As the Railroads' Coal Traffic Declines, Oil Rises

By Editors

The shift away from using coal to generate electricity and the nation's burgeoning oil production are starting to be reflected in railroad traffic.

The bar chart depicts the change in rail traffic for coal, oil and all other commodities over the past year. It does not reflect the actual volume of traffic but only the size of the recent changes. Coal is represented in blue, crude oil and petroleum products in brown, and all other commodities in green. The horizontal axis represents the gain or loss in the number of carloads from 2011 to 2012. Gains are measured to the right of the zero point and losses to the left.

The biggest shift was the loss of 726,257 carloads of coal from 2011, a reduction of 10.8 percent. Crude oil and petroleum gained 170,994 carloads, a gain of 46.3 percent. Other commodities gained a slight 71,608 carloads but this represent only a 1 percent increase over the previous year's traffic.

Previous to last year, coal made up almost half of all rail traffic. This gave rise to speculation as to whether the coal industry really owned the railroads or whether the railroads own coal. Most of this traffic comes out of the Powder River Basin in Wyoming, where a coal train now departs every seven minutes. With many utilities now replacing coal with natural gas, this traffic declined to 41 percent of all rail shipments last year.

The railroads made up for some of this loss by expanding the transport of crude oil, most of it from the Bakken Shale in North Dakota. Generally 90 percent of crude oil moves by pipeline, but the lack of any connections into the Bakken region has spurred the railroads to step in with oil tank cars. A rail link was just completed to refineries in Delaware, bringing Bakken oil to the East Coast for the first time. To date rail's oil traffic consisted mostly of gasoline and refined products, with crude oil making up only 3 percent of the traffic. Last year it rose to 38 percent.

The pattern is likely to continue, since many older coal plants are now shutting down while new areas of oil exploration are opening up in previously untapped areas. There is even speculation that some of the Alberta Tar Sands may eventually enter the country by rail, since the Obama Administration may ultimately deny construction of the Keystone Pipeline.

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