Shipping Ethanol Could Be Literally On Track

John Davis

Ethanol producers facing the dilemma of not being able to ship much of their fuel through pipelines… but also not wanting to burn more fuel to make deliveries of the green fuel… have found the answer in an industry that can ship large quantities at a relatively cheaper price than semi-trucks: trains.

This article in Business Week says the boon for ethanol is also helping the railroads:

The idea behind ethanol is to reduce oil consumption, and thus reduce its negative environmental impact, so it seems trains would be the best way to transport the corn-based fuel. Trains are used to transport corn from grain bins to the production plants, and ultimately to markets across the country. According to the American Coalition for Ethanol, more than 75% of the ethanol produced in the United States is shipped by rail.

High diesel-fuel prices certainly make it a no-brainer for businesses to use the rails. As of June 25 the average price of on-highway diesel in the United States was $2.835 per gallon, according to the Energy Information Administration.

S&P equity analyst Kevin Kirkeby says shippers of bulk commodities, like coal and grain, are largely dependent on railroads for long-distance transportation. Ethanol is another product likely to rely heavily on the rails, as it is hard to transport ethanol any other way.

The article goes on to say Burlington Northern railroad’s ethanol shipping revenues this year will be $100 million. Rail car producers are also benefitting as they see demand for their cargo vehicles rise with the production of ethanol.

Ethanol, News