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Energy Industry Hogs the Rails, Shutting Out Farmers

Western farmers trying to get grain to market fear rising transport costs as oil companies increasingly turn to rail
oil train
oil train


Westbound oil train, Essex, Montana.
Credit: Roy Luck/Flickr

Oil and coal industries' reliance on rail to ship their wares may put the squeeze on Western farmers using the same tracks to get their grains to market. Montana growers are looking with concern at plans to crowd the rails even more with coal exports to the Pacific Northwest.

As energy commodities are more profitable to ship, already-limited rail capacity will likely tighten and become more expensive for growers, said Gerald Fauth, a Virginia-based transportation economics expert. Fauth is co-author of a report on rail impacts of coal imports prepared for the Western Organization of Resource Councils, a network of grassroots community organizations in the West.

"Many of the impacted railroad line segments already have significant rail capacity and congestion issues associated with current rail traffic," the report concluded. These capacity and congestion problems, it added, "require major upgrading and expansion of existing railroad tracks."

Doubling capacity
Energy and transportation companies have spent hundreds of millions of dollars to expand coal exports to Asia in order to compensate for declines in domestic coal. No new terminals have been built yet, but three proposed terminals in Washington and Oregon would have a combined coal export capacity of 110 million tons per year. Three existing Canadian export terminals also plan to roughly double their capacity to account for increased coal shipments from the U.S.  

According to the report, published in February, the number of loaded and empty trains handling coal from the Powder River Basin of Montana and Wyoming could reach be as high as 36 trains per day in five years and up to 63 trains per day in 10 years. Potential railroad movements of oil from North Dakota's Bakken shale to the Pacific Northwest could add another 22 trains per day.

These train cars would go through numerous populated cities and environmentally sensitive areas – blocking traffic, causing railroad traffic congestion, adversely impacting wildlife, and polluting the air land and water in addition to bringing higher freight rates and deteriorated service to grain farmers, according to the report.

Those figures are speculative, and railroads say that energy commodity trains are just a fraction of total rail traffic today. BNSF Railway, the major freight carrier through Montana, sends less than a dozen oil or coal trains daily from the coal and oil fields of North Dakota, Wyoming and Eastern Montana to the Pacific Northwest, said BNSF spokeswoman Roxanne Butler.

Oil shipments skyrocket
But shipments of oil have skyrocketed in recent years: The American Association of Railroads reports that nationally about 400,000 railcars of oil were delivered in 2013 – up from 11,000 in 2009.

Some Montana farmers are already struggling with rail delays moving their grain to market, though not all blame delays on coal or oil trains. 

"Grain elevators are full. Some growers may need to buy more grain storage if they can't get rid of last year's crop by the time harvest comes around," said Matt Flikkema, president of the Montana Grain Growers Association. But Flikkema said some of the more troublesome and recent delays are largely due to record cold temperatures and a series of snowstorms that have snarled transport through the West and Midwest.  

Roughly 80 percent of Montana's 1 billion dollar per year wheat crop leaves the U.S. for export to places such as Asia and the Far East through Portland, Oregon. The vast majority goes by rail, said Flikkema. 

Kremlin, Mont. wheat farmer Ryan McCormick says he hasn't yet had any problems moving his crop from the state's remote northern border. But he senses trouble on the horizon. BNSF, he said, "has been well in front of telling us there are going to be some issues in the next couple years." 

Paying for construction
Farmers like McCormick don't have other options for moving large quantities of grain for export. It would take about 400 truckloads to move the same amount of grain carried by the typical 110-car train. 

Still, McCormick sees the increased rail traffic for coal and gas as a gain. "Coal and oil traffic are paying for construction that will increase capacity," he said. "It will be a benefit to Montana producers in the long-term."

BNSF will spend $900 million on efficiency and expansion projects in 2014. In 2013, they spent $115 million to improve and expand rail capacity in Montana alone, according to the company.

This article originally appeared at The Daily Climate, the climate change news source published by Environmental Health Sciences, a nonprofit media company.

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