Even as the number of places available to stockpile oil is rapidly dwindling, railroads are clamping down on rising demand from oil companies to store crude in rail cars due to safety concerns.
Due to the worsening coronavirus pandemic, oil demand is expected to drop by roughly 30 percent this month worldwide. Even as Russia and Saudi Arabia hammer out an agreement to cut worldwide output, supplies are increasing. As refiners reduce processing and US exports fall, storage is filling rapidly. By mid-2020, storage space for crude globally could run out.
For a hazardous commodity such as crude, clients are told by the railroads that tank cars are not a prudent long-term storage mechanism. A loaded crude oil unit train will not be put in a private facility by the railroads and a safety hazard potentially created.
The US Energy Department showed nearly 142 million barrels of crude moved via rail in the US in 2019, representing about 10 percent of what is transported via pipelines. Unit trains can carry around 60,000-75,000 barrels.
