DOT Predicts Billions for Future Oil Train Derailments

Train derailments involving crude oil and ethanol in the United States will cost more than $18 billion over the next 20 years, according to an assessment by the U.S. Department of Transportation. DOT forecasts there will be just over 200 derailments involving trains carrying 20 or more tank cars of crude or ethanol between 2015 and 2034, an average of more than 10 per year, based on analysis of previous accidents and predicted growth in traffic volumes. Most will be “lower-consequence events” involving limited damage to property, environmental clean-up and only a few injuries or fatalities, with the bill totaling less than $5 billion. But up to 10 could have more serious consequences because they occur in more densely populated areas, with an estimated cost of $1.2 billion per incident. DOT also considered a tail-risk event occurring in a densely populated urban center such as Chicago and estimated the damages from a single incident could amount to $6 billion. However, the maximum insurance coverage available in the commercial rail insurance market is limited to around $1 billion per carrier, per incident, according to DOT, so railroads are under-insured against the risk of a catastrophic accident. These estimates were first reported by the Associated Press and are contained in a draft regulatory impact analysis prepared by DOT to support its proposed new rules on tank cars and railroad operations, and can be downloaded from www.regulations.gov using the document code PHMSA-2012-0082-0179. (reuters.com)