Oil rides American rail streak

June 7, 2013 at 6:51 AM
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WASHINGTON, June 7 (UPI) -- The shipment of petroleum products by rail led in terms of overall commodity groups for May, the Association of American Railroads said.

AAR said eleven of the 20 commodity groups shipped on U.S. rail systems recorded monthly increases for May when compared to the same time last year. Petroleum and petroleum products led the way with a 41.8 percent increase compared to May 2012. Other cargo, like motor vehicle parts and gravel, recorded single-digit gains.

AAR Vice President of Economics John Gray said the U.S. economy still isn't "firing on all cylinders."

"Pockets of rail traffic growth, such as autos, nonmetallic minerals, and commodities related to crude oil extraction are being countered by continued weakness in steel-related commodities, paper and grain, among others," he said in a statement Thursday. "Like everyone else, railroads are hopeful that the economy will soon finally shake off its malaise and start reaching its potential."

Oil companies operating in North America are turning to rail as production gains overwhelm existing pipeline capacity. Pipeline supporters say their safety record is better than rail, though oil spills from rail are far less severe.

Grain shipments by rail for May were down 20 percent year-on-year.

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