Posted on 07/31/2017 3:31:32 AM PDT by buckalfa
Coal has been the driving force behind the U.S. rail system for more than a century. The stories of locomotives chugging along as workers fed shovels full of coal into the burners may be a thing of the past, but that chunky byproduct has still been largely responsible for keeping the American rail system afloat. According to the American Association of Railroads, coal amounted to almost a third of gross tonnage carried by U.S. rail in 2016. It also amounted to more than 13 percent of rail revenue. And while that may not sound like a large percentage, 70 percent of the coal used by energy companies that year arrived by rail.
Understandably, the shrinking demand for coal in energy production has translated to less revenue for rail companies as well. By 2015, the U.S. Energy Information Administration reported, coal consumption had dropped 29 percent, down almost a third since its peak in 2007.
That continuing decline is not only impacting revenues for rail companies like BNSF Rail and Union Pacific, but it is forcing companies to rethink how America’s oldest automated form of transport can keep running.
Last week CSX Rail’s CEO made an announcement that put this shift into stark relief: “Fossil fuels are dead,” said Hunter Harrison, who has been charged with the difficult task of increasing the efficiency of the country’s third-largest rail system. Harrison, who has built his reputation on revitalizing both U.S. and Canadian rail companies, is driven by what he calls “precision railroading,” in which trains run on a system managed by a centralized hub, rather than by the rail yard. It also means a lot less leeway for expenditures that simply don’t make sense — like buying rail cars that fit a niche, declining, market.
His declaration that he’ll stop buying coal cars because “coal is not a long-term issue” may have been shocking to investors, but Harrison isn’t alone in his opinion.
[As] coal usage in the U.S. power sector declines, so will the number of trains needed to transport it,” explains Tali Trigg in her Scientific American blog post. “[That’s] a lot of trains, often going back empty once the coal has been delivered.”
“Stranded asset risk will trump rhetoric” when it comes to “ploughing money into U.S. coal extraction” write Bloomberg new energy experts. They point out that the UK, whose energy industry, like that of the U.S. was forged on the mining and sale of coal now represents a measly 4 percent of energy production in the British Isles. That’s remarkable, given the industry’s iron-clad grip on the UK’s economy as late as the 1980s and 90s. But across the world, in countries that have relied upon fossil fuel extraction and mining, a new attitude about what can drive rail is taking shape. Even when it comes to transportation in the country’s biggest commercial center, where Harraison first made his prediction last year.
Fossil fuels are “probably dead,” Harrison told listeners at a J.P. Morgan Transportation Conference in New York in March 2016.
“I’m not maybe as green as I should be, but I happen to think the climate is changing [and] they’re not going to fool me anymore,”
Hunter Harrison is a controversial exec at CSX who specializes in disruptive management to maximize stock value.
The questions become is he being penny wise and pound foolish in light of coal's resurgence or is he making a wise long term decision knowing that Trump will not be in office forever? Then again he is just letting his elitist green tendencies show through?
Insanity.....
I dont think its “dead” ...but I can certainly see it declining...
There really are some better options, but be course lib aholes ruined Nuke/Thorium reactors..
wind wont work most places/ditto for sun...
technology is always changing...
A lot of US energy suppliers stopped using coal because Obama killed the industry. They can be brought back. We have a good market overseas for the use of coal.
I know a lot about nuclear and a fair amount about coal. If anything is dad it is solar. Once the subsidies are gone and California crashes, you may see a return to normal.
Natural gas is transport by pipelines and not trains so naturally you will need more pipelines and less trans. It s still fossil fuel generating the power.
Natural gas is killing coal. The good news is that low energy costs will help drive the economy.
I think most “dedicated” rail cars are owned by the customer, not the RR.
They have lots of coal cars just sitting around. Why buy new ones when the load supply was almost obliterated? Being that CSX was heavily reliant on coal movement, their bottom line has gotten down to dangerous levels. Big layoffs were implemented when Harrison took over and now we hear that even more are coming. The JEA/FPL SJRPP coal cogen plant has been shut down recently. There were so many coal fired power plants shut down under Obama that the trailing effects are almost where he wanted them to be. Now we have a new administration that will take time to unravel the disastrous effects of the last.
Still, until those coal cars are scrapped, they sit idle and ready for whatever new growth comes along for coal. But, that will take time to get old closed generating plants re-certified and in some cases refitted with new clean burn technology.
To his point of restructuring the way rail cargo logistics is managed, there exists the need to refit an old outdated method that adds a lot of time in the rail yard waiting. Several new technologies are ready for automating a great deal of the yard operations including RFID tags on each car for more accurate and quicker transfer management. Updates on detecting cars in need of maintenance at speed outside of the yards to ID them before they get there to effect the quick repair and re-entry to service. The biggest plus is getting them off the tracks before a failure causes a derailment.
I guess after Cole transport the trains will start transporting once again people
I work in a coal fired power plant that looks to run another 21 years. We’ll see.
Meanwhile, we’ve been buying Oklahoma wind generation for $18mw.
Coal may not be dead yet, but it is dying, simply due to market forces.
You are correct. I picked up on the story from a rail industry forum site that mentioned this and that the cutbacks would be on motive power. I have regained my childhood interest in railroads since my four year old grandson started taking me to the local depot to watch trains.
How very cool.
My grandson is 3, and it's all trains, all the time. I love it.
Hunter Harrison is found to spit on the notion that coal is dead. Funny how no one in the kook energy industry cannot be found to say their business is a hoax and cannot make it in the free market.
Maybe those Solyndra execs should be subpoenaed.
How very cool.
My grandson is 3, and it's all trains, all the time. I love it.
Too much of what passes as "management" these days is exactly that.
• Manage to maximize stock price
• Take Golden Parachute
• Get your face on cover of Forbes, make the rounds of the business talk shows
• Move on & repeat at next company
I think the real issue is declining rail shipments compared to trucking shipments. Both industries use so-called fossil fuels.
He’s for reducing his capacity to transport coal by rail.
Liberalism is a mental disorder.
For the past 8 years the green RATs have chewed away at the western economy and ripped off billions of dollars from the workers of that economy. Meanwhile the the old line Communists appear ready to make an all out effort to complete their goal of world conquest. With Islam rubbing its hands in glee waiting to pick off the weakened winner.
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