Analyzing the Risk of Transporting Crude Oil by Rail
In this paper, I combine data on incidents associated with rail transportation of crude oil and detailed data on rail shipments to appraise the relation between increased use of rail to transport crude oil and the risk of safety incidents associated with those shipments. I find a positive link between the accumulation of minor incidents and the frequency of serious incidents, and a positive relation between increased rail shipments of crude oil and the occurrence of minor incidents. I also find that increased shipments are associated with a rightward shift in the distribution of economic damages associated with these shipments; the implied marginal impact of an additional 1,000 rail cars carrying oil between two states in a given month is $1,836. In addition, I find larger average effects associated with states that represent the greatest source of tight oil production.
Thanks are due Thomas van Eaton for superb research assistance, participants at the 2017 ASSA meetings, the Workshop on Energy Transitions held at the University of Southern Denmark in March 2017 as well as seminar participants at Washington State University and the University of Wyoming for lively discussion. Particular thanks are due to Ben Gilbert, Max Maelstrom and Lucy Qiu for their constructive feedback. Any remaining errors are solely my responsibility. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.