This is the latest press release from mostly Western US rail shippers, mostly in the energy sector. Thar’s a perfect strom approachin’, and the end result will be re-regulation of the railroads, who apparently have blown any chance to factually mollify the concerns of rail shippers.
“Those dependent on coal shipments for power have reached a breaking point because of dwindling reserves at coal-fired plants due to stalled shipments, forcing utilities to buy high-priced natural gas-fired power to fill the gap.”
Hint: That means Average Joe citizen, for the most part oblivious to the ag vs rail problem, will be well aware of the utility vs rail problem as those energy bills start to climb, and blame is laid right at the railroads’ feet.
“There are two bills pending in Congress that would correct these problems, but there has been little movement on either since they were introduced last year. The investor-owned utility’s top lobby group, Edison Electric Institute, has expressed concern over the high transportation costs and is advocating new rail lines be built to increase access to Western coal.”
Hint: The DM&E may not be the only new line to reach Western low sulfer coal reserves. Will we finally see the advent of the shipper-owned rail line?
“…plants have become captive to the rates charged by the rails, which in many cases costs utilities as much for the last hundred miles of travel as it does during the first thousand.”
Hint: The first abuse to go will be those counterintuitive “paper” barriers/bottlenecks. What have the railroads gained by implementing such tactics, other than to **** off the wrong people? These barriers/bottlenecks added nothing to the bottom line.
"But they say now the problem has reached epic proportions. Coal reserves at the nation’s power plants are at record lows, according to a recent spee
Am I to understand from the above that a power plant that is specifically designed to burn coal (frequently a particular grade of coal) needs only to turn on the gas spigot to begin using gas? I don’t think so.
As for reregulation, Micheal Baron has this election year’s edition of the Almanac Of American Politics out. Try the reference desk at your local library and check out the party breakdown of the House and Senate and if your propensity to change wishes into predctions survives that brief contact w/ reality, try to imagine such a bill leaving the desk of the Oval Office w/ a presidential signature
The real problem is infrastructure. Class 1’s failed to anticipate trends in the markets and at the same time now they have to keep one eye on Wall Street and another on the high cost of putting down rails when afew years ago they were pulling them up.Some once coined an apt phrase when describing management as “snatching defeat from the jaws of victory.” Another problem is their lack of public relations building with the electorate whose clout they need at the legislative level. Thet are below the publics radar unless you are stalled behind lowered gates at a crossing for a slow moving freight. The public is also their end customer. I once had a conversation with a UP management type who told me in so many words that they did not need to worry as they are still the cheapest means to move bulk freight over a long haul. Now with the deteriorating oil crisis which seems to be escalating what are they doing on planning to protect this advantage as their fuel costs soar?
As opposed to the thinly veiled fascism of the current anti-trust exempt rail oligarcy which gouges domestic producers while simultaneously bending over backwards for the import intermodal trade? Pull your head out of the ballast for a while so you can see the reality of what’s going on.
And for the record (and for the umteenth time), I am not in favor of reregulating rates. I am in favor of breaking up the oligarchy vertically for the sake of establishing market based rates and aggressive expansion via intramodal competition. If it takes the ironic twist of separating the infrastructure from the rest and putting it into public/private consortium oversight, then so be it.
Just for the sake of posterity, why has it taken two years and counting to rehab the Orin line?
The bottom line is this: The mindset of the Class I’s that they are immune to the consequences of their actions (or inactions as the case may be) is finally coming around to confront them in the court of public opinion, and that’s the figurative place where legislative action comes to the fore.
Tell me Bob, are you immune to price hikes in your electric bill? You must have a place that is electrified by distributed power systems and warmed by an internal hot air system. No coal? No heating oil? No natural gas?
If you think that’s fascism you should read ‘Mein Kempf’ and then the “Communist Manifesto”. Fascism and socialism are nearly identical when it comes to the usefulness of large transportation systems like railroads. If they can benefit the country then they should be staffed with government agents and party operatives as a private company (fascism) or they should be owned by the government outright (communism). Either way genuine private ownership (publicly traded included) is not a word in either
-ism’s lexicon. Separating the infastructure and placing it in the pubic domain is soicialism, pure and simple. The government is not a rail business, and I really doubt that the influences of government politics and policies will cause the problems to go away. We’ll just be met with another rash of bankruptcie
As anyone who is wise should do. Don’t rely on the government to take care of it. You will pay eight times as much for a study to determine why you are paying eight times as much.
How about this point FM? I am glad LC nailed this one, as I remember reading about the funding of the DM&E, and thinking where in the heck are all of the energy utilities in all of this? That answered a lot of questions for me as to the complaining that the utilities have been doing.
The only thing LC has nailed is his brain to the ballast. We discussed this before, that any ambitious rail project, especially one whose ultimate fate rests with PRB coal, will need federal backing. Yes, PRB coal is hot right now, but what happens if the Democrats take back the White House and Congress? Coal may again revert back to the ranks of “unclean” status. We may get the dreaded “carbon tax” (ostensibly to mitigate the perceived “cause” of alleged global warming/abrupt climate change), and if so coal is dead. Nuclear power may get a big boost.
In other words, there are a lot of uncertain variables lurking that could kill any potential returns on such a capital intensive investment. The real question is why any private investors would even consider such an investment without some guarantees. Well, DM&E now has the guarantees in the form of the federal loan guarantee, which means the private capital will now be available.
And by every measure, the current coal shortage is most definitely the fault of the railroads, specifically BNSF and UP. They are only delivering at 85% of normal. So the railroad types turn around and blame the utilities, claiming “they should have stockpiled more”. How? How can they have been expected to stockpile more when the rai
The problem is…There arn’t enough Coal Trains. Coal is what’s called a low priorty Freight. It can and will sit in the yard for hours for many reasons. I do agree. It is the Railroads falt for not delivering enough Coal. And if and when those P*GS called the Democrats do take over the Government,you will the end of Coal as we know it.
