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Rail activity reflects coal's imbalance against gas

THE push-and-pull of coal and natural gas had a ripple effect in 2012, with more oil production a...

Donna Schmidt

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Data from the US Energy Information Administration and the Association of American Railroads shows crude oil and petroleum products accounted for the biggest increase in railcar loadings among commodities in 2012. In fact, the increase in crude represented a record jump.

At the same time, coal had the largest decline. But it still remained the dominant category of carload shipments, accounting for 41% of total carloads.

Petroleum and petroleum products, while it had a 46% increase in traffic to 171,000 carloads, had a combined 4% share last year.

Crude oil had an estimated 38% of combined deliveries in the oil and petroleum products category, the EIA said, up significantly from 3% in 2009, and was this responsible for almost all of the category’s growth in 2012.

Why the jump? Limited transport options, according to EIA officials.

“Typically, about 90% of the crude oil and petroleum products in the US are transported by pipeline,” it said.

“However, more crude is being moved by rail from areas of the country seeing a boost in oil production, such as North Dakota's Bakken Shale formation, that do not have adequate pipeline infrastructure to transport the oil to refineries,” adding that US crude oil production increased by a record 780,000 barrels per day in 2012.

While it was a leader, coal was still rail’s biggest loser. The sector had 6 million carloads, down 726,000 carloads or about 11% overall. All the while, more than 70% of coal burned by power plants for electricity generation still arrives by rail.

“Those deliveries fell in 2012 because of lower demand from power plant operators, who turned to more price-competitive natural gas as a generating fuel,” the agency said.

According to the EIA Electric Power Monthly, coal made up 37.2% of US electricity generation through last November, a drop from the 42.5% it made up over the same 11-month period of 2011.

Over that same time period, electricity generation from natural gas increased from 24.6% to 30.8%.

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