Reference no: EM132769966

Though it did not require the use of mileage, it required that railroads must use a method to allocate fuel surcharges that correlates with actual fuel costs. The STB is an economic regulatory agency within the Department of Transportation that Congress charged with the fundamental missions of resolving railroad rate and service disputes and reviewing proposed railroad mergers. After spiking in 2008, the cost of fuel fell in 2009 and 2010, but it has risen substantially in early 2012 to near the peak levels of 2008. While the increase in fuel costs has put pressure on railroads to raise rates (BSNF, one of the large rail shippers, doubled its surcharge in January 2011), rising fuel costs have helped increase rail traffic, as some shippers switch from less fuel efficient trucks to more fuel efficient rail transportation. Total fuel surcharges by BNSF, one of the largest railroads, have continued at about 65% of BNSF's total fuel expense in the period 2011 through 2013.

Required

Problem 1. How would you propose that the increased cost of fuel be charged to shippers by the railroads?

Problem 2. Do you think the STB ruling should solve the problem?

Problem 3. What are the key sustainability issues for a consumer of rail transport?