By Kevin C. Gillen
Pennsylvania has benefited enormously from its oil and gas boom. Over the last decade, the industry has grown to support more than 300,000 jobs in the commonwealth and contributed more than $34 billion to the state's economy. But with that production now comes the challenge of how we transport this output to businesses and consumers. When it comes to transporting natural gas and natural gas liquids, we basically have three options: train, truck, or pipeline.
First, consider transport by train. As all of North America has experienced an energy boom, transportation by rail is suddenly increasing nationwide. In 2008, U.S. railroads transported 7 million barrels of crude oil or natural gas. By 2014, this had grown to nearly 300 million barrels. But such rapid growth has taxed our rail infrastructure, as neither the quantity of rail lines nor the quality of our rail cars has been sufficiently upgraded.
The result: a much higher accident rate. Between 1975 and 2012, spills from trains were both rare and small. But in 2013, there was 1.5 million gallons of spillage, which was more spillage in U.S. rail incidents than in the prior 37 years combined. And, rail spills tend to do much more damage to both the environment and human life than spills occurring from trucks or pipelines.
In February of 2015, a train hauling 107 cars of crude oil derailed in Mount Carbon, W.Va. The resulting spill caught fire and caused several large eruptions of giant fireballs. Hundreds of families were forced to evacuate, with some losing their homes altogether, and two nearby water treatment plants were shut down.
Not only is transport by rail less safe, it's also more expensive. The Congressional Research Service has estimated that transporting energy output by rail is two to three times more expensive than by pipeline: about $10-15/barrel rather than about $5/barrel.
But transportation by truck doesn't offer a very attractive alternative either, for two very distinct reasons. First, trucking is the most risky form of transportation from both health and environmental standpoints. The number of trucking accidents (and subsequent spillage incidents) per year is far higher than accidental spillage from rail or pipeline.
Second, transportation by trucking is also far more inefficient and expensive, for the simple reason that it takes lots and lots of trucks to move billions of gallons of crude or natural gas than what could be carried by a train or a pipeline. A single truck trailer can only hold about one-third of what a single rail car can carry. Moreover, making transportation by truck would require an enormous investment in our trucking fleet, since our present fleet only carries about 4 percent of our current annual energy output.
Making trucks our primary form of transportation would add enormous congestion to our roads, as well as dramatically increase the likelihood of both accidents and spills.
That leaves transportation by pipeline. Currently, 70 percent of all liquid energy output in the United States is transported by pipeline. Yet, the occurrence of serious spillage or serious accidents is overwhelmingly confined to transportation by either rail or truck. In a paper published by the Manhattan Institute, the author found that the incident rates for spillage accidents were highest for road transportation (20 billion ton miles per year), followed by rail (2.08) and then in a very distant third was liquid pipelines (0.58 incidents per billion ton miles). Pipeline transportation is not only safer than rail or road, it is safer by several very big orders of magnitude.
And transport by pipeline, compared with other forms, has also been found to have less of an adverse effect on property values in the communities that such pipelines run through. A recent independent study by consulting firm Integra Realty Resources examined home sales both near and far from liquid gas pipelines in four different states. Controlling for housing quality and size, they found that proximity to a pipeline had no statistically meaningful effect on a home's value, its probability of sale, or its owner's ability to obtain a mortgage. By contrast, you probably don't need to commission a study to guess what close proximity to a trucking depot or rail yard has on home values, much less an oil spill or natural gas fire.
Pipeline opponents would have you falsely believe that constructing new infrastructure capacity such as pipelines is harmful to both the environment and individual households. But it is the failure to construct new capacity that does true harm. Pipeline transportation is not only more economically beneficial and efficient than the alternative forms, it is also the healthier and more responsible choice as well.
Kevin C. Gillen is a Philadelphia-area economist. Kevin.C.Gillen@Drexel.edu