Attacks on coal spreading to rail markets

Norfolk Southern Corp. (NSC), the railroad that cut its third-quarter forecast amid a decline in coal shipments, said the slump in those deliveries will persist through 2013’s first half.

The drop in coal, the carrier’s biggest cargo category, will run “largely unabated” into next year, Chief Executive Officer Charles “Wick” Moorman said on a conference call. The shares fell 2.3 percent to $64.50 at 5:58 p.m. after regular New York trading. …

“Nothing is broken, but without a return to demand in coal and with the sluggish economic environment, there’s nothing to step up and fill the void that coal left,” said John Mims, an FBR Capital Markets analyst in Arlington, Virginia.

This Bloomberg News article is something I have been predicting for months and months. As the war on coal continues to claim victims, it is painfully naive to think that a slumping coal market will somehow magically miss impacting any other industries.

I have read numerous articles and comments from smug, self-righteous officials and activists who revel in the news that the coal industry has suffered setbacks over the past few years. They’re proud to be able to take part in decimating what they consider a “dirty” industry. However, they rarely stop to take a look at the real people, families, businesses, and communities that they are casting aside in their rush for environmental and political purity. Their sense of schadenfreude is too strong to allow for empathy for people who are losing jobs and seeing their way of life crumble.

Sadly, their self-righteous strutting has also blinded them from seeing the larger impacts of their activities, laws, regulations, and activism. But those impacts can’t be hidden for much longer Since approximately 40% of the volume carried by our class 1 railroads is coal and (from memory) roughly 20% to 25% of the income earned by our class 1 railroads is coal-based, the reality is that coal has financed and cemented the foundation on which much of our railroad industry is based.

Removing a quarter of the income on which our railroads base their business will necessarily impact the costs of the other items they ship. Intermodal, grain, fuels, passengers, etc. will all see price increases as they are forced to cover the costs of maintaining tracks, bridges, and rail fleets.

Of course this is something that we have all encountered over the past few years as the prices of basic necessities have all climbed markedly. Just a few examples will suffice.

  • White bread ($/loaf)  – Sept. 2006 – $1.08 … Sept 2012 – $1.40
  • Reg. Gasoline ($/gal) – Sept 2006 – $2.59 … Sept 2012 – $3.86
  •  Hamburger ($/lb) – Sept 2006 – $2.54 … Sept 2012 – $3.48

Source: bls.gov

Since many of the goods that we rely on – or the goods on which farmers, manufacturers, and suppliers of those rely – are shipped via rail, the costs of most goods can be expected to continue to rise. As the war on coal and domestic energy continues to take its toll on our economy, consumers across the nation will continue to be hit in the pocket book.

24. October 2012 by Jason Hayes
Categories: Energy, Environment, EPA, Jobs, Marketplace Information, Policy, Railroads, Regulation, USA | Tags: , , , , | Comments Off on Attacks on coal spreading to rail markets