U.S., Canada: Railway Regulations Will Not Deter the Energy Revolution

The demands imposed by new railway regulations recently announced by the U.S. Department of Transportation probably will not outweigh the benefits the oil and natural gas revolution have conferred on the United States and Canada. Increased production has put pipelines at maximum capacity, and expansion projects are moving slowly, prompting producers to rely more heavily on railways to transport what they have extracted. But recently, several train tankers carrying oil derailed Dec. 30 in North Dakota, which in turn led to a public outcry over safety concerns — hence, the new government regulations.

However, Washington and Ottawa may adhere more closely to business practices than they do the regulations. Energy production is obviously very profitable, creating jobs and balancing trade accounts. Perhaps as important, using railways to transport oil and natural gas enables the United States to synchronize and deepen energy relations with Canada, which can also use them to circumvent regulatory approvals for U.S. pipelines, most notably Keystone XL, and potentially connect its oil production to global markets.