Rail Companies Ordered to Reveal Details of Oil Shipments

Chicago has long been the crossroads of the U.S. economy -- a teeming center of commerce geographically positioned at the nation’s midway point with access to the Atlantic via the Great Lakes.

Jun 20, 2014 at 11:31AM

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Chicago has long been the crossroads of the U.S. economy -- a teeming center of commerce geographically positioned at the nation's midway point with access to the Atlantic via the Great Lakes.

In the 19th century, Chicago was arguably the most important rail hub in the country, carrying grain, meat, lumber, and other agricultural commodities from the Midwest to markets on the east coast. The city's phenomenal growth since then was built on this rail economy, with manufacturing, finance, and a vibrant service sector springing up as a result.

Chicago today remains a critical organ in America's economic circulatory system. Every day, around 37,500 rail cars, or one quarter of the total U.S. freight traffic, travel through what Carl Sandburg called the "City of Big Shoulders" in his famous poem, "Chicago."

The cargo of those trains is still mainly agricultural commodities, but these days they're just as likely to be carrying oil or coal.

And because oil production is booming in the U.S., rail traffic in and around Chicago is also booming. Earlier this year, some freight trains took more than 30 hours to pass through Chicago because the rails were so crowded.

But delays were the least of the problems. Trains carrying crude oil over the past year have demonstrated a frightening tendency to derail and explode. State and federal regulators have been slow to respond, even as the frequency of oil-by-rail shipments has skyrocketed.

With much of these potential bomb-trains passing through Chicago, the city has tried to intervene where the federal government has so far failed to. Two Chicago aldermen have pushed legislation to ban oil trains from passing through the city, but the measure failed to gain momentum. Chicago Mayor Rahm Emanuel has also supported levying a new fee on the movement of hazardous materials through the city, but that, too, went nowhere.

The city, like most communities, does not have adequate resources to deal with an emergency. Jim Arie, the fire chief of Barrington, a Chicago suburb, told The Chicago Tribune about the difficulty of preparing for a huge incident that might not even occur. "It's truly the worst-case scenario for a fire department and it's not the kind of thing you can staff for or have enough equipment for."

But up until now, even a minimum amount of planning was difficult because rail companies have refused to inform state officials about when and how much oil they move across the country, insisting that the sensitive information is kept secret to ensure the safety of shipments.

On June 18, however, U.S. transit regulators overruled that argument and ordered rail companies to tell state officials things like what route trains will take, when they will pass through certain places, and other logistical details.

The June 18 decision by the Federal Railroad Administration will allow states to better prepare emergency response plans. Some states, including Montana and Washington, intend to publish the details to the public.

Not surprisingly, rail companies are not happy. "We must be cognizant that there is a real potential for the criminal misuse of this data in a way that could cause harm to your community or other communities along the rail route," Patrick Brady, the director of hazardous materials at the major rail company BNSF, wrote in a letter to Montana regulators. BNSF said it would consider legal action if Montana made oil shipment details public.

The FRA decision was a small but important victory for public safety, and it will be felt here in Chicago. Across the U.S., shipments of oil by rail hit 110,000 carloads in the first quarter of 2014, the highest on record. Up until now, a lot of that oil passed through Chicago, but city safety officials didn't know with any precision when or how much. Now they will.

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Written by Nick Cunningham at Oilprice.com.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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