As the oil boom outgrows the US pipeline network, the oil industry is increasingly using alternatives such as rail to transport crude oil across the country. Between 2008 and 2013, annual crude oil transported by rail in the U.S. grew from 9,500 to 407,761 carloads (about 275 million barrels), according to the Association of American Railroads (AAR). During the same period, a debate about the safety of oil-by-rail has arisen in response to a few high profile accidents and spills, including the Lac-Mégantic derailment in Quebec on July 6th, 2013 that killed 47 people and destroyed half the town.
At issue for policymakers is how to evaluate the overall costs and benefits associated with transportation by rail versus pipeline. “In addition to enjoying a substantial cost advantage, pipelines result in fewer spillage incidents and personal injuries than road and rail,” a recent Manhattan Institute report concluded. Politico recently noted that “This year  has already shattered the record for property damage from U.S. oil-train accidents, with a toll exceeding $10 million through mid-May — nearly triple the damage for all of 2013.” However, the rates of incidents and damages per carloads of crude transported by rail, is not as consistent as the overall incident and damage trends being reported (Inside Energy). When examining spill rates, rail accounts for 0.38 gallons spilled per million barrel miles moved, compared to 0.88 for pipelines, according to estimates by the AAR. AAR also points out that the definition of an “incident” varies between the two modes of transportation, as 73% of reported rail incidents between 2002 and 2012 were spills of less than 5 gallons, a spill size which pipelines are not required to report.
The Department of Transportation (DOT), responsible for regulating the transportation of oil-by-rail, is taking steps to address the risks. Their latest effort, an order addressing the classification of crude being transported, was the fourth emergency order and safety advisory issued by DOT in the last seven months.
What are the economic, environmental and security costs and benefits of transporting oil-by-rail versus pipeline? Is one ultimately preferable to the other?