A winter-long traffic jam on U.S. railways is hampering transport of ethanol, forcing production cuts and ratcheting up prices in supply-deprived regions.
The coldest winter in three decades has stalled locomotives, frozen track switches and delayed crews, causing snarls in Chicago and other major hubs across the continent and slowing much of the eastbound ethanol trade.
It is a further sign of how this winter has put severe strain on U.S. energy production and transport. Deliveries of propane, natural gas, even electricity, have struggled to keep up amid the freezing temperatures.
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East Coast stocks of fuel ethanol fell to their lowest level on record last week, down to 4.6 million barrels from 6.4 million at the same time last year, data from the U.S. Energy Information Administration showed on Mar. 12.
Midwest ethanol producers — who often can store no more than 10 days’ worth of production on site — are finding their tanks full as railroad pickups slow.
As a result, some plants are reducing production. The EIA data showed the second-lowest weekly production for ethanol in the Midwest so far this year, at 802,000 barrels per day.
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“We’ve had some times where we’ve had to make some adjustments in production,” said Brian Cahill, chief executive officer of Southwest Iowa Renewable Energy, which operates a 110-million-gallon-per-year ethanol plant in Council Bluffs, Iowa.
Cahill said his company mitigates the issue somewhat by loading unit trains of 80 cars or more. But congestion in the country’s busiest rail hub of Chicago still slows transportation of the ethanol from the plant in western Iowa to the New York Harbour and elsewhere on the East Coast, he said.
It is unclear how long the congestion will last as the weather thaws and shippers work to erase the backlog of deliveries.
A spokeswoman for CSX Corp., which has experienced delays in eastbound deliveries, said the railroad is working to relieve the congestion, but warned that “progress will be somewhat slow.”
