Ethanol Leaking from Train Derailment in Florida

24/7 Wall St.

Three tanker cars filled with ethanol are leaking the fuel from a CSX Corp. (CSX) train that derailed at the Port of Tampa. Fifteen cars are off the track and firefighters are using foam in an effort to keep the ethanol from igniting, according to a report from CBS News.

Virtually all ethanol in the United States is transported by rail, barge or truck because pipelines to carry the stuff are almost nonexistent. The water content of ethanol encourages corrosion and cracking in the pipelines, which require special and expensive modifications to be capable of transporting ethanol.

Ironically, the single operating ethanol pipeline in the U.S. carries the fuel from Tampa to Orlando. Kinder Morgan Energy Partners L.P. (KMP) put the pipeline into service nearly five years ago. Privately held ethanol maker POET and Magellan Midstream Partners L.P. (MMP) proposed an 1,800-mile-long ethanol pipeline from South Dakota to New York, but the pipeline was never built.

Shares of CSX Corp. are inactive in the premarket this morning, having closed at $24.94 last night, in a 52-week range of $18.88 to $26.36.

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