This is challenging.
TransCanada Corporation (NYSE:TRP) President Alex Pourbaix has stated that rail transport is ten times more likely to spill and create three times more greenhouse gasses.
In contrast, Canadian National Railway (NYSE:CNI) has argued the opposite. Their statistics show rail emits 50% less carbon emissions than pipelines and spills less crude oil by volume.
These contradictions highlight the need for more independent research.
According to a recent report by the IEA, pipelines are six times less likely to spill. However, when pipelines burst they’re catastrophic events spilling more oil when they rupture. Rails spill 0.38 gallons of oil per million barrels moved compared to 0.88 gallons for pipelines.
Of course, these statistics are little comfort to environmentalists who are against tar sand development regardless of the transport method.
Foolish bottom line
So which one will win out?
The key will really come down to the the difference between the price for Canadian crude and other international benchmarks. Refineries will only pay a premium for rail shipments as long as Canadian crude is sufficiently cheap and southbound pipelines remain clogged. If this spread narrows, railroads will lose market share quickly.
Robert Baillieul has no position in any stocks mentioned. The Motley Fool recommends Canadian National Railway (NYSE:CNI).
The article Pipelines Versus Railroads originally appeared on Fool.com.
Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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