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The External Costs of Transporting Petroleum Products by Pipelines and Rail: Evidence from Shipments of Crude Oil from North Dakota

35 Pages Posted: 25 Sep 2017  

Karen Clay

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; National Bureau of Economic Research (NBER)

Akshaya Jha

Department of Economics

Nicholas Z. Muller

Middlebury College - Department of Economics

Randall Walsh

University of Pittsburgh - Department of Economics

Date Written: September 2017

Abstract

This paper constructs new estimates of the air pollution and greenhouse gas costs from long-distance movement of petroleum products by rail and pipelines. While crude oil transportation has generated intense policy debate about rail and pipeline spills and accidents, important externalities – air pollution and greenhouse gas costs – have been largely overlooked. Using data for crude oil transported out of North Dakota in 2014, this paper finds that air pollution and greenhouse gas costs are nearly twice as large for rail as for pipelines. Moreover, our estimates of air pollution and greenhouse gas costs are much larger than estimates of spill and accidents costs. In particular, they are more than twice as big for rail and more than eight times as big for pipelines. Our findings indicate that the policy debate surrounding crude oil transportation has put too much relative weight on accidents and spills, while overlooking a far more serious source of external cost: air pollution and greenhouse gas emissions.

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Suggested Citation

Clay, Karen and Jha, Akshaya and Muller, Nicholas Z. and Walsh, Randall, The External Costs of Transporting Petroleum Products by Pipelines and Rail: Evidence from Shipments of Crude Oil from North Dakota (September 2017). NBER Working Paper No. w23852. Available at SSRN: https://ssrn.com/abstract=3042411

Karen B. Clay (Contact Author)

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Akshaya Jha

Department of Economics ( email )

Nicholas Z. Muller

Middlebury College - Department of Economics ( email )

Munroe Hall
Middlebury, VT 05753
United States

Randall Walsh

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States

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