Week Ending 21April2012: Much Stronger Improvement Ignoring Coal

April 27th, 2012
in econ_news

Econintersect: Week 16 of 2012 ending 21 April 2012 shows rail traffic continued to contract over 2011 levels according to data released by the American Association of Railroads (AAR).

Fourteen of the 20 carload commodity groups posted increases compared with the same week in 2011, with petroleum products, up 48.3 percent; motor vehicles and equipment, up 32.9 percent, and primary forest products, up 22.8 percent. The groups showing a significant decrease in weekly traffic included farm products excluding grain, down 19 percent; grain, down 18 percent, and coal, down 16 percent.

Follow up:

The pattern in the data is the same as it has been for over a two months. The majority of the reason for the contraction is coal movements - which would only effect the profitability of railroads, and not really an economic indicator as coal is an alternative fuel to oil and natural gas - U.S. production of those are up sharply in recent months.  This week rail growth was strongly positive when coal was removed from the calculation


Week 11 2012 Carloads Intermodal Total
This week Year-over-Year -3.6% 6.0% -3.3%
This week without coal
Year Cumulative to Date -3.2% 2.6% -2.4%




Note that the total year-to-date traffic is contracting year-over-year.

Steven Hansen

Source: AAR

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  1. Ford Is Bunk says :

    Coal is an alternative fuel? They're hauling it not burning it ... are you on crack?

  2. Admin (Member) Email says :

    @Ford is Bunk - - -

    The wording was poor. The word "alternative" has been elaborated to "alternative fuel to oil and natural gas - U.S. production of those are up sharply in recent months."

    Here is the data we are looking at:

    EIA (Natural Gas)
    Natural gas production (y-o-y)
    Jan +11.6%
    Feb +15%
    Mar +8%
    Average for 2009 = +1.7% Average for 1Q 2009 = +2.9%
    Average for 2010 = +3.0% Average for 1Q 2012 = -0.2%
    Average for 2011 = +6.5% Average for 1Q 2011 = +4.0%

    EIA (Petroleum)
    Petroleum production (y-o-y)
    Jan +10.3%
    Feb +17.1%
    Average for 2009 = +8.7% Average for 1Q 2009 = +0.6%
    Average for 2010 = +2.2% Average for 1Q 2010 = +5.3%
    Average for 2011 = +3.3% Average for 1Q 2011 = +0.7%

    Oil and Natural Gas combined have been 48% of U.S. energy and coal 29%. A 12% increase in oil and natural gas production equates to the combined usage increasing to nearly 53% and coal declining to about 24%, a decline of about 17% in coal usage.

    The above calculation assumes constant total energy usage from 2011 to 2012 and constant nuclear and renewable energy (11% of energy production each). Thus it is likely that the reduction in coal usage will be less than the 17% calculated on the first pass.

    But there can be no doubt, based on the huge increases in oil and natural gas production, that coal usage must be declining significantly.

    John Lounsbury

  3. Ford Is Bunk says :

    Oil is used for transportation ... coal is substituted for by natural gas (and uranium, wind and solar theoretically but really mostly just natural gas). Increases in oil production should have no effect on coal usage for power generation (especially given thatth e price per btu for oil is multiples of that for coal.) Maybe the huge increase in natural gas explains some of the decrease in coal shipments by rail but it's important to remember that substitution is long term because it takes a long time and a fair amount of cash to build a new power plant. Likely static or falling industrial production accounts for the rest, which is why I was so surprised by your take.

  4. Admin (Member) Email says :

    @Ford is Bunk - - -

    Your comments about electricity generation is in agreement with the data that is out there. Here is an example: http://www.greentechmedia.com/articles/read/coal-consumption-drops-to-lowest-level-since-1996/

    Data from the EIA indicates that U.S. coal consumption has been dropping over the past three years (to 4Q 2011) while coal exports have been increasing: http://www.eia.gov/todayinenergy/detail.cfm?id=5990 The increase in exports has only been about 1/3 the amount of decreased domestic consumption.

    The only data the EIA has for coal production since 2008 is based on the rail carloads data so that doesn't help our discussion.

    John Lounsbury

  5. Ford Is Bunk says :

    Yes the data is difficult and coal is tangential to my area of expertise. It may well be that the UCLA diesel index or that the Trucker's Association's monthly data are better predictors of industrial production than coal trainloads which as you note may well be down due to substitution rather more than for decreased demand for electrical power.

  6. admin (Member) Email says :

    I am traveling and my communication is limited. most fossil fueled power plants are dual powered - oil/natural gas or coal/natural gas - so that the utility can burn the cheapest source of fuel. right now it appears that natural gas is the cheapest.

    It really would be interesting to get timely export numbers on coal as I too believe this adds to the data wobble.

    steven hansen

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