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Where Have All the Oil Trains in California Gone?

While many California were protesting oil trains carrying the hazardous Bakken crude, a funny thing happened—they stopped coming. While protests may have delayed the construction of new oil terminals, economics is at the root of the slowdown.
March 13, 2015, 11am PDT | Irvin Dawid
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"Although tank cars full of oil now roll daily through cities in the Midwest and East, provoking fears of crashes and fires, the number of oil trains entering California has remained surprisingly low, state safety regulators say, no more than a handful a month," writes transportation reporter Tony Bizjak for The Sacramento Bee. "In recent weeks, they appear to have dwindled to almost nothing."

“Crude oil shipments from out of state have virtually stopped,” said Paul King, rail safety chief at the California Public Utilities Commission (CPUC). “Our information is that no crude oil trains are expected for the rest of this month.”

It would appear that as with fracking, California's crude-by-rail opponents have Saudi Arabia to thank for the dramatic reduction in oil prices, more specifically, for their decision not to reduce their oil output, resulting in oil prices taking oil prices in a tailspin. 

California Energy Commission fuels specialist Gordon Schremp said lower prices for other types of oil have made Bakken marginally less marketable in California, although that could easily change in the future.

Indeed, the reprieve may be short term if one is to believe some of the forecasts resulting from dramatic build-up in crude oil supplies in the United States, particularly in Cushing, Okla., that could cause a domestic price collapse to as low as $20 per barrel according to Citigroup's Ed Morse, reported The Associated Press on March 3.

"(S)upplies haven't been this high since 1930, reported The Wall Street Journal on Wednesday. "If storage tanks were to fill up, prices would plummet as producers sought homes for their crude," writes energy markets reporter Nicole Friedman. Should that happen, the benchmark price difference between domestic oil from the Midwest and imported oil might be too much for California refineries to ignore.

Full Story:
Published on Wednesday, March 11, 2015 in The Sacramento Bee
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