Last month in Rails Crossing (subs only) ISA looked at the rails with respect to our ongoing coal investigation. Turns out the rails may be solid and conservative investments as derivatives of the U.S. shale oil boom. The strength of the rail stocks has been remarkable on the heels of coal shipments falling 100 million+ tons in 2012. Crude being hauled on rails has more than made the difference and will continue to blossom in the years ahead.
First, an introduction to rail tank cars: RBN Energy. Rail oil prospects excite Wall Street at Railway Age. Some standbys suffering, but rail industry has rebounded at Times Online.
“North American rail shipments of crude oil are estimated to have grown by 360,000 barrels per day within the past 12 months to reach 465,000 bpd…” Financial Post
To this point, oil on rail growth has been driven by the Bakken (Mark Perry). Statoil leased 1000 rail cars to make the trip to the gulf coast (Statoil). Bakken oil is going to head east as well (Fuel Fix).
As U.S. oil production booms without the pipeline capacity available for transportation, the higher cost rail option becomes necessary. Importantly, often the trains take the oil to where it is priced of Brent instead of WTI.
Meanwhile, it’s not just oil. Frac sands needs to be moved too: Star Tribune.
Especially in Canada, Rail gains steam as a crude oil mover at Globe and Mail.
Further investigation of the rails is necessary and should be profitable. Stay tuned! Do you enjoy Independent Stock Analysis? Add JJ Butler to your investing toolkit. For $100 a year, become a member today!