Canadian Pacific Railway CEO: People Need To Realize That Fossil Fuels Are “Probably Dead”
The CEO of Canadian Pacific Railway, one of the largest railways on the continent, was recently quoted as saying that people need to begin realizing and accepting that fossil fuels are “probably dead” — owing to a changing climate and the environmental hurdles that are likely to be introduced in coming years to large-scale use of fossil fuels.
The Canadian Pacific Railway CEO, Hunter Harrison, made the comments at a recent JP Morgan transportation conference in New York. One where he also noted: “I’m not maybe as green as I should be, but I happen to think the climate is changing; they’re not going to fool me anymore.”
Harrison speculated that, while the transition to “alternative fuels” would be a long one, investments into fossil fuels would likely begin drying up due to environmental barriers.
The Calgary Herald provides more:
The country’s second-largest railway has seen shipments of crude drop due to declining demand brought on by the dramatic fall in oil prices. Thermal coal shipments have also waned. Harrison said the rail industry will have to adjust to a shift to alternative energy sources, just as it did in the 1990s when the US Clean Air Act wiped away 29% of the business at Illinois Central Railway that he ran at the time.
Company spokesman Jeremy Barry said later that Harrison was referring to the “overwhelming trend” toward sustainable energy and the need for all segments of the economy to acknowledge the ever-changing energy landscape.
“I think that it’s a challenge going forward, but rails have historically dealt with those changes really well through the years and continued to survive and make it,” Harrison continued.
As conventional railway transport is far and away one of the most energy efficient means of transport and shipping, that fact isn’t surprising. Unless the canal network of the northeast makes a comeback via a New Deal–style public works project (this is never going to happen, I know), then I’m doubtful that continental railway networks will lose their (energy efficiency) dominance anytime soon. Once oil prices climb back to their previous highs (which shouldn’t take more than a few years), railway transport will once again seem to be a particularly economical choice for many.
(Tip of the hat to Matthew Klippenstein for this story.)
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“The country’s second-largest railway has seen shipments of crude
drop due to declining demand brought on by the dramatic fall in oil
prices.”
Now let me get this straight. Because of falling prices, demand falls. Because it’s now too cheap for people to afford to buy. So if we raise prices high enough people will start buying again.
That’s the understanding level of the Calgary Herald’s reporter I know. But I suppose it is something Harrison possibly said too. But Harrison has to be smarter than that. He was likely shorthanding it. People see the decline in prices everyday at the gas stations they pass. What is invisible to us all is the huge glut caused by the over-supply that has caused the fall in prices. Or he is still rose-colored glassing it and not admitting that the economy has not rebounded enough from 2008 to return gas demand to its 2008 levels.
Sigh.
I think what he’s saying is that there is a demand drop for Canadian oil due to global price decreases for oil.
If you read carefully he’s talking about Canadian oil and what Canadian rail ships, not global oil.
Gotha. That makes more sense.
CP does operate within the US. This link shows it is number six in market cap:
http://www.investopedia.com/articles/investing/093015/top-five-public-railroad-stocks-us.asp
With any combination of demand drop and supply rise, prices fall.
Did anyone say oil demand fell because oil prices fell? No. Not simplistically. Those terms are too vague. But in the context of the article it’s clear what the statement means. It can only be misunderstood by taking it out of context.
The quote is a reference to demand for rail services dropping because Canadian tar sands oil is too expensive to compete with falling global oil prices. Falling global oil prices cut Canadian source oil demand.
The Canadian rails are facing a reduction in oil shipment due to decreased demand for Canadian oil.
Yes, I was reading the comment from the wrong direction. I was reading it as a consumer not a transporter.
I could easily have done the same. Thanks for the courteous reply. I try to keep my comments respectful. I make misteaks, or misread sometimes, too, and I appreciate good feedback including bloggers that supply links. Its nice when everyone contributes.
demand for oil has not dropped but sourcing has changed. Less of expensive North American crude is being shipped by rail, while more, cheaper, oil is shipped by tanker or pipeline. Rail is more expensive transport than pipeline or tanker and helps make oil shipped in this manner less competitive.
Low oil prices were, in part, caused by North American production increases. They are maintained by unrelenting Middle East production.
Alberta ships coal and oil sand crude. Demand for coal is declining, and oil sand extraction can not compete at less than $50 barrel. That is why rail shipments are down. It is unlikely to be temporary. The infrastructure investment cannot be put on hold for years. The workers leave, real estate prices crash, factories go dormant and then who wants to risk investing to reopen when prices can fall below profit lines overnight? This time the carbon party is really, really over in Alberta.
You are wrong on several points. Oil sands extraction costs are often below $30 per barrel and getting steadily lower.
There is no evidence that the global demand for coal is decreasing but I suspect it will happen. Most exports of Canadian coal is from B.C..
Rail shipments were increasing because of a shortage of cheaper alternatives. The current decreases may become permanent if other alternatives become available.
Alberta has other export industry that is not insignificant. Agriculture and forestry are examples.
Your prediction about the party will probably be proven wrong, again.
Alberta is shutting 18 coal fired plants, so it is ending its domestic coal demand. If extraction costs are viable for oil sands why is everything going South shutting down and moving out? They are still shipping in a desperate hope for redemption. My guess, it is doomed.
Even losing $6 per barrel, top Canada oil sands project unlikely to close … crude has a break-even production costs of C$57 ($43.46) a barrel, …” You see what I mean, they are losing $6 barrel but hope is desperate.
How are they losing $6 per barrel. You quote costs in Canadian dollars. Oil is at about $52 if quoted in Canadian dollars
Sorry misread your post. The 57. dollars would only apply to a very small proportion of Canadian production. I would refer you to Suncor, one of the largest oil sands producers.The last I heard their costs were at 28.00 and going down.
Yes, most Alberta coal production has been for domestic use. I think it is a good long term strategy to end coal fired generation.
Oil sands operations are not shutting down and things are not any better to the south.
Low prices mean a period of consolidation with many smaller high debt companies being picked up by more viable ones. It also means a moratorium on expansions as cash flows are not sufficient. It is cheaper to pick up the assets of other companies.
All this leads to higher prices in the future as production declines.
I don’t think the roller coaster is shutting down for a while yet.
So, which of the large US/Can railways will be the first to start electrifying their tracks? Or are they betting on biofuels, batteries, fuel cells or such?
Electrifying track is expensive, sure, but the technology exist and is mature.
Good question. I wonder what the numbers would be on a monster locomotive packed to the brim with a giant battery. Just think of the level of regenerative braking power it would get back.
The largest Railway in the world the trans siberian in Russia is electric and has been for decades. It’s a no brainer.
Ah, an opening…
“Along the route of the Trans-Siberian Railway, trains of oil tank cars extend across the landscape for miles. Each tank car, black and tarry-looking, with its faded white markings, resembles the one that follows it… a trainload of these cars defines monotony.
The Trans-Siberian Railway covers 9,288 kilometers between Moscow and the Pacific port of Vladivostok, or 5,771 miles. In other words, if it were twenty-one miles longer, it would be exactly twice as long as Interstate 80 from New Jersey to California. Laying awake near the tracks in some remote spot at night you hear trains going by all through the night with scarcely a pause.
…
(T)he Trans-Siberian Railway is all-electric, with overhead cables like a streetcar line – you find the tracks are empty of traffic only for five or ten minutes at a time.
…
Besides oil, the railway carries coal, machinery parts, giant tires, scrap iron, and endless containers … just like the containers stacked five stories high around the Port of Newark, New Jersey, and probably every other port in the world.”
Travels in Siberia by Ian Frazier (2010)
Slightly off topic – have you read “The great railway bazaar” by Paul Theroux? – http://www.theguardian.com/books/2013/may/30/book-club-paul-theroux-railway
Brilliant book with a great section on the Trans-Siberian.
Long time ago. Time to read it again. Theroux is my favorite travel writer but I’m not sure I’d like to share a beer with him. (I’m certain I’d give P G O’Rourke a pass. He’s morphed into a right wing jerk.)
Same here. I vaguely remember him talking about fluid freezing in bottles in the carriages on the Trans Siberian. Time to dig my copy out.
Locomotives with about 2 MWh of Lion batteries, say 100 kWh of supercaps, maybe a 1 MW diesel motor generator set (for emergencies). Then electrify about one tenth of the track, especially graded sections and locations were trains stand (e.g. one side of a passing loop on an otherwise single track line). Since those power sources can be put in series, then a 3 MW continuous, 6 MW max (short term) locomotive should be possible. North American diesel electrics couldn’t match that. Such hybrid electric locomotives could wander perhaps 100 km from the overhead wires making them muc more flexible than normal electric locomotives.
Changing the subject, when are we going to see (partially) battery powered garbage trucks? They would be another good application for supercaps to recycle the energy otherwise thrown away when those trucks brake.
Being done…
http://cleantechnica.com/2014/09/16/first-electric-garbage-truck-in-us-hauls-9-tons-of-chicago-trash/
Regenerative power is only really useful in stop-and-go traffic. The benefits would be almost non-existent in a locomotive that keeps going at the same speed for dozens or even hundreds of miles once it has accelerated.
You get a stop for every start. And you go down a hill for each hill you go up.
Since railway engines are restricted to their tracks, there is no need for batteries. Electricity could be supplied by overhead lines or electrified track. Examples are subway systems or street cars of the past.
Can a train with regenerative braking feed power back into the wires or track? I’ve been told they can’t, because if the electrical connection was lost the braking would also be lost. But why couldn’t the train have multiple connections?
Yes, a train with regenerative braking can feed power back into the wires. Googling around suggests a few of these systems are in the process of being deployed, on commuter trains though, not freight trains. I’m sure these trains have some kind of backup braking system in case the electrical connection is lost, be it mechanical brakes or an array of resistors on the roof.
“Once oil prices climb back to their previous highs (which shouldn’t take more than a few years)” I doubt it unless producers come out of the market. Oil has peaked and the writing is on the wall, consumption is on a downward spiral from now on.
I’m a Canuck, and I know this to be true; Canucks are well informed but for some reason, all their viewpoints are ten years old. Everything that happens in California happens there, ten years later. This man’s comments might have been accurate in 2006.