Competition In The Markets For Western Coal Economics Of Western Coal Transportation

To ensure the continued growth and economic viability of the Western coal industry, both in the domestic and inter- national markets, it is essential for the industry to become more creative and active in confronting the most serious obstacle in this objective; and that is, the inherently long distances which Western coal must be transported inland to reach its major markets. Figure 1 shows the 1982 coal consumption by state for those states where Western coal was consumed. (Except as noted in this paper, Western coal producing states are defined as Colorado, New Mexico, Arizona, Utah, Wyoming, Montana and North Dakota. Any exceptions used will have only an insignificant effect on the content of the paper). This figure illustrates the long distances that are required for Western coal to reach its markets. The total production for 1982 from the Western coal producing states was approximately 220 million tons, of which only 85 million tons was consumed within the boundaries of these states. The remainder was transported to markets outside the area. This map also shows, based strictly on the consumption of the states to which Western coal was shipped during 1982 and not considering other factors which are involved in the marketing of coal, the total market potential of Western coal would amount to a total of 445 million tons. This does not include export coal from the West Coast, which is now estimated to be less than 2 million tons for 1983. In 1980, it had been estimated that by 1985 the West Coast exports would have been at least 10 million tons per year, which will not be attained.