Costly coal

THE US Energy Information Administration has found the cost of transporting coal to power plants has gone up almost 50% in a 10-year span.

Donna Schmidt

Agency officials said the jumps, which occurred between 2001 and 2010, were all the more significant considering more than 70% of US coal was transported to the electric power sector by rail and would impact on prices.

In 2010, transportation costs accounted for 40% of the average overall cost of coal delivered to power plants.

Between 2001 and 2010, US rail rates for shipping coal increased from $US11.83 to $17.25 per short ton.

“Rates grew slowly in the beginning of the decade before increasing almost 11% in 2005, then continuing to grow at a relatively robust pace until the recession,” the EIA said.

“However, the impact of the recession on transportation rates was short-lived as rates grew more than 9% in 2010.”

The agency stressed that only looking at the national numbers could be misleading, because the variables differed significantly based on the origin of the coal from one of the nation’s six coal basins.

Southern Appalachian coal costs, for example, had a 10% annual jump across the years of the study. Powder River Basin rates had a more modest 1.5% rise over the same timeframe. Some PRB-destination states even realized reduced rates during the period.

The EIA said significant variations in rate/cost impacts also ranged widely because of minemouth coal prices and transportation distances across the US.

“While rail transportation costs for Appalachian and Illinois Basin coals as a per cent of total delivered cost fall in the low 20 per cent range, the relatively low commodity cost of PRB coal, and the long distances it travels, results in transportation costs that averaged almost 60 per cent of the total delivered cost in 2010 – more than the commodity itself,” officials pointed out.

Coal transport from West Virginia to Maryland had the third-highest cost increase, looking at state-to-state delivery data. Virginia to Tennessee and Virginia to Georgia had the largest hikes.