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Mon, 08 Jul 2013 14:15:00 GMT | By Deirdre McMurdy, MSN Money

Why we’re still shipping oil by rail

As oil demand recovers with the U.S. economy, safety will be a huge challenge.

Deirdre McMurdy

Even before it’s possible to begin a full investigation of the tragic rail accident that has devastated Lac-Mégantic, one thing is already certain: there will be no shortage of blame to go around.

The blame will be apportioned in unequal measure to the owner and operator of the railway, the engineers who were charged with securing the train the night it broke loose, and the federal government which oversees rail regulation under Transport Canada’s Railway Safety Act. With a criminal investigation now underway, there may eventually even be an individual or group of individuals to blame.

But even those of us far from the scene must bear some of the blame for what happened, however indirectly.

As long as our economy and our society remain dependent on oil, there will always be an issue of how to safely transport it to market. Despite the application of sophisticated technology and elaborate regulations, there is no risk-free way to do that.

Not by pipe. Not by truck. And not by rail.

The horrific explosion of petroleum-filled rail cars in Lac-Mégantic underscores this reality. It also heightens the emotional and political pitch of an already intense debate about the future of the North American oil and gas sector and the issue of market access.

Those who object to the proposed construction of pipelines to unlock Canada’s shut-in oil for export now have to reconsider the option of using tanker cars and trucks.

That’s something that was already evident following the derailment — and salvage — of six oil-filled CP Rail tankers in Calgary earlier in the month.

Calgary’s mayor publicly upbraided CP Rail, which — correctly — apologized for the barely averted disaster. But the issue is much bigger than that, even if it leads to some improved operating procedures.

As the U.S. economy begins to grow after years of stagnation, demand for petroleum products will increase. Granted, there have been improvements in technology and in conservation practices, but the U.S. remains the world’s largest oil consumer and Canada’s largest oil export customer.

Demand is certainly growing in developing countries, but between 1995 and 2005, U.S. consumption increased by three million barrels a day. Transportation — specifically the demand for personal-use vehicles — accounts for the greatest chunk of oil demand (almost 70 per cent in the U.S. and 55 per cent worldwide).

To reinforce the point that individual consumption habits haven’t changed over the course of the economic downturn, the most recent U.S. vehicle sales figures are pretty eloquent.

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