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RSI report shows proposed tank car regulations could cost up to $60 billion
People making regs who have no common sense or no clue what goes on in the real world. Just cost us all higher prices
Regulatory economic analyses almost always overstate benefits and underestimate costs. Similar analyses done for affected parties – such as this one – almost always do the opposite: understate benefits and overstate costs. While I do not know exactly where the cost-benefit balance lies in this case, from a brief skimming of the report my impression is that splitting the difference is near the most likely case. In particular, this report makes much of costs to the economy of rail traffic being diverted to highways, which almost certainly overstates what would happen in the (unlikely) case that the final regulation were to be what is proposed. Most of the purported costs will disappear if implementation of the regulation were delayed. As we know, delay will certainly take place. Delay will occur because the regulatory process is intrinsically slow, especially because the regulated industry will do whatever it can to slow things down.
The report also assumes that the optimistic projections of demand for oil transport will come to pass, an assumption that cannot be real. With crude oil prices now less than $60 per barrel, many of the production plans will be cancelled on cost grounds. The production projections assume crude oil pricing in the vicinity of $100/bbl. There was a report this morning that exploration plans in the Bakken are already being halted.
James D. Wilson
Just another example of industry whining about having to spend the extra money to operate in a safe fashion. What the report does not say is how these rules will prevent accidents that could cause both financial and human losses. As for oil being shifted to moving by trucks that is just a joke.
And the disaster in Canada will end up costing how much? Environmental clean up, compensation to victims families, rebuilding the town- all of those put together will approach that $B number too. It’s all a question of who pays.