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Accident Draws Fresh Attention to Crude Oil Shipments by Rail

Accident Draws Fresh Attention to Crude Oil Shipments by Rail

2013 is ending with yet another major rail accident involving oil. Authorities in eastern North Dakota are urging residents in the town of Casselton to evacuate – following Monday's derailment of a mile-long BNSF train, carrying more than 100 cars of crude oil. BNSF is a subsidiary of Warren Buffett's Berkshire Hathaway (NYSE: BRK-A).

The ensuing fires, explosions and massive smoke plume have created a health hazard in the region, but no injuries have been reported

The Casselton derailment is at least the fourth major accident of its kind this year in North America. In July, 47 people were killed when a train carrying Bakken crude from North Dakota derailed and exploded in a small Quebec town near the Maine border. Similar derailments, with ensuing fires and explosions, also took place in Alabama and the Canadian province of Alberta.

See also: Latest Derailment Draws New Attention to Amount of Oil Now Transported by Train

The shale oil boom in North Dakota and Canada – areas that currently are without any major oil pipeline systems – has brought new focus to the historic amount of oil currently being transported via rail and safety issues regarding those rail cars.

According to CBS News, U.S. railroads transported nearly 180,000 carloads of crude oil during the first half of 2013 – twice the amount as in 2012 and 33 times more than during the same period in 2009.

In the U.S., only Texas produces more oil than North Dakota. And earlier this month, North Dakota's top oil regulator told The Associated Press he expects as much as 90 percent of his state's oil will be transported by rail in 2014 – up from 60 percent in 2013.

Industry observers, meanwhile, expect more opposition and calls for reform in the wake of this latest derailment.

"Accidents like this are not only wake-up calls to the residents directly affected, but to those along the heavily trafficked routes bringing crude to the US east and west coasts," Eurasia Group analyst Elena McGovern told Reuters.

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