GLG News by Railcar Market Experts (EU)
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Toby KolstadPresidentRail Theory Forecasts
Natural Gas Discoveries are bad news for those looking for growth of railroad coal traffic
May 6, 2009
U.S. Gas Fields Go From Bust to Boom | online.wsj.com
Recent discoveries of new natural gas reserves have sent well-head prices to levels not seen since late 2002, and supplies are now estimated to be sufficient for 100 years at current rates of usage. Just last year, supplies were thought to be limited and it looked like the natural gas industry was going to be as reliant on foreign imports of LNG as the gasoline industry was on the import of foreign crude oil. Now price, supply, and LNG imports are no longer obstacles to increasing the use of natural gas to make electricity and to power highway. Since coal has been the reserve fuel for those utilities which thought natural gas supplies were limited, the prospects for the former fuel have declined as those for natural gas have risen.
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Toby KolstadPresidentRail Theory Forecasts
Rail freight, thought to be stable, is falling again
April 27, 2009
US rail shipments sink 24.3 percent from a year earlier, industry trade group reports | finance.yahoo.com
The American Association of Railroads (AAR) reported that rail shipments decreased 24.3% during the week ending April 18. Unlike the AAR statements in previous weeks, this one did not contain an explanation about how weather or the Good Friday holiday caused the unfavorable comparison. In the detailed report available to AAR members, carloads were down by significantly more than 24.3% for most traffic segments, with Motor vehicles (-57.7%) and metallic ores and metals (-52.9%) suffering the most. Grain traffic was still down 21.3% and even coal shipments, which for the year are only down 5.8%, decreased 16.2%. Could rail traffic be settling at an even lower level than previously projected?
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Thomas ShewskiOwnerHigh Energy Services
April 27, 2009
Coal Prices Crumble | www.forbes.com
Both steam and metallurgical coal demand are down. United States steam coal (for electricity generation) is down due to the economic slump affecting industrial demand and switching to cheaper natural gas-fired electricity generation in some areas of the nation. Metallurgical coal demand is down due to the crushing drop in steel production domestically and globally. Although coal demand is down significantly, it does not necessarily allow coal under contract to be excused for purchase.
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Thomas ShewskiOwnerHigh Energy Services
April 27, 2009
Administration Stops Short of Endorsing Climate Bill | www.nytimes.com
House Democrats issued a draft climate bill titled “The American Clean Energy and Security Act of 2009” on March 31, 2009 which proposes to reduce CO2 emissions and require the development of renewable energy on a nationwide scale. The section that follows highlights important provisions contained in this 648 page draft bill.
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Thomas ShewskiOwnerHigh Energy Services
Potential New Emissions Rules: Effect on Electricity Generation
April 27, 2009
Central New York Rep. John McHugh Takes Aim at Acid Rain | www.syracuse.com
Some in Congress are using the debate in Washington, DC on carbon tax to also include additional limits on mercury, nitrous oxide (NOx), and sulfur dioxide emissions (SO2) from coal plants. Many proposals have been floated in Congress (one of which is linked here) to limit these emissions. If any of these proposals were to pass and become law, it will have significant impact on electricity generation.
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Thomas ShewskiOwnerHigh Energy Services
Burn Likely to Continue to Be Down for Several Months
April 27, 2009
Genscape Coal Burn Falls 2 Percent Below Same Week 2008 | uk.reuters.com
Domestic thermal coal demand is likely to continue to be down for several more months, with nothing positive on the immediate-horizon.
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Toby KolstadPresidentRail Theory Forecasts
FreightCar America to halt production at its second shop in two months
April 16, 2009
FreightCar to halt production in Roanoke | www.roanoke.com
With the temporary closure of its Roanoke VA plant, FreightCar America (RAIL) will be down to just one plant in Danville IL where union workers were notified in February that four of five jobs would soon be cut. In 2007, with production falling to 10,282 from 18,548 railcars in 2006, the company closed its largest and oldest facility in Johnstown PA and transferred all production work to its two other plants in Roanoke and Danville. Deliveries held constant in 2008, at 10,239 railcars, but output was expected to a fraction of that total this year. The closure of the Roanoke VA facility indicates that this forecast was on target.
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Toby KolstadPresidentRail Theory Forecasts
Enlarged STB might be better than anti-trust legislation for railroads
April 13, 2009
Compromise bill getting close | www.railwayage.com
Railroads, shippers, and legislators seem to be working on a compromise bill that would enlarge the STB and remove some exemptions the railroads currently enjoy from regulatory oversight. Railroad labor unions have join forces with the rail carriers to oppose the alternate bills that are currently in committee and are expected to advance in both the house and senate next month. The compromise bill seems to have some chance of passing then either of these pieces of legislation. It will probably be unnecessary legislation and an example of more government waste by the time the bill becomes law since the railroads are already under market pressure to rectify some excessive rates.
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Toby KolstadPresidentRail Theory Forecasts
Despite bad weather related weekly carloads, coal traffic is one bright spot of rail traffic.
April 6, 2009
Coal volume slump leads freight traffic decline | www.railwayage.com
Coal traffic was down 21% for the week ending March 28, compared to last year, and railroad ton miles were off 24% for the same period. Blizzard conditions in Wyoming hampered loading operations and contributed to the decline in production and transportation more than any other factor. Before these numbers were added to the yearly totals, coal traffic was only down 3.9% on a national basis, and all of that loss was in the East and was due to the decline in export sales of Appalachian steam and metallurgical coal. Coal production and railroad traffic in the West was running about even to last year until the weather interfered with mine operations. Moreover, new coal plants coming online this and next year should keep coal traffic climbing, albeit slowly, for a while out of the Powder River Basin fields.
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Thomas ShewskiOwnerHigh Energy Services
Key Features of Draft Climate Bill
March 31, 2009
Democrats Unveil Climate Bill | www.nytimes.com
House Democrats issued a draft climate bill titled “The American Clean Energy and Security Act of 2009” on March 31, 2009 which proposes to reduce CO2 emissions and require the development of renewable energy on a nationwide scale. The section that follows highlights important provisions contained in this 648 page draft bill.
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