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Mitigating Environmental and Public-Safety Risks of United States Crude-by-Rail Transport

Author

Listed:
  • Olufolajimi Oke
  • Daniel Huppmann
  • Max Marshall
  • Ricky Poulton
  • Sauleh Siddiqui

Abstract

We present a medium-term market equilibrium model of the North American crude oil sector via which we develop a scenario analysis to investigate strategies to mitigate the environmental and public-safety risks from crude-by-rail transportation across the United States. The model captures crude oil movements across rail- roads, pipelines and waterways, while distinguishing between light and heavy crude qualities. We find that restricting rail loads or increasing pipeline capacity from areas driving production will significantly reduce rail movements. However, lifting the United States crude oil export ban in isolation will only increase rail transportation volumes. We show that an integrated policy of targeted rail caps, pipeline investments and lifting the export ban sustainably addresses medium-term crude-by-rail risks in the United States.

Suggested Citation

  • Olufolajimi Oke & Daniel Huppmann & Max Marshall & Ricky Poulton & Sauleh Siddiqui, 2016. "Mitigating Environmental and Public-Safety Risks of United States Crude-by-Rail Transport," Discussion Papers of DIW Berlin 1575, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1575
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    References listed on IDEAS

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    Cited by:

    1. Langer, Lissy & Huppmann, Daniel & Holz, Franziska, 2016. "Lifting the US crude oil export ban: A numerical partial equilibrium analysis," Energy Policy, Elsevier, vol. 97(C), pages 258-266.
    2. Sankaranarayanan, Sriram & Feijoo, Felipe & Siddiqui, Sauleh, 2018. "Sensitivity and covariance in stochastic complementarity problems with an application to North American natural gas markets," European Journal of Operational Research, Elsevier, vol. 268(1), pages 25-36.
    3. Iranitalab, Amirfarrokh & Khattak, Aemal & Thompson, Eric, 2019. "Statistical modeling of types and consequences of rail-based crude oil release incidents in the United States," Reliability Engineering and System Safety, Elsevier, vol. 185(C), pages 232-239.

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    More about this item

    Keywords

    Crude-by-rail; market equilibrium; mixed complementarity problem; transportation capacity; infrastructure investment;
    All these keywords.

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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