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The magazine Trains reports that the Canadian government is considering increasing the insurance limits for railroads transporting crude oil. This type of shipment is known as Crude By Rail or CBR. While I'm generally not in favor of government meddling of any kind in what is supposed to be private enterprise, I think this is a good idea. Let me explain.
The Obama administration handed railroads, both U.S. and Canadian, a huge windfall by opposing the Keystone XL pipeline, and pipelines for crude in general. It is anybody's guess whether the pipeline business could have or shoud have jumped through all the environmental hoops and over all the government imposed regulatory hurdles in time to handle the increased production of domestic crude coming from new technologies. Love or hate the tech--fracking, horizontal drilling, steam injection, microorganisms, polymer and solvent detachment, and all collectively known as EOR--most people would admit that the bonus every week at the gas pump is something our pocketbooks have needed for a long, long time. But there is a concurrent bonus to the pocketbooks of the freight railroads. Even while complaining of capacity constraints and understaffing, the railroads are making money from CBR.
It's a windfall brought about by government policy, so there's nothing inherently un-conservative about the government throwing on a little regulation that will give communities where CBR is routed some peace of mind. And after the past year's record, those communities need some peace of mind beyond the railroads' assurances that everything that can be done is being done to upgrade and make the car fleet safer and moves of CBR in general safer.
I'd be the first in line to argue that railroads are the singular business where safety is of utmost concern and has been for many years. And yet, we see lapses in crew training and maintenance that suggest that railroads may have reached the highest "safety awareness" saturation possible for the size and heavy-duty nature of the enterprise. Likewise, we may have reached the point where best possible engineering practices simply are not going to be enough for the size and complexity of rail transportation.
Enter the insurance companies. As an insurance professional for over forty years, I know that insurance companies have some of the best and brightest engineers devoted to machinery and personnel safety practice. The profitability of their business in the area of liability depends on not just picking risks with the best possibility of outcome, but also on assuring that those risks practice what they preach. Railroads are so flush right now that I doubt the higher premiums for higher limits will bother them. But the higher the limits of insurance, the more the insurance companies will be motivated to be involved in railroad safety. Think of it as adding another set of eyes and ears to the mix without adding employees to the railroad. Another layer, so to speak.
Free enterprise demands that CBR movements will continue. With certainty, there will be future accidents. Higher limits will not penalize the railroads, but they will add a layer of safety concurrent with a heightened confidence by the general public that they will have recourse when something goes terribly wrong. It's only fair.
©2015 - C. A. Turek - mistertrains@gmail.com
