INSIDE THE U.S. SHALE GAS AND RAIL BOOM

INSIDE THE U.S. SHALE GAS AND RAIL BOOM

With so many options in transportation cropping up, there was a time within the last few decades where many were writing off the railroad industry. Trucking, planes, and pipelines were supposed to push the freight rail industry out of the picture—but of course, like many predictions, the results could not have been more off target.

One of the main reasons for this freight-rail renascence is the boom in natural gas production in the U.S. Driven by new hydraulic fracturing technology, an uptick in gas (from areas such as the Barnett Shale in Texas and the Bakken Shale in North Dakota and Montana) have turned the country into global energy superpower. Experts now believe that U.S. crude oil production will reach more than 9 million barrels per day this year—compared to just 5 million in 2008.

In order to transport the increased volume around the country, companies have turned to the once-forgotten freight rail industry. An all-time record 97,135 carloads of crude oil rode the rails in the first quarter of 2013, according to the Association of American Railroads. To understand the true impact of the shale gas boom, it’s important to know that record number is 922times higher than the same period in 2008.

As one might expect, there has also been a rise in investment in rail companies and infrastructure. Some experts believe that more $25 billion will find its way into maintaining and upgrading America’s rail system in 2014. (Despite this encouraging number, there is little question that America’s rail infrastructure needs help from both the private and public sectors to raise its safety and efficiency levels.)

The shale oil boom will continue for the near future. In fact, according to Exxon, the U.S. will be a net exporter of both oil and gas by 2025. For this to happen, America’s freight rail system must do more than just maintain—it must grow and flourish.