Energy & Environment — What a rail strike would mean for energy

by Zack Budryk - 11/30/22 5:56 PM ET

Congress is moving quickly to avoid a possible rail strike, which could have severe effects on the energy industry if it were to happen.

Meanwhile, the Biden administration pledges to protect a sacred Nevada site, and more than a dozen Puerto Rican towns sue oil companies over climate change.

This is Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. For The Hill, I’m Zack Budryk.

Potential rail strike could upset energy industry

A strike by U.S. railroad workers has the potential to have dramatic impacts on energy delivery, with industry groups warning of logistical snarls and price increases for consumers.

The potential strike — which Congress and President Biden are scrambling to avert — would predominantly affect commodities that can’t be transported by pipelines, such as coal and ethanol.

What does that mean for energy? A number of energy trade groups have vocally lobbied for Congress to step in, warning that a strike could be devastating to their industries.

“Our country’s ethanol producers rely greatly on the railroads to move their products to market, and if the nation’s trains stop running, the nation’s ethanol biorefineries stop running too,” Renewable Fuels Association (RFA) President and CEO Geoff Cooper said in a statement Monday. “We need a resolution quickly so the 400,000-plus jobs supported by our nation’s ethanol industry, and the rural economy itself, will not suffer the dire consequences of an interruption in rail service.”
More than 95 percent of domestic ethanol supply is manufactured in the Midwest, requiring rail transport to heavy-use states like Texas and California.

And that’s not all: More than 70 percent of ethanol produced in the U.S. is transported by rail, and in the last five years American railroads have transported an annual average of almost 395,000 carloads, according to data from the RFA. The ethanol plants themselves, meanwhile, rely on rail transport for about 25 percent of the grain used in production.

“The biggest impact is actually on the delivery of ethanol to the terminal logistics and distribution system,” said Andy Lipow, the president of Lipow Oil Associates. “Because gasoline contains 10% ethanol in every gallon that is sold, it becomes an integral part of the supply chain without which supply shortages will develop.”

Lipow said existing ethanol stockpiles contain enough that it’s possible a short strike could come and go without affecting consumers, putting the window at about 10 days.
“However, as those delays progress and get extended … we find that the terminals will run out of ethanol and consequently will not be able to supply their customer demand for gasoline to be sold at the retail service station,” he added.

Twelve unions representing railroad workers have spent nearly three years negotiating a new contract with rail carriers, with the members seeking sick leave, more flexibility in schedules and a raise. Union leaders agreed to a Biden administration-brokered deal earlier this year, but the rank and file of four of the unions have rejected it.

The House on Wednesday passed legislation to avert a strike, sending it to the Senate for consideration ahead of a Dec. 9 deadline.

Biden vows protections for Nevada’s Spirit Mountain

President Biden on Wednesday committed his administration to protecting a Nevada mountain and the surrounding landscape, but stopped short of the formal national monument designation desired by advocates.

Avi Kwa Ame, or Spirit Mountain, is a sacred site to the indigenous people of the Yuman language group, and environmentalists have also called for a national monument designation, which would prevent development on about 450,000 acres around the mountain.

Not quite a monument: Speaking at the White House Tribal Nations Summit Wednesday, Biden did not announce a formal designation, despite initial reports that he would make the second such announcement of his presidency. Formal protections for the area would make it the largest acreage protected under the Biden presidency so far.

“When it comes to Spirit Mountain and the surrounding ridges and canyons in Southern Nevada, I’m dedicated to protecting this sacred place that’s crucial to the creation story of so many tribes that are here with us today,” the president said. An Interior official confirmed to The Hill this did not constitute a formal designation.
“Avi Kwa Ame holds deep spiritual and historic significance to the Native people who have stewarded these lands since time immemorial,” said Interior Secretary Deb Haaland, the first Indigenous Cabinet secretary. “I am thrilled that President Biden is committed to protecting this sacred place, and honor the many years of work of the Tribes and local community to safeguard the integrity of the historic and cultural landscape and the many objects of significance within it.”

The push to protect Avi Kwa Ame has led to atypical friction between environmentalists and the renewable energy sector. Last December, the Bureau of Land Management signaled it will not authorize a proposed wind farm in the Mojave Desert that would have overlapped with the proposed monument.

Puerto Rican towns sue major oil companies

Sixteen Puerto Rico municipalities filed a class-action lawsuit in federal court against major oil companies, alleging companies like ExxonMobil, Shell and Chevron colluded to suppress evidence of climate change that has devastated the island, including 2017’s Hurricane Maria.

The municipalities accused the defendants, who include Exxon Mobil, Royal Dutch Shell, Chevron, BP, ConocoPhillips and Arch Coal, of conspiring to conceal fossil fuels’ role in climate change. The lawsuit alleges the companies spent billions of dollars on a “fraudulent marketing scheme to convince consumers that their fossil fuel-based products did not–and would not–alter the climate, knowing full well the consequences of their combined carbon pollution on Puerto Rico.”
The defendants produced more than 40 percent of global industrial greenhouse gas emissions between 1965 and 2017, according to the lawsuit, and were aware emissions were associated with stronger storms dating back to at least 2017.
The complaint cites an internal 1998 memo from Shell predicting “violent” Atlantic storms hitting the east coast of the U.S., likely prompting class-action consumer lawsuits.

Puerto Rico in particular has become a “canary in the coal mine” for the impacts of climate change, the lawsuit alleges, citing the Global Climate Risk Index 2020, issued in 2019, which called the island the single country most affected by climate change. Warmer waters around the island have intensified the winds associated with tropical storms and hurricanes, such as Maria, which killed nearly 3,000 people on the island.

“While Puerto Rico is the ultimate victim and the first victim, it is not the last,” said Marc Grossman, a partner at Milberg Coleman Bryson Phillips Grossman LLC, which is representing the plaintiffs. “We are investigating claims by municipalities all over the world coming to the realization that they, along with the rest of the planet, were duped by the fossil fuel industry and now live in grave danger of being the next Puerto Rico.”

Gas prices could drop below $3 by Christmas

The average U.S. gas price could drop below $3 per gallon by Christmas, according to price tracker GasBuddy, dipping to the lowest levels since February despite worries about inflation and a possible recession.

GasBuddy reported a decline of 22.7 cents per gallon in the last month and said the dip could continue through December, pushing the price per gallon down to a possible $2.99 by the Christmas holiday.

The national average figure is currently hovering around $3.50 this week.

“All the metrics look very positive for motorists as this week is likely to continue seeing falling gasoline prices, with many areas falling to the lowest level since Russia’s invasion of Ukraine in February,” said GasBuddy’s head of petroleum analysis Patrick De Haan.

“It’s entirely possible the national average price of gasoline could fall under $3 per gallon by Christmas, which would be a huge gift to unwrap for motorists after a dizzying year at the pump,” he added.