Pipelines: The Safest Way to Move Fuel

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The administration appears unwavering in its decision to block construction of the Keystone XL Pipeline, which would bring oil from Canada, our closest trading partner, to American refineries in the Gulf of Mexico.

The relative safety of pipelines vis-à-vis road and rail to transport oil and gas is a topic of preeminent importance. Data published by the U.S. Department of Transportation clearly show that pipelines have lower injury and fatality rates than road and rail, in addition to enjoying a substantial cost advantage.

These findings have substantial relevance for America's energy future. Petroleum production in North America (Mexico, Canada, and the United States) is now over 16 million barrels a day, according to the Energy Information Agency, and could climb to 27 million barrels a day by 2020. Natural gas production in Canada and the United States could rise by a third over the same period, climbing to 22 billion cubic feet per day.

This oil and gas will have to travel to where it is needed. Whether it is produced in Canada, Alaska, North Dakota, or the Gulf of Mexico, it will be used all over the country, especially since new environmental regulations are resulting in the rapid closures of coal-fired power plants. Large fleets of buses and trucks are switching to natural gas, General Motors and Chrysler are making dual-fuel pickup trucks, and newspapers are speculating about the timing of natural gas passenger vehicles for the American market.

The obvious solution is pipelines, which result in fewer fatalities, injuries, and environmental damage than road and rail. Already almost 500,000 miles of interstate pipeline crisscross America, carrying crude oil, petroleum products, and natural gas. The network of pipelines has a remarkable safety record. Americans are more likely to get struck by lightning than to get killed in a pipeline accident.

America has 175,000 miles of onshore and offshore petroleum pipeline and 321,000 miles of natural gas transmission and gathering pipeline. In addition, over 2 million miles of natural gas distribution pipeline send natural gas to businesses and consumers. This is expected to increase as America shifts to natural gas to take advantage of low prices that are expected to last into the foreseeable future.

Pipeline transportation of oil and gas is safer than transportation by road and rail. Pipelines are the primary mode of transportation for crude oil, petroleum products, and natural gas. Approximately 71 percent of crude oil and petroleum products are shipped by pipeline on a ton-mile basis. Tanker and barge traffic accounts for approximately 22 percent of oil shipments. Trucking accounts for 4 percent of shipments, and rail for the remaining 3 percent. Essentially all dry natural gas is shipped by pipeline to end users.

If safety and environmental damages in the transportation of oil and gas were proportionate to the volume of shipments, one would expect that the vast majority of damages to occur on pipelines. But the opposite is true: the majority of incidents occur on road and rail.

Data on pipeline safety are available from the United States Department of Transportation Pipeline and Hazardous Materials Safety Administration Office of Pipeline Safety (PHMSA). Operators report to PHMSA any incident that crosses a certain safety threshold. These reports enable the public to calculate the safety of pipelines in comparison to road and rail.

The Transportation Department has compared the incident, injury, and fatality rates for oil and gas pipelines with transportation by road and rail for the period 2005 through 2009. Road and rail have higher rates of serious incidents, injuries, and fatalities than pipelines, even though more road and rail incidents go unreported.

Rail had the highest rate of incidents, with 651 per billion ton miles per year. This was followed by road, with 20 per billion ton miles per year. Natural gas transmission came next, with 0.89 per billion ton miles. Oil products were the safest, with 0.61 serious incidents per billion ton miles.

With respect to pipeline systems, natural gas transmission lines had the lowest average fatality rate for operator personnel and the general public between 2005 and 2009, with a rate of one person killed per year. This was followed by oil and rail, with an average of 2.4 people per year. The highest is road, with an average of 10.2 people a year.

To draw another comparison, according to the National Weather Service there was an average of 39 reported deaths annually caused by lightening from 2001 through 2010. From 1992 to 2011 fatalities related to pipeline incidents were about 20 per year. An individual had about twice the chance of getting killed by lightening as being killed in a pipeline incident.

Injury rates, defined as numbers of people hospitalized, show a similar pattern. On average, annual injuries for 2005 through 2009 were lowest for oil, at 4 people per year, and natural gas, at 6.2 people per year. The rate was highest for rail, at 25.6 people per year; although this number was heavily biased by the 2005 observation. Road accidents were 21.8 people per year, on average.

Some claim that pipelines carrying Canadian oil sands crude, known as diluted bitumen, have more internal corrosion, and are subject to more incidents. However, PHMSA data show no incidents of oil releases from corrosion from Canadian diluted bitumen between 2002 and 2010. Oil sands crude has been transported in American pipelines for the past decade.

Pipeline safety matters because America continues to ramp up production of oil and natural gas. We need better pipelines to get oil from North Dakota to the refineries in the Gulf, and natural gas from the Marcellus Shale in Pennsylvania (and New York, should the State allow production to move forward) and the Utica Shale in Ohio to the rest of the country.

In the next few years, the administration may allow more states to explore for oil offshore. In addition, Congress might vote to give coastal areas a share of oil drilling revenue, providing a powerful incentive for more drilling. Congress could also form a liability risk pool to allow independents to expand drilling in the Gulf of Mexico. In order for these resources to get where they are needed, we need more pipelines-the safest way to move fuel.


Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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