Railway delays affecting not only grain crops but also coal industry

Railway delays have affected grain crops, and some people are blaming it on increased competition from oil and coal shipments, a bumper grain crop, an improved economy that is jacking up the amount of consumer goods and a bad winter. But the coal industry says it has also been the victim of delays, as railroad companies choose to transport more lucrative oil over coal.

About 40 percent of U.S. power is generated from coal-burning plants, and 75 percent of U.S. coal relies on freight railroads to get to power plants, according to Wood Mackenzie, an energy consultancy, Swetha Gopinath and Sweta Singh report for Carrier Management. Without access to railways, some in the coal industry have turned to barges and trucks to transport coal. (Marketplace graphic)

"Transporting by barge, while cheaper than rail, is limited to plants located near rivers," Gopinath and Singh write. "Some companies are using third-party docks for barge deliveries and then trucking coal over to power plants that do not have adequate infrastructure. But trucking is typically used over short distances and is substantially more expensive than barge and rail."

Minnesota Power has idled four coal-powered generators that serve the Duluth area for three months "because the railroad isn’t delivering enough coal," Dan Weissermann reports for Marketplace. "Railroads are crazy busy—carrying oil from North Dakota for one thing—and the delays are driving their customers nuts."

Al Rudeck, vice president of strategy and planning for Minnesota Power, told Weissermann, "This is unprecedented. We’ve never had to shut our units off because we can’t get the coal we need. This year they’ve had a lot of challenges on the rail system, in terms of congestion, weather and a lot of business."

Delays are also significantly impacting supplies being stockpiled, Stephanie Joyce reports for Wyoming Public Media. "With temperatures dropping across the northern United States, power plants would usually be stockpiling coal in preparation for higher electricity demand during the winter months, but this year, that’s proving problematic."

The Comanche power plant outside Pueblo, Colo., which supplies power to communities along the Front Range, including Denver, and consumes hundreds of tons of coal an hour in the process, normally has a coal pile one hundred feet tall, said Xcel Energy fuel supply manager Craig Romer, Joyce writes. But right now, it’s less than a third of that. Romer estimates stockpiles for all of Xcel’s coal-powered plants are at 60 percent of where he would like them to be because competition from the oil industry has meant that coal trains haven’t been making as many deliveries as usual to the plant in recent months. (Read more)