Monday, October 6, 2014

Farmers Protest Oil Hogs the Rails; US Oil Market Disconnect

A public role in rail’s big battles?

By Conrad deFiebre   MinnPost  10/06/14


.....While about 50 unit trains of Bakken petroleum keep chugging through Minnesota every week en route to distant refineries, practically every other commodity has been plagued by rail shipment delays or prohibitively higher carload rates. As bipartisan federal lawmakers reviewed decades-old railroad deregulation, 24 trade groups representing chemical, steel, cement, plastics, paper and fertilizer industries wrote Senate leaders to complain about a costly, time-consuming process for challenging rate increases before the Surface Transportation Board, Bloomberg News reported.

Then, leaders of the National Farmers Union descended on Washington to protest a railcar shortage that, at a time of bumper crops and depressed grain prices, is further eroding profits, in some cases due to fines for late deliveries. "It should really be imposed on the railroad that did not deliver on time, not the grain deliverer," Doug Sombke, the South Dakota Farmers Union president, told Bloomberg Businessweek.

... the challenges Upper Midwest farmers face to ship their crops today may be unprecedented. With Bakken oil hogging the rails, allegedly in exchange for under-the-table payment premiums, 100 million bushels of grain sat in Minnesota elevators and another 100 million bushels were stored on farms, the Star Tribune reported in late August.

"When you're sitting in a grain elevator waiting for cars to load, and every day you see oil trains pass by, it just adds insult to injury," Bob Zelenka of the Minnesota Grain and Feed Association told the newspaper. Meanwhile, a state corn harvest estimated at 1.3 billion bushels is about to begin....

.... Balancing the transport needs of the nation's agriculture, energy and industrial sectors — as well as Amtrak passenger timetables severely disrupted by rail bottlenecks — is a difficult but necessary job. An opaque deregulated market seems to be making a mess of it. Could some old-fashioned government command and control do any worse?     read entire article here

kelo.com 10/06/14  BY CATHERINE NGAI AND JONATHAN LEFF

NEW YORK (Reuters) - An unusual disconnect has emerged in the U.S. oil market, with headline futures slumping to levels below $90 a barrel even as traders in the physical crude market report surprisingly robust demand and strong pricing.....

... This turn is due largely to U.S. refiners expanding their capacity this year far more than expected. That has allowed them to absorb a larger share of oil from North Dakota's Bakken or the Eagle Ford shale plays in Texas, which is illegal to export and would otherwise swell inventories. This underpins local crudes and forces foreign competitors to cut back, knocking global oil prices.....

.... Although most refiners are now starting to shop for crude delivered in November, when seasonal maintenance will ease and demand for spot crude should get even stronger, the physical market could still tumble.....  read more here

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