Tuesday, May 20, 2014

Are railroads favoring oil shipments while grain bins and silos are still full from last fall's harvest?

Upper Midwest track map of Burlington Northern Sante Fe,
a Berkshire Hathaway company.
NPR's David Schaper reported on Morning Edition yesterday that railroads are months behind in shipping grain and other commodities.
     David Berg, presi­dent of the American Crystal Sugar company, said storing sugar in huge tote boxes and 50-pound bags has cost his company hundreds of thousands of dollars and may cost it millions if delays continue into next fall.
     Bob Dinneen, of the Renew­able Fuels Association said "the ethanol industry has had to cut back production because we don't have anywhere else to put the product because the railroads can't come and clear our inventory." Reported Schaper:
     In addition to the sugar and ethanol delays, power plants are waiting for trainloads of coal, cereal makers wait on shipments of oats, some farmers are delaying spring planting as they wait for shipments of fertilizer and even dealerships have to wait for deliveries of new cars.
     A new North Dakota State University study says that freight rail delays have already cost that state's agricultural producers more than $66 million and the economic losses are mounting in sectors and other states, too, as just about everything hauled by train across the northern tier of the country continues to face delays...
     In the mean time, 75% of the nearly one million barrels of oil per day from the Bakken fields of North Dakota and Montana are shipped by rail, using 400,000 tankcars of crude last year, up from fewer than 10,000 in 2008.
     NPR said that oil industry representatives declined to be interviewed for its story.
     You can listen to the complete report, as broadcast on Morning Edition, below:

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