S., shipments of oil by rail hit 110,000 carloads in the first quarter of 2014, the highest on record. Up until now, a lot of that oil passed through Chicago, but city safety officials didn’t know with any precision when or how much. Now they will.

By Nick Cunningham of OIlprice.com

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