By: Micheal Molitch-Hou

Numerous studies suggest that, given the current climate emergency, no new fossil fuel infrastructure should be built. Not only that, but existing fossil fuel plants should be shut down now if humanity hopes to prevent the Earth’s atmosphere from warming beyond 1.5°C above preindustrial levels. This is both the goal set by the Paris Agreement and a level at which it may be impossible to halt runaway climate collapse. (That doesn’t account for the loss of biodiversity associated with extraction of fossil fuels, which scientists consider equally as dangerous as the climate crisis.)

Nevertheless, oil continues to be transported throughout the world to fuel our global society. As long as this remains the case, it is essential to ensure that this volatile material is transported safely, efficiently, and, for those who are counting dollars and cents, cost-effectively. For ground transport, that leaves two dominant options: by rail and by pipeline. In this article, we take a look at both of these methods to determine the advantages and disadvantages of each.

While pipelines have fixed locations, rail transport can be more flexible for transporting oil and can deliver oil to and from a wider variety of locations on short notice, depending on market demand. Unlike pipelines, rail shipment does not necessarily require long-term contracts, nor is there a regulated rate of return. A pipeline, for instance, can’t raise its rates when service demand is high.

“A pipeline can get congested during peak times so you can’t get any more oil through it, but the rate still can’t increase above that maximum regulated rate,” University of Chicago public policy professor Ryan Kellogg told Energy News. “So, the fact that pipelines can become congested creates the opening for rail to come in and help move the extra oil.”

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Areas of Focus: Energy Markets
Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Fossil Fuels
Fossil Fuels
Under current policies, fossil fuels will play an important role in the energy system for the foreseeable future. EPIC research is exploring the costs and benefits of these fuels as...