Why Railroads Care About Coal Exports

How the rail industry thinks about coal.
This post is part of the research project: Northwest Coal Exports

Here are three pictures that help explain why American railways seem to be supporting coal export proposals in the Northwest. It’s because railways are very closely connected to the coal industry. Consider:

Coal so dwarfs every other rail-hauled commodity that it is almost as important as all the other commodities combined. (N/B, this picture excludes “intermodal” freight.)

But while coal is a huge component of rail freight, it declined noticeably in 2009 and 2010:

Presumably, a good deal of the recent decline is related to a lousy economy and the attendant reduction in demand for electrical power and industrial uses of coal. Yet the recently depressed coal rail volumes are not entirely driven by the economic downtown. In fact, coal-fired power is on a long-term downward trajectory:

Going forward, that downward trend is likely to continue, and perhaps accelerate. Regulators are tightening pollution standards; other power sources like natural gas and renewable energy are becoming increasingly competitive in the marketplace; and communities across the country are averse to coal-fired power for its deleterious health effects.

Power plants are not the only customers that railways service with coal shipments, but they easily constitute the lion’s share. So given the ongoing decline (and dismal future prospects) for domestic coal use, it’s no wonder that railway companies support big new coal export facilities. As Americans are increasingly uninterested in buying coal, railways will want to find consumers—no matter how far afield they may be—who will pay coal to be moved by rail, whether it’s to a power plant or an export terminal.

 

Notes: I created the first chart using data from the table on page 8 of the American Association of Railroad’s “Rail Time Indicators” report for January 2011. (The AAR data does not combine commodity carload data with figures for intermodal freight, which amounted to 11.3 million trailers and containers in 2010.) The second chart comes directly from page 13 of that same report. The third chart is taken from the most recent rail indicators report, which was published in December 2011. 

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Comments

  1. Clark Williams-Derry says:

    Fantastic charts!

  2. Guy Dauncey says:

    The good news about this is that as the use of coal declines, or is shut down, and as the global oil squeeze tightens, there will be a lot of capacity on the railways to take regular freight that is currently transported by truck.

  3. Bryan says:

    I’ve waited several days to commit on this. Eric your charts are very accurate. Nice job. But it is ignorant to think coal trains are going away next week, next year, or in ten years. And Guy to think the railroads would quote unquote, use all that excess capacity to get trucks off the roads shows that you don’t really understand the transportation industry. This is what I understand about this whole coal export arguement as I see it. One side, the environmental side just doesn’t want coal mined at all. There is no reasoning to these people. They see no one else’s side and there is no middle ground. I talked to a gentleman this afternoon from the Columbia Riverkeepers, the question I asked was why choose to fight the coal exports now when there has been coal exported through the gorge up to Westshore for at least five years. He said it was cause of the volume.. If your taking a stand that coal shouldn’t even be mined than waiting till there is an export terminal being planned at Longview!! As I pointed out to him, there has been coal running down the Columbia River Gorge for more than twenty years to Centralia, and more than five years for export, and in that time there has never been a complaint about coal dust blowing off a train, people’s health hasn’t gotten worst cause of these trains. So, there goes two of the largest arguements out the door. Another arguement that doesn’t hold water is railroad capacity, there is capacity. And more capacity will be added as this traffic increases. Now the other side of this arguement is about jobs, jobs that are sorely needed in these counties that have never recovered from the timber industry demise 20+ years ago. These are people that just want jobs, and the funny thing is the groups that took thier timber jobs away are the same groups that don’t want allow these new export terminals. People there needs to be some comprise, it doesn’t have to be just one way or another….

    • brian says:

      Thanks Eric, for your insights and great graphs.
      Bryan, I’m one of ‘those people’ who thinks coal is best left in the ground, based on overwhelming evidence that burning it is anti-life. The scale that China wants to burn it makes all of the discussions about coal dust, rail/traffic conflicts, loss of property values, etc. (all important to some of us) seem small by comparison. Another ‘gift’ to the West if we do these dirty deeds, is the prevailing winds in kind of a karmic way, will visit regularly. If you haven’t read it, The Weathermakers by Tim Flannery is a good start. Peace

    • Kit P says:

      There is a coal mine next to the Centralia coal-fired power plant. The reason coal comes down Columbia River Gorge years to Centralia to supply 20% of the coal to the plant is an agreement with environmentalist to reduce haze.

      • Eric de Place says:

        Kit,

        The coal mine at Centralia has been shuttered for many years, and it’s mainly because the plant ownership wanted cheaper coal. Washington currently supplies none of its own coal.

      • Kit P says:

        Eric,

        Thanks for correcting me. According to a TransAlta report the decision to stop mining was made in 2006 which is the year I moved from Washington State. A footnote said that 500 lost their jobs.

        It is hard to tell if the governor of Washington State are better than California at driving job to other places. We did not move because we wanted to. I would be very happy continue to develop renewable energy in the PNW but that was not one of the choices I had.

  4. Rod Adams says:

    Eric – thank you for illustrating why freight railroad interests have been so supportive of antinuclear activities for so long.

    Aside: Warren Buffett has been damning nuclear technology with faint praise for several years; perhaps his recent purchase of Burlington Northern, one of the largest coal carrying railroads in the US, has something to do with his public questioning of the ability of nuclear energy to compete in the power market. End Aside.

    If the US had kept building nuclear plants at the rate we achieved and maintained throughout the period from 1963-1973, the traditional coal industry would have been out of business by 2000. Railroads would have lost one of their most profitable and most captive customers (there are few options for most coal mines; the local railroad is generally a monopoly).

    Unlike Brian, I am not a true believer in eliminating coal – it is a valuable raw material that can be safely mined for centuries by well-trained and compensated miners. Instead of eliminating the use of coal, I would prefer to help coal miners and coal mine owners to recognize that they could make more money and sell a cleaner product if they upgraded their fuel at the mine rather than shipping a dirt-filled, unrefined product that sells for a huge discount in the energy market.

    Here are some fuel price numbers normalized to a consistent unit of measure:

    coal @ $40 per ton ~ $1.80 per MMBTU (million BTU)
    natural gas @ $2.50 per 1000 cubic feet ~ $2.50 per MMBTU
    oil @ $120 per barrel ~ $21.00 per MMBTU
    diesel fuel @ $4.00 per gallon ~ $30.00 per MMBTU
    commercial nuclear fuel @ 0.5 cents per kilowatt hour electricity ~ 65 cents per MMBTU

    My pitch to the coal industry would be to use cheap, clean nuclear heat to convert H2O and their carbon rich fuel into a refined hydrocarbon that could compete with petroleum products.

    The Germans, Japanese and South Africans have proven that the technology exists to convert heat, water and coal into excellent diesel fuel, gasoline and aviation gasoline on an industrial scale. So far, that process has been expensive and dirty because they burn up half of the input coal to make the heat; it would be much cleaner and cheaper if the input heat was from emission-free nuclear reactors.

    My solution would not necessarily do much for the freight railroad business. The coal mines might decide to ship their new, higher-value, liquid product via pipelines instead. However, the competition between pipelines and railroad tanker cars would be beneficial for all of the rest of us in terms of improving service and pricing.

    Shipping oil instead of coal from our domestic mines would also be very beneficial to the US national security and to the prosperity of the world. Just think about the positive impact that substantially lower US demand would have on the price of diesel fuel delivered to a developing country.

    Rod Adams
    Publisher, Atomic Insights (atomicinsights.com)

  5. Kit P says:

    Only Rod Adams would come to an anti-nuclear site to bash coal.

    For twenty years, I have moored a sail boat with a white deck on the Columbia River about 100 feet from the railroad tracks. Once a day, a coal train comes by heading to the Boardman coal-fired power plant. I have found no evidence of ‘dirt’. The noise from the trains is irritating but only a few minutes a day.

    Rod Adams has recently moved to the small city in Virginia where I currently live. I never hear trains because I was smart enough not to buy a house where I could hear trains. Last time I lived near a coal-fired power plant, a railroad, and freeway was because I had a boat dock in my backyard.

    The nice thing about working in the power industry is not having to live in a dirty city. As an mechanical/environmental I know what efforts we go to protect the environment. Am not sure what it is about human nature that causes people who have a wonderful standard of living to complain about what does not affect them.

    • Eric de Place says:

      Kit,

      What makes you think this is an anti-nuclear site?

      The Boardman comparison is silly. That plant consumes, what, about 3 million tons of coal per year? By contrast, coal companies have active export proposals in the Northwest for MORE THAN 40 TIMES AS MUCH COAL!!! (That’s 38 million tons at St Helens, 44 million tons at Longview, and 48 million tons at Cherry Point, and that’s not even counting Coos Bay and Grays Harbor.)

      I, personally, am not wild about the idea of the Pacific Northwest becoming one of the largest coal exporting regions in the entire world. That’s what on the table right now. The proposals threaten serious harm for local communities and serious harm to the global climate.

      • Kit P says:

        Eric,

        The reason I i think this site is anti-nuclear is because I did a search and found no positive articles. Not an important point.

        The Boardman example is not silly. It is a real example. I have found that people who are against something tend to make up stuff while ignoring the actual real examples that do not fit their agenda.

        I am not too wild about people who live in cities with six lane freeways ringing the city explaining the environmental impact of providing power.

        The reason my present job is designing new new reactors is that China stopped exporting cheap slave labor coal in 2005 because China could no longer meet domestic demand. Our coal became more valuable. Coal produced where workers get a decent wage and have strict safety standards could compete on the world. In the US, nuke plants may be the most economical choice depending on transportation cost.

        As far as the climate goes, leaders in Portland and Seattle seem to think putting Americans out of work will stop Asia from burning more coal. If you look at the increase in coal consumption in the last few years for just China alone, it is greater than all the OCED countries together.

  6. TedN says:

    My father was a coal miner for 30 years and I worked in the industry for 6 years yet I totally oppose these proposals to expand the shipment of coal from Northwest terminals! The evidence from climate scientists makes it clear that we must gradually wean ourselves off of coal unless some economically feasible means to capture CO2 is developed. These proposals would facilitate the expansion of coal generation in Asia, precisely what we need to discourage. See http://www.giss.nasa.gov/research/briefs/hansen_16/

    Even if coal wasn’t such an important factor in climate change, there are plenty of other valid reasons to oppose these proposals. If the externalities, chiefly health costs, were included in the price of coal generated electricity it would be among the most expensiive sources of electrical generation. See http://thinkprogress.org/romm/2011/10/13/332882/economics-coal-fired-power-plants-air-pollution-damages/ The impacts on traffic congestion in Northwest communities and upon environmentally important areas are also important considrations.

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