The average cost of shipping coal by railroad to power plants increased almost 50% from 2001 to 2010, with rail transport accounting for more than 70% of U.S. coal destined to the electric power sector, said a new report from the U.S. Energy Information Administration.
The average cost of shipping coal by railroad to power plants increased almost 50% from 2001 to 2010, with rail transport accounting for more than 70% of U.S. coal destined to the electric power sector, said a new report from the U.S. Energy Information Administration .
Though they vary significantly, transportation costs accounted for 40% of the average overall cost of coal delivered at electric power plants in 2010. On average, nominal U.S. rail rates for shipping coal grew from $11.83 to $17.25 per short ton from 2001 to 2010, EIA noted.
Rates grew slowly in the beginning of the decade before increasing almost 11% in 2005, then continued to grow at a relatively robust pace until the recession. The impact of the recession on transportation rates was short-lived as rates grew more than 9% in 2010.
“National numbers can be misleading, however, as regional dynamics tend to vary considerably among the six major coal basins,” EIA said. “For example, Southern Appalachian coal costs increased more than 10% annually in 2001-10, while Powder River Basin (PRB) rates grew 1.5% over the same period. For a few PRB destination states, rates fell during this period.”
The wide range in mine-mouth coal prices and transportation distances across the U.S. create significant variation in the impact of transportation rates on overall coal costs, with different basins affected to significantly differing degrees, EIA said.
While rail transportation costs for Appalachian and Illinois Basin coals as a percent of total delivered cost fall in the low 20% range, the relatively low cost of PRB coal, and the long distances it travels, results in transportation costs that averaged almost 60% of the total delivered cost in 2010—more than the cost of the coal itself.
State-level data show further variation in rate changes over 2001-2010. At the high and low ends, Virginia-to-Tennessee rates grew 83% while Wyoming-to-Kansas rates fell 23%—a 106 percentage point swing.
In this latest release of Coal Transportation Rates to the Electric Power Sector, EIA has significantly expanded upon prior versions of this report with the incorporation of new EIA survey data.