Industry group slams railroads over ‘abject failure’ to deliver product

Source: Amanda Peterka, E&E reporter • Posted: Friday, April 4, 2014

The ethanol industry today sent a biting letter to the Association of American Railroads seeking answers on the rail delays that have hampered the industry in recent weeks.Delays in shipping ethanol have led to lower production and sent ethanol prices up, the Renewable Fuels Association wrote. About 70 percent of the nation’s ethanol is transported by rail.Ethanol production averaged 949,000 barrels per day in December but dropped to 896,000 barrels by early March (Greenwire, March 13). Ethanol prices reached a seven-year high this week, according to Bloomberg.

“Nothing has changed with regard to ethanol production costs or efficiencies. The only change has been abject failure of the rail system to adequately address the needs of all its customers,” RFA wrote. “The U.S. economy is suffering as a consequence.”

In a recent email, AAR spokeswoman Holly Arthur blamed the delays on the cold.

“As you can imagine, record cold temperatures, snow and ice have impacts on rail operations — from having to deal with snow and ice on infrastructure and equipment, to limits on how long employees can be outside,” Arthur said. “Railroads are doing all they can to address any service disruptions.”

The Renewable Fuels Association, which represents ethanol producers, has asked AAR to respond to questions on the steps railroads are taking to reduce the logjam.

It has also asked the railroad association to address how much the growth in crude oil rail transport has affected transportation of ethanol.

“The railroads have attributed this lackluster performance and inefficiency to winter weather. But they seem to have forgotten that winter comes every year,” RFA wrote in the letter today. “Indeed, a more plausible explanation for the severity of the current epidemic is the explosive growth in railcar shipments of Bakken and Canadian crude oil.”

Crude oil, though, represents just 1.4 percent of rail traffic, according to AAR.