The reason pbf refinery is going to the new tanker cars only is this. CN CP have instituted a $325 per tanker car fee starting april 1 on any tanker car built before after 2011 and a certain classification. This fee eats into every refinerieas bottom line. DELTA has a refinery for there jet fuel in trainer pa. so this will affect them also since the oil they get comes from the sands region and bakken region. To me this sounds like extortion by the railroads
Matt,
Not sure what is happening in Canada, but the AAR and now the fed’s want all new tank cars to meet a stiffer construction standard, and existing cars to be upgraded. Of course, the tank car owners are fighting this, but the rash of tank car wrecks is pushing this to happen.
This cost of this will be initially borne by the tank car owners, and the cost will trickle down to the refinery and eventually the end user - Nothing new here.
Jim
I will move this over here because I don’t want to hijack a thread that is about a Pennsylvania derailment and playing records backward to find secret messages.
So, as I said over there:
If railroads cannot refuse shipments offered in legal cars (as we have been told), how can they be allowed to overprice shipping in those cars for the express purpose of discouraging their use?
[8D]pass the popcorn. I love a good ufo story?[swg]
Good heavens, but there are a lot of oil threads lurking about…
It’s all the rage these days.
Norm, are you saying you don’t find the language (the specific labeling) offensive or that you believe the whole message was inappropriate?
The latter.
Don’t other hazmat already have surcharges?
But it sounds like that is the intention of the surcharge. Is the railroad able to add a surcharge with no price limit? Or are surcharges regulated somehow?
In this case, what if the surcharge does not result in any tank car shifting. What if the surcharge is simply accpted and passed trough to the end user? Could the CN then raise the surcharge higher?
If so, it seems like the end result would simply be the pricing of the oil out of the market. New tank cars are not going to magically appear overnight just because CN is pricing to encourage that. Something has to give when the price goes up.
Dear Posters:
I went ahead and deleted certain posts with a thought to getting this discussion back on course … it is a good one. Please keep your discussions respectful.
Also, please be aware that each of you are able to send private messages to one another to seek clarification of points of view or for details that, when asked publicly, might otherwise distract from the main conversation. This might help in diffusing tense situations before they overtake a thread.
Best,
Steve S.
thank you
Was not the UP Chlorine case decided before Staggers?
[8D]maybe[swg]
Of course, the railroads will say that they are not discouraging the use of the DOT-111 cars, but instead merely adjusting the price to compensate themselves for the now-realized increased exposure to risk of damages/ losses from fire, explosion, and liability for property damage and bodily injury (including death) resulting from the use of said cars. The railroads will also point out that much of the risk of these damages is outside of the carriers’ control - grade crossing accidents, etc. - and it’s the shippers, not the railroad, who choose to buy/ lease those cars and maintain them, etc.
A long legal principle in the U.S. is that while a certain activity cannot be absolutely prohibited, it may be heavily regulated, taxed, etc., almost to the point of practically barring it. While that may seem to be almost the same thing, it is enough of a “distinction with a difference” to pass most legal challenges and reviews (except some activities expressly protected by the First Amendment to the Bill of Rights, etc.).
Here, the $325 per car surcharge is around 50 cents per barrel (700 barrels per car), or a little over a penny a gallon. Anyone want to bet on an oil company winning an argument over that small of an amount, in an era of $3.50 per gallon gas for our cars ?
That said, I find the flat $325 per car fee - apparently regardless of the mileage traveled or risk incurred - a little too simple. I’d find it quite a bit more reasonable if it was proportional on a per car-mile basis - say, 16 cents per car-mile for a 2,000 mile
Paul, thank you for a clear and concise analysis.
You’re welcome, Dave (and everyone else). I used to do trackwork in the PBF refinery (and others in that area, such as the one at Trainer), and oil-by-rail is a subject in which I’ve been deeply interested for over 40 years now (yikes !).
I’d much rather do (and read) this kind of analysis, same as some of the posts by you and others. It just took a while to collect my thoughts, mainly while shoveling the accumulated snow and ice off the driveway . . . .[:-^]
- Paul North.
What is your opinion on the pure bitumen by rail question, or is your experience completely outside that portion of the oil business? Do you agree with Greasmonkey?
[quote user=“Paul_D_North_Jr”]
Of course, the railroads will say that they are not discouraging the use of the DOT-111 cars, but instead merely adjusting the price to compensate themselves for the now-realized increased exposure to risk of damages/ losses from fire, explosion, and liability for property damage and bodily injury (including death) resulting from the use of said cars. The railroads will also point out that much of the risk of these damages is outside of the carriers’ control - grade crossing accidents, etc. - and it’s the shippers, not the railroad, who choose to buy/ lease those cars and maintain them, etc.
A long legal principle in the U.S. is that while a certain activity cannot be absolutely prohibited, it may be heavily regulated, taxed, etc., almost to the point of practically barring it. While that may seem to be almost the same thing, it is enough of a “distinction with a difference” to pass most legal challenges and reviews (except some activities expressly protected by the First Amendment to the Bill of Rights, etc.).
Here, the $325 per car surcharge is around 50 cents per barrel (700 barrels per car), or a little over a penny a gallon. Anyone want to bet on an oil company winning an argument over that small of an amount, in an era of $3.50 per gallon gas for our cars ?
That said, I find the flat $325 per car fee - apparently regardless of the mileage traveled or risk incurred - a little too simple. I’d find it quite a bit more reasonable if it was proportional on a per car-mile bas
[8D]by lawyers, 4 lawyers,pass the popcorn. it raining lawyers[banghead]
So in the name of profits over safety, you’d prefer the industry to keep the hazards a “secret” even though the hazards were identifed 23 years ago by the NTSB?