Oil Companies Dealt Blow After Blow on Plans to Ship Crude by Train

Neil Young singing to the junkies for oil. He's seen the needle and the damage done.

by Gaius Publius

The oil train dominoes are falling. Seems no one touched by oil at the transport end wants any part of it. Pipelines leak, 100- and 200-car trains blow up and burn, and fracking destroys health, lives and ground water.

The key in all of these battles is local control, exercised by the very people in place to be the suffering recipients of all the damage done.

Tony Bizjak writing at the Sacramento Bee (my emphasis):

Oil company dealt another blow on plan to ship crude by train

For the second time in a month, a California community has rejected an oil company’s plans to ship crude oil on long trains through Sacramento and other cities to coastal refineries.

The San Luis Obispo County Planning Commission on Wednesday voted to reject a request by Phillips 66 Co. to build a facility at its Nipomo Mesa refinery that would allow it to receive oil shipments via three trains a week, some of which likely would have traveled through Sacramento and other Northern California communities.

The 3-2 vote to deny Phillips can be appealed by the company to the county Board of Supervisors.

Two weeks ago, the City Council in Benicia unanimously rejected a proposal by Valero Refining Co. that would have allowed it to receive oil from two 50-car trains daily on rail lines through downtown Sacramento, Roseville, West Sacramento, Davis, Dixon and other Northern California communities, as well as through the Feather River Canyon watershed.

Both oil companies were seeking local approval to build spur rail lines and oil transfer stations at their refineries to access oil from North American crude-oil fields, which have seen a boom from new hydraulic fracturing – or fracking – technology.

The requests pitted the oil companies against anti-oil activists, environmentalists and leaders of communities along rail lines, including officials in Sacramento and Davis who said they were concerned about the potential for catastrophic derailment and fires involving the volatile liquid.

If you widen out from California to the whole West Coast, it's win after win after win. Todd Paglia from Stand.earth:

Fighting oil companies and the railroads is no easy thing, but in the last few weeks there was a win, then another, and another and the rout of the previously untouchable fossil fuel sector shows no sign of slowing down. From southern California to northern Washington, communities along the West Coast have dealt four massive blows to the fossil fuel industry over the past two months. Taken separately, each of these announcements represents years of work and tens of thousands of people refusing to put the health and safety of their families, communities and our climate at risk. Collectively, these decisions, which came in rapid succession, represent a shift in the acceptability of expanding fossil fuel infrastructure along our coast. Put simply, people are no longer willing to let the oil industry decide their future, to pollute their communities, to poison their bodies, and to irreparably harm our climate, by building new fossil fuel infrastructure.

The details:

What does this mean for the future of the oil industry along the West Coast? Well, if Shell’s announcement yesterday that it would be withdrawing its request to build a new oil train facility in Anacortes, Washington, is any indication, the writing is on the wall.

To fully understand the tectonic shift that has just occurred in the fight to protect communities and our climate against new fossil fuel infrastructure, it helps to have a sense of what exactly has gone down in the past two months;

• On August 9, the Whatcom County Council dealt a stunning blow to big oil by starting the process to suspend all new fossil fuel proposals for two months, an immediate moratorium that was extended for six months on September 27th. Why is this a big deal? Whatcom County has found itself at the center of a national debate around fossil fuel infrastructure since it could become a gateway for exporting everything from coal to gas to oil to the growing Asia Pacific market. The county council members’ August decision is likely a prelude to a permanent moratorium. The impact of this cannot be overstated – it prevents the growth of the coal industry across the west with no new markets to send it to.

• Oil giant Kinder Morgan is working to push through a pipeline full of controversial tar sands oil to the Port of Vancouver, BC, and if that doesn’t work they may to try deliver the toxic oil to a terminal in Whatcom County on the critical waters of the Salish Sea. Like the recently rejected coal export terminal, an oil export facility would bring the risks of spills and climate damage, with just a few jobs – a very bad deal for anyone but Kinder Morgan. Which is another reason the Whatcom County ordinance is such a big deal.

• On September 20, after a 3½  year fight, a city council in the small Bay Area town of Benicia denied a proposal for a new oil train terminal at the Valero refinery. This stunning decision was, according to Benicia Mayor Elizabeth Patterson, the first time the city has voted against the refinery - a business that currently provides 20-25% of the city’s tax base. The city’s decision was made possible by tenacious organizing by local activists who garnered powerful opposition both in Benicia and in communities along the rail route stretching to Davis, Sacramento, and beyond.

• The Benicia City Council’s decision came on the heels of a ruling by the Surface Transportation Board (STB), a little-known federal agency that primarily handles disputes between railroads. The STB settled a dispute over whether or not, as Big Oil argued, federal regulation of railroads extends so far as to deny local governments land use permitting discretion over oil companies’ proposed oil train projects. Ultimately, the decision affirmed Benicia’s right to deny Valero’s project - a ruling that has already reverberated across the country and buttressed the City of Albany, NY’s challenge to an oil train facility there.

• The following week, on October 5, the San Luis Obispo County Planning Commission stunned oil giant Phillips 66 when it denied their permit to build a new oil train facility. The decision came after a nearly three-year review process, with tens of thousands of Californians opposing the project and more than 45 cities, counties, and school boards sending letters urging the planning commission to deny it.

By the way, the magnitude of the disruption is considerable. From Stand.earth's press release about the Anacortes victory: "Combined, the Shell, Benicia and San Luis Obispo decisions represent at least 1,500 tank cars per week of explosive crude oil that were destined to run through our communities, and now will not." These trains, each of them, are almost a mile long.

As Paglia wrote, local resistance shows no sign of stopping. What's important about the West Coast, from California to Canada, is that if the oil giants can't get fracked oil and gas to a Pacific port, they can't get it easily to India and China. In other words, they can't monetize it — which is their whole reason for doing what they do.

Disrupting that industry is a path to winning the climate war, though we have to work even faster at it than we're working. Still, hats off to everyone working this end of the battle. This is what winning looks like!

Disrupting Big Oil

A thought about disrupting Big Oil. Market prices are really low right now, too low in fact to keep many players in business, because supply is so great and oil prices are a very sensitive supply-and-demand pressures. I don't see supply shrinking any time soon, since the race to monetize the last carbon atom is on. And to be frank, the pressure to "keep it in the ground" is an attack on Exxon's stock value, which in large part is based on its monetizable reserves, its "in the ground" assets.

As I write, Exxon's stock price is $88 per share. Could Exxon stay in business if its stock price were suddenly $40? Perhaps not. After all, the mutual funds would shed the stock like water, driving the price even lower. There would be bottom feeders at those low prices, but a new ceiling would have been established. Major stockholders would panic and revolt.

So what would it take to drive Exxon's stock below its ability to stay in business? That's an honest question, and worth exploring.

Now pursue that line of thinking further. I'm a believer in disrupting supply (starving the oil-consuming junkies) as well as, or even instead of, outlawing demand (legislating against using the needle). It just seems more effective. First, any carbon mined will be very likely be burned somewhere in the world. Second, Big Oil has to be driven out of business anyway if we're going to win. The industry has to be bankrupted. So finally, if the disruption is disorderly and chaotic, do we care? Especially if the price of an orderly disruption is so much lost time that we simply lose the whole game we're playing, lose completely what we're trying to preserve?

So again, what would it take to bankrupt Big Oil? In particular, what would it take to drive their stock price below what they can sustain and still stay in business? Transport disruption, as discussed above (and also here), is one method. Other thoughts?

GP