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Fire fighters douse rail containers in downtown Lac-Mégantic, Que., early July 7, 2013.

The fallout from the fiery crash of a crude-oil-laden runaway train in Quebec that killed at least five people could end up hurting Canada's two major railroads, says one analyst.

The tragic accident in the centre of Lac-Mégantic early on Saturday is believed to be the worst incident in the history of crude-by-rail transport, Desjardins Securities analyst Benoit Poirier said in a research note Monday.

For Montreal-based Canadian National Railway Co. and Calgary-based Canadian Pacific Railway Ltd., the incident raises public safety concerns over shipping oil by train and sharpens the debate over rail transport versus pipelines, said Mr. Poirier.

"We see no direct implications for CN or CP, but the accident will definitely raise questions in the public's mind about the safety of crude-by-rail vs pipeline projects such as Keystone XL and may negatively affect CN's and CP's business," he said.

CN shares fell 80 cents to $102.66 in mid-day trading on the Toronto Stock Exchange on Monday.

Canadian Pacific Railway stock dropped $1.09, or almost 1 per cent, to $126.12.

The company operating the train in the Lac-Mégantic tragedy -- Montreal, Maine and Atlantic Railway -- could end up "under financial distress as insurance companies would likely not cover the full cost of the accident," added Mr. Poirier.

Railway companies large and small have been eagerly expanding their operations as more and more energy producers use rail as an alternative to pipelines, which increasingly face opposition from residents, First Nations people and environmentalists.

Arthur Salzer, chief executive officer of Northland Wealth Management, said insurance costs to cover the movement of crude by rail will likely rise in the wake of the incident, but "not substantially."

"The companies that ship oil – CP especially – their marginal costs are going to go up, not significantly but enough to make a difference."

CN spokesman Mark Hallman said in an email that the company "will not comment on any aspect of the tragic incident involving the Montreal, Maine & Atlantic Railway on July 6 nor will it speculate about the impact of the incident which remains under investigation."

CP spokesman Ed Greenberg also said the company prefers not to comment at this time "out of respect to the MM&A railway and residents of the Quebec community at the center of this tragic incident and the investigations that are now taking place into the cause."

John Stephenson, fund manager with First Asset Investment Management Inc., said the derailment and explosion on Saturday highlight the risks of moving crude by rail, as compared with pipelines.

"It's an opportunity to open the debate. It's a wake-up call that there is a cost to everything."

Mr. Poirier said in his note that the National Energy Board estimated that 2 per cent -- or 16.6 million barrels -- of the Canadian crude exported last year went by rail.

"Growth is expected to continue this year, with an estimated [73 million barrels] carried in the US in 2013 and [110 million barrels] in 2014.

"Based on our estimates, crude-by-rail represented 2 per cent of CN's total revenue in 2012 (30,000 carloads) and management expects this to double in 2013. For CP, we estimate that crude oil transporation represented 3 per cent of its revenue in 2012 and we believe this could rise to 7-10 per cent by 2015, assuming it doubles or triples the number of carloads (from a base of 70,000 carloads)."

Among other publicly traded companies involved in oil-by-rail, shares in Cenovus Energy Inc. were unchanged on the TSX on Monday. The oil sands producer has increasingly been using rail to ship oil around North America.

Fuel distributor and marketer Parkland Fuel Corp. – which acquired a fleet of 1,200 rail cars in February – saw its shares rise by four cents to $17.33.

In the U.S., Phillips 66 stock moved up $1.45 (U.S.) – or 2.53 per cent – to $58.69 after initially falling 76 cents to $57.98 on the New York Stock Exchange. The refiner has signed agreements to receive Bakken crude by rail.

Shares in Trinity Industries Inc., which makes tank cars, were off 79 cents – or 2.14 per cent – at $36.10 on the NYSE.

Parkland in particular may experience some market volatility, said Mr. Salzer.

"There's a bit of a concern when you look at that company and see the amount of exposure to this area," he said.

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