Summary
Coal traffic was down 21% for the week ending March 28, compared to last year, and railroad ton miles were off 24% for the same period. Blizzard conditions in Wyoming hampered loading operations and contributed to the decline in production and transportation more than any other factor. Before these numbers were added to the yearly totals, coal traffic was only down 3.9% on a national basis, and all of that loss was in the East and was due to the decline in export sales of Appalachian steam and metallurgical coal. Coal production and railroad traffic in the West was running about even to last year until the weather interfered with mine operations. Moreover, new coal plants coming online this and next year should keep coal traffic climbing, albeit slowly, for a while out of the Powder River Basin fields.
Analysis
The long term perspective is not so encouraging if the current Administration in Washington DC follows through on its plans to impost carbon caps and other onerous programs on the utilities and other companies that burn coal for electricity or heat. The impact of these programs, if implemented, would take a few years to be seen, much like the three year delay between 2001 and 2004 of the impact of the changes that the Bush Administration made in the Clinton coal policies. Nevertheless, should carbon taxes and other discouragements to coal burning become the law, coal production will start to decline in the West, as will railroad coal traffic.
Coal traffic in the East is already falling, due both to the reduction in export traffic and the continued decline in coal burning power plants located in Eastern states. Almost all of the new plants scheduled to come online this and next year are located in the West or Midwest and will probably not burn Appalachian coal.
