(John Kemp is a Reuters market analyst. The views expressed are his own)
By John Kemp
LONDON, March 9 (Reuters) - Two more serious derailments and fires involving trains carrying crude oil in the past week confirm there is a serious problem with the safety culture on North American railroads.
The latest fiery derailments occurred in northern Illinois involving a train operated by BNSF and northern Ontario involving a train operated by Canadian National Railway.
They come just weeks after serious oil train fires in West Virginia involving a train operated by CSX and another Canadian National derailment in northern Ontario.
Fortunately, these derailments occurred in sparsely populated areas, but it is only a matter of time before a train derails in a densely populated urban centre and risks a mass casualty incident.
The U.S. Department of Transportation predicts more than 200 crude and ethanol carrying trains will derail over the next 20 years, including ten in urban areas.
Based on plausible assumptions, at least one of these urban derailments could cause a catastrophic accident with deaths, injuries, damage to property and environment clean up costing $6 billion.
The 200-plus predicted incidents will cost more than $18 billion in total, according to the Department of Transportation ("Oil by rail shipments are playing Russian roulette" Feb 23).
Yet regulators and the industry (including railroads, oil shippers, and oil producers) appear to be in a state of denial about the seriousness problem and the need for urgency tackling it.
The U.S. Department of Transportation and groups representing the industry have failed to produce timely and effective response to the spate of train fires.
So it is time for Congress and the White House to step in and impose a solution to enable crude to be carried safely while protecting communities along the major oil by rail corridors.
Research has shown serious accidents in any industry almost always have multiple causes and occur when multiple safety systems fail simultaneously.
The spate of train fires over the last few years have revealed at least inter-related safety problems: (1) trains are derailing with alarming frequency; (2) tank cars cannot contain their loads when they come off the rails; and (3) crude oil is much more flammable and hazardous than originally estimated by the industry and regulators.
The multiple causes of train fires have encouraged industry participants to engage in a blame game and try to shift the responsibility and costs of solving the problem onto others.
Railroads insist crude is highly dangerous and should be reclassified under the hazardous materials regulations and carried in strengthened tank cars.
Oil shippers and producers dispute the characterisation of the crude as unusually flammable and instead insist railroads must do a much better job of keeping trains on the tracks.
The industry and regulators have responded with a patchwork of measures that have tried to tackle individual aspects of the problem.
The Association of American Railroads (AAR), representing the major railroad operators, has introduced speed restrictions and other safeguards for high-hazard flammable trains meant to reduce the probability of derailments (Circular OT-55-N).
The AAR, together with the Railway Supply Institute's (RSI) Committee on Tank Cars, representing shippers, has also introduced revised construction standards for new tank cars built to carry crude oil and ethanol (Circular CPC-1232).
For the U.S. government, the Department of Transportation's Pipeline and Hazardous Materials Administration (PHMSA) and Federal Railroad Administration (FRA) have stepped up safety inspections to ensure crude has been properly tested and classified under the hazardous materials regulations.
North Dakota's Industrial Commission, which regulates production in the Bakken, where much of the oil involved in train fires originated, has brought in new rules requiring the stabilisation of crude prior to shipment.
And Canada has introduced its own restrictions requiring the accelerated phase out of existing old DOT-111 tank cars, requiring railroads to carry more insurance, and allowing railroads to collect higher, safety-related fees for carrying oil.
None of these actions individually or collectively has been enough to reduce the risk of derailments and train fires.
Recent accidents have involved trains travelling slowly well under the new limits prescribed by OT-55-N, using new and supposedly stronger tank cars prescribed by CPC-1232, and with oil correctly classified and placarded under the Hazmat Regulations.
The industry's voluntary actions have not done enough to reduce the risk of derailments and train fires.
New CPC-1232 tank car standards are only a minimal improvement over the old DOT-111 standards they replaced according to the U.S. National Transportation Safety Board, which investigates the cause of accidents.
NTSB has identified improved tank car safety as one of its top 10 priorities for 2015. Safety regulators want much tougher tank car standards coupled with slower speed limits and other measures to keep trains on the tracks.
NTSB wants tank cars to have thicker steel shells than the DOT-111 and CPC-1232 models, full-height head-shields to protect them against puncturing in collisions, and more protection from the heat generated by train fires.
NTSB wants trains routed away from densely populated urban areas wherever possible and the introduction of positive train control technology.
But the most important change has nothing to do with train speeds or tank car standards: it is cultural and must come from the top of the rail industry and the U.S. government.
There is complacency within the industry about the risks posed by crude-carrying trains. Occasional derailments and fires are seen as an unfortunate but unavoidable cost of the oil boom.
This is dangerous and short-sighted. If a train disaster like Lac-Megantic occurred in the heart of a U.S. city, the political backlash would jeopardise the entire oil-by-rail business.
To safeguard the future of the industry, the squabbling between railroads, shippers and regulators about who is responsible for train fires, and the costs and benefits of various safety options, must end.
Instead, railroads, shippers and regulators must embrace a "safety culture" that targets zero train fires (which is a far cry from the predicted 200 over 20 years). Safety must be made the oil by rail industry's top priority.
There is a rich literature on what contributes to a good safety culture. But safety culture always begins at the top with an emphasis on zero avoidable accidents from an organisation's leaders.
The existing approach to writing oil by rail regulations - led by lawyers, lobbyists and inside safety experts - has demonstrably failed.
It is time to clear them out of the way in favour of a broad new safety strategy agreed between the chief executives of the railroads, shippers and oil companies as well as the White House and the Department of Transportation, with appropriate legislation and oversight from Congress.
If the crude by rail industry cannot develop an adequate safety culture on its own, it is time to impose one from outside. (Editing by William Hardy)