Famous investor Warren Buffet said this week that it is clear that railroad tank cars that carry crude oil need updating. Oil from some areas has the potential to be more dangerous than previously thought, both to people and the environment during a spill.
Buffet appeared this week on CNBC after he released an update in a letter to Berkshire Hathaway Shareholders last Saturday. Buffet is the owner of BNSF railroad, and is also a manufacturer of tank cars.
Buffet noted in the CNBC interview that crude oil from the Bakken oil Field in North Dakota and Montana, and also the oil from the Eagle Ford oil field in south Texas has turned out to be more volatile than first thought.
Such volatility could have contributed to some of the disastrous derailments in the last 18 months. One occurred in Lac-Megantic, Quebec in the summer of 2013 and killed 46 people.
New safety rules are being drawn up by federal regulators and will not be finished until late this year.
However, some oil and railroad companies are not waiting for the new regulations and are updating their tanker cars on their own. Two oil firms, two railroads in Canada and a tank car manufacturer have all announced this year that they are going to boost production of an updated tank car called DOT-111. They are going to stop using the older version of the tanker car. It is that old design that some experts believe have caused some of the deadly derailments in the last few years.
Refiner Tesoro informed investors in February that its entire tank car fleet would be updated with the safer cars. The new cars have thicker protective plates at both ends, and thicker shells that make them harder to crack during a crash.
Discussions on the new cars started back in 2009, when the US government asked industry to draft new standards for the DOT-111.