Eastern Railroad Discussion > America's coal fired electric plants are running low on coal!

The Wall Street Journal has an article today about the squeeze on coal prices as supplies diminish and demand rises.  Although the vast majority of US thermal coal is sold in the futures market, a small % is sold via the spot market for quick delivery.  Mine operators are unwilling to produce coal that may not have an immediate buyer, so they do fine mining coal where both a buyer and a firm price are in hand.  The rise of export coal has pressured both the contract and spot markets.

As more coal (and natural gas) was burned this summer to produce electricity for air conditioning, supplies of coal fell below predicted safety levels.  Most plants like to have 90-120 days supply on the ground, some are now down to 30-45 days.  Mine operators are unwilling to significantly increase coal output without a long term contract , so the squeeze is on.  A few states, like Virginia, North Carolina, and Florida have mandated conversion / shut down of older coal fired plants, which adds a complication to supply.  A few operators have decided not to invest in coal mines given what they see as a bleak future.

Powder River coal is running $35 at the mine, Appalachian coal is about a hundred, which is consistent with the much higher btu at the burn site.  Powder River coal, which is often blended with Appalachian coal, also has significant  rail transportation costs

Paywall likely

https://www.wsj.com/articles/americas-power-plants-are-low-on-coal-11638268201?mod=hp_lead_pos7

The mine operators must have read all the posts on here from 
a few years ago that declared coal was dead.

well, i think the transportation costs of powder river coal by the railroads brought RELIABLE and INEXPENSIVE energy to this country..........

66

goneon66 Wrote:
-------------------------------------------------------
> well, i think the transportation costs of powder
> river coal by the railroads brought RELIABLE and
> INEXPENSIVE energy to this country..........
>
> 66

Transportation costs for energy fuels are a big part of the puzzle. Oil and coal.   Back when Bakken crude was $90 against WTI of $110, it made sense to pay $15 to ship it by rail  to NJ, Delaware, etc.  When crude dropped to $25, no way anyone was going to pay $15 or $10 on top of that.  I'm sure Powder River coal has similar issues on contract pricing

Union Pacific and BNSF may not be excited to take a one off spot deal for 300-400 cars of coal for one buyer for one purchase, even if the mine thinks it's a great deal.

however, i think you have to consider the production costs of energy in addition to the rail transportation costs.

some other forms of coal, nat gas, and oil can get very expensive to produce.

pull up some previous posts on nat gas.  some of us thought the prices would increase.

powder river coal is abundant and one of the easiest forms of energy to produce/mine in this country as it is "strip mined."   the land is also reclaimed.

we shall see what happens in the next year with increasing energy prices and the demand for powder river coal, especially if the prices of fuel, goods, and services keeps increasing.

it could be good news for the railroads............

66





 

But like railroaders,  a lot of the coal miners have been whacked and may never go back...both Powder River and Appalachian Workers.

Victor



Edited 1 time(s). Last edit at 12/01/21 19:24 by wabash2800.

I'm not sure of the market dynamics anymore, but at one time some Powder River coal was mixed with richer but higher sulfur containing eastern coal to reduce the total sulfur emissions at the Midwest and Eastern steam plants.

By mixing "local" with western, the power generators achieved lower overall total transportation costs than pure Powder River coal, along with higher BTU's per ton.

Powder River coal was/is considered sub-bituminous, with a lower heating value per ton, but it is far lower in sulfur content.

Yes, Rich, that was the way it is (was) done. We still do have low sulfur western unit coal trains headed as far as Northern Michigan to mix with Eastern coal, as far as I can tell, and likely down South.

Victor



Edited 2 time(s). Last edit at 12/02/21 08:33 by wabash2800.

For an interesting first hand account of what it's like to be on a coal train, see the story "Coal Train" in the book "Uncommon Carriers" by John McPhee.