Western Railroad Discussion > BNSF Adds Surcharge On Oil Trains!

BNSF announced today that they will add a $1000.00 surcharge on all of the older models of tank cars that carry oil. The goal is to get the companies who ship oil to order the new tank cars that are built of a higher standard and to scrap the older tank cars.
The surcharge will add about $1.50 per barrel to the cost of shipping oil across the country.
Guess who will get to pay the surcharges????

Does this have anything to do with their insurance?

Ray

It's for their lawyers when the NIMBY's sue them.

Smart move on BNSF's part. Get the higher risk cars off their rails and onto somebody else's property.

Wonder how long until NS UP CP etc all add their surcharges?

(A few years ago, one of the Jersey Shore beach towns got tired of brawling in the streets around bar closing time, which was 3am. Like the neighbors.

Changed the closing time to 2am, lights out at 2.15, so everybody headed up in a drunken convoy to find open bars someplace else in some other town. Worked like a charm...)

Send the bill to the tree huggers.

Nudge

That surcharge is really crappy. It could cost BNSF a lot of money if the producers seek out other transportation of the oil maybe trucked to a BNSF competitor who does not charge it. BNSF knows of the back log of tank car orders and that it will be every bit of 2 or more years before a fleet can be changed out. Fact is competitiors can also be spelled p-i-p-e-l-i-n-e.

This is no different than a fuel surcharge, Alameda Corridor Surcharge, Peak Season Surcharge, etc.

So tired of the tree hugger and NIMBY posts...

Yeah force them to shortlines who really have no storage space but somehow have to find where to put the 100-some car train because the customer doesn't want it delivered to the BNSF...ask me how I know? I had to put a 110 car train in three different sidings for storage...got another one tomorrow.

That's the problem when there's a lack of competition.

Actually CN and then CP started surcharging for the older equipment earlier this year. Since the cars are private cars, the customers are probably shifting the older cars to BNSF, so this would be a way of bringing balance back to the car supply.

In a business/financial/economics realm, this is an attempt to put a cost on a risk factor.
Not an exact science, but a push toward motivating parties toward safer practices by trying to put a number on the risk factors of their cost-based business thinking.
Smart move methinks.

nwkrailfan Wrote:
-------------------------------------------------------
...ask me how
> I know? I had to put a 110 car train in three
> different sidings for storage...got another one
> tomorrow.

Aww, poor guy. Must suck to have too much business.


The surcharge makes sense. Phase out the cars that are supposedly causing the problems and you sent have to pay an extra 100,000 per train. More incentive to get those new cars out there.

Posted from Android

nwkrailfan Wrote:
-------------------------------------------------------
> Yeah force them to shortlines who really have no
> storage space but somehow have to find where to
> put the 100-some car train because the customer
> doesn't want it delivered to the BNSF...ask me how
> I know? I had to put a 110 car train in three
> different sidings for storage...got another one
> tomorrow.

Is there another Railroad to send it to? Why is your RR not charging the oil train storage and other fees to move it off your RR?

Pacific5th Wrote:
-------------------------------------------------------
> nwkrailfan Wrote:
> --------------------------------------------------
> -----
> > Yeah force them to shortlines who really have
> no
> > storage space but somehow have to find where to
> > put the 100-some car train because the customer
> > doesn't want it delivered to the BNSF...ask me
> how
> > I know? I had to put a 110 car train in three
> > different sidings for storage...got another one
> > tomorrow.
>
> Is there another Railroad to send it to? Why is
> your RR not charging the oil train storage and
> other fees to move it off your RR?

Yeah, the BNSF...but the customer doesn't want to pay the surcharge so they want us to store them. No idea what they are going to do with them, maybe modifications to get them up to standards.

Posted from Android

If I understand correctly these cars can be used for other products.
So it's not like they're scrap metal, yet...

spnudge Wrote:
-------------------------------------------------------
> Send the bill to the tree huggers.
>
> Nudge

Because the oil companies can't afford it? Have you looked at their earnings lately?

Couple of thoughts: Perhaps BNSFs tank car order is coming in and we don't want them sitting around. Let's clog up someone else's railroad to help ease our capacity issues. The motorist will never notice and we can put another billion or two in the bank.

It does seem that the surcharge could have been phased in, perhaps in three month increments, $250 till reaching the 1k number.
John

I love trees!!

I love trains

Posted from iPhone

This surcharge may add a small amount to the cost of these particular loads of oil to the producers, but the cost of gasoline that you and I pay will not be substantially affected by it, because it will not be enough to alter the world price of crude oil or the resulting market prices of petroleum products. This will have only a short-term impact on specific companies' profits until replacement tank cars come on-line.

The reason Bakken oil is even marketable right now, despite the high cost of extracting it from the ground, is that crude prices are high (though lower of late than they've been in the recent past).