US Chamber of Commerce Blog
In fall 2014, Great Plains farmers grew frustrated as clogged rail lines forced grain to pile up at local grain elevators.
Too much stuff was trying to go over a limited amount of track. Grain cars were competing for space on trains with oil tankers moving crude oil from the Bakken region and Canada.
I heard about the effects of congested track when I traveled west, last year:
Tom Kauer, president of the South Central Development Corporation, told us that as more Canadian oil travels by rail, less grain can be moved. "Millions of bushels are sitting on the ground," he said.
According to Mona Madler, executive director of the Southeast Montana Area Revitalization Team in Baker, Mont., the situation got so bad some farmers were "dumping grain on the ground."
While America's oil boom has been lower prices and more energy security, it's been a headache for some farmers, as the American Farm Bureau Federation noted in a report.
It points out that 39% of all grain shipped by rail came from the Upper Midwest (Minnesota, North Dakota, South Dakota, and Montana). At the same time, these same states saw oil car load increases of 10,000 or more from 2007-2012.map_oil_carload_changes_2007-2012.jpg Map: Oil train car load changed: 2007-2012
There wasn't enough rail capacity for all the grain and oil. "Oil's rail routes directly pull resources, like locomotives, personnel, and track capacity, away from grain service," reads the report. Grain-packed elevators, longer shipping times, and lost opportunity costs, resulted in a big economic hit to farmers:
The USDA estimates grain and oilseed producers throughout the Upper Midwest may have received $570 million less for the crops they marketed in 2014 than they could have earned in a normal freight environment.
For instance, the average North Dakota corn farmer lost $10,000 in income.
This fall, the situation might be better. Lower oil prices have reduced Bakken production meaning traffic might not be as bad on the rails. But oil producers are nimble and can crank up production quickly. We could quickly see grain cars again be competing with oil tankers for scarce rail space. This transportation problem can't be ignored.
A long-term solution will involve taking some of the stress off the rail system. Now, you can't shove wheat or corn through a pipeline, but you can do that with oil.
"Crude oil, however, can be more efficiently and affordably shipped through pipelines, and can be done without crowding already overstressed railways," said report author Elaine Kub.
If you've been reading me for a while you know where I'm going: The Keystone XL pipeline.chart_freed_grain_capacity_pipeline.jpg Chart: Freed rail capacity for grain cars if a pipeline were built.Source: American Farm Bureau Federation.
The pipeline would transport 830,000 barrels of oil a day--100,000 from the Bakken in Montana and North Dakota. If an oil rail car can carry roughly 700 barrels of oil, then the Keystone XL pipeline's capacity would mean 1185 fewer oil tankers jamming up rail lines each day. The freed up capacity would be enough to move 11 grain trains--3.85 million bushels--daily, the Farm Bureau report finds.
Now, the pipeline wouldn't be a magic pill for transport backlogs, but building it would ease stress on the rail system as well as on farmers who depend on it.
Now, the pipeline wouldn't be a magic pill for transport backlogs. all modes of transport will continue to be needed. President Obama sitting on the Keystone XL permit shrinks the options, while building it would ease stress on the rail system as well as on farmers who depend on it.
States continue to resist EPA's overreaching carbon regulations. Officials in southeastern states strategized the best ways to fight back:
Momentum is building across the Southeast toward a "just say no" campaign for U.S. EPA's final Clean Power Plan rule, expected to be released within weeks.
A panel of lawmakers at the Southern Legislative Conference (SLC) yesterday passed a resolution urging state attorneys general to sue EPA over the rule that targets existing power plants. Broadly, the rule calls for a 30 percent reduction in carbon emissions by 2030, but targets for states vary.
States will have to write their own plans on how they are going to reduce their power sector CO2 emissions. If they do not, EPA will write the plan for them.
Del. Rupert "Rupie" Phillips, a Democrat from West Virginia, wrote the resolution, which passed SLC's energy and environment committee. His original measure urged states to not submit plans with EPA, but a compromise was struck to direct attorneys general to take legal action first.
"It's time to draw a line in the sand," Phillips said. "The EPA is pushing us around like they are a bunch of punks. I just want the states to stand together and say 'no.'"
States aren't just worried about the job losses and economic damage from a less-reliable power grid. They also see EPA's plan as a threat to state government sovereignty.
Dan Byers, Senior Director of Policy for the U.S. Chamber's Institute for 21st Century Energy, pointed out the many ways states are resisting:
In fact, led by West Virginia, 15 states have already taken the extraordinary step of suing to stop advancement of EPA's rule before it is even finalized. In addition, Governor Mary Fallin of Oklahoma has announced that Oklahoma will not submit a compliance plan to EPA, Texas Attorney General Ken Paxton said he plans to challenge the EPA rule in court after it is finalized, and a number of states (Arkansas, Kansas, Louisiana, Kentucky, Missouri and others) have passed legislation restricting the form and manner of their state response to EPA.
This Institute for 21st Century report--"In Their Own Words: A Guide to States' Concerns Regarding the Environmental Protection Agency's Proposed Greenhouse Gas Regulations for Existing Power Plants"--collects states' objections to EPA's carbon regulations.
Earlier this year, Sen. Mitch McConnell (R-Ky) warned states to "think twice before submitting a state plan -- which could lock you in to federal enforcement and expose you to lawsuits." (Here are some excerpts from Sen. McConnell's letter to governors.)
Such a threat is very real. In a RealClearEnergy op-ed Byers explained that EPA's plan will make states vulnerable to "sue-and-settle" legal attacks from environmental groups:
[A]nything a state commits to as part of its compliance plan effectively comes under federal control, and enforcement and compliance actions on state energy efficiency or renewable energy programs can be imposed at the whim of an -EPA agreement. Even states acting in good faith could be subject to the sue-and-settle hammer as a result of factors entirely beyond their control. For example, in states that encounter unique circumstances or unexpected challenges that force deviation from their state plan--be it unexpected demand increases, renewable project delays, or something as minor as a modified monitoring and verification procedures--environmentalists will have a shiny new vehicle with which to drive states to Federal court (either directly or indirectly through a suit against EPA).
EPA is expected to finalize its carbon regulations as soon as August. Expect the legal battle to really heat up then.
Before the Obama administration turned the proposed Keystone XL pipeline into a multi-year political circus, there was the original Keystone pipeline.
In 2005, TransCanada proposed the project for moving Canadian shale oil from Alberta to Illinois. In 2008, it received a Presidential Permit (in only three years!) and was operating in 2010. (2008 also is when TransCanada applied for a permit to build the Keystone XL pipeline.) Extensions were completed in 2011 and 2014, expanding the pipeline network to eight states.transcanada-keystone-pipeline-system-map-2015-06-08.jpg Facebook TweetKeystone pipeline system.Keystone pipeline system. Source: TransCanada.
As the State Department continues evaluating the Keystone XL pipeline--which they've done five times--the original Keystone keeps moving oil from Canada.
After five years, it has reached a milestone: Safely transporting one billion barrels of oil.
For some perspective, if you laid one billion oil barrels end-to-end, it would wrap the earth 21 times.
Or put it another way, the largest oil supertankers carry 2 million barrels of oil and are 1,500 feet in length. To move 1 billion barrels of oil you would need 500 of them, stretching 750,000 feet--142 miles.
wikimedia_oil_tanker_buildings_500px.jpg Comparison of oil tanker Knock Nevis with other large buildingsSource: Fred the Oyster. Licensed under a Creative Commons Attribution-Share Alike 4.0 International license.
An article in Rural Electric Nebraskan notes that local residents hardly notice the physical pipeline:
"The ground doesn't look any different than it did beforehand," said Charles Barber, a farmer whose property is located near Keystone's Steele City Pump Station. "You don't even know the pipeline is there. This hasn't changed any of our process on the way we farm," he says.
But local governments have noticed the pipeline's economic benefits:
One area where Keystone was an immediate boon to Nebraskans is in payment of property taxes. Since construction, Keystone has paid $20million in property taxes to counties, townships, and to school, fire and natural resource districts along the route.
Here are some numbers about the original Keystone pipeline system:1 billion: Barrels of oil safely transported. $200 million: Dollars paid in local property taxes in eight states. 13,540: The direct and indirect jobs created by construction so far. 2,639: Miles of the Keystone pipeline system. 8: The number of states the pipeline system runs through.
And here are some numbers on the Keystone XL pipeline when it's finally built:$3.4 billion: Addition to U.S. GDP. $55.6 million: Annual property taxes generated in the first year of operation alone. 800,000: Additional barrels of oil per day that will be transported through the Keystone XL pipeline. 42,100: New direct and indirect jobs that will be created. 1,179: Miles of the Keystone XL pipeline; 840 miles of which will be in the U.S. 220: Miles of pipe sitting in a North Dakota field waiting to be used to build the Keystone XL pipeline.
Just as the original Keystone pipeline has safely moved oil and made a positive contribution, so too will the Keystone XL pipeline... when President Obama finally pulls it out of permitting limbo.