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More on the negative consequences of monopolistic pricing
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cbt141, <br /> <br />According to the Grain Transportation Summary provided by USDA, there is roughly a $20 per metric ton price difference between ocean carriers out of the PNW vs Gulf Coast, averaging around $40 mt out of PNW and $60 mt out of Gulf Coast. The rail rates out of Minneapolis to Gulf Coast are around $25 mt, to PNW $45 mt. Either way, it costs $85 mt from Minneapolis to Japan. Now add Montana to the mix. Even though the mileage is less from Montana to PNW than it is from Minneapolis to Gulf Coast, the rail rates are twice as high Montana to PNW as it is from Minneapolis to the Gulf Coast. <br /> <br />It is blatantly obvious that Montana is subject to monopoly pricing. Not only that, BNSF's monopoly is a factor in allowing Montana grain to be overpriced relative to Australian or Canadian grain. If the STB had done their job and forced BNSF to accept access by UP or KCS as a requirement of the BN + SF merger (the same caveat that applied to the UP + SP merger which forced UP to accept BNSF over it's central lines), the trade position of the U.S. relative to its competitors would have been enhanced. That $20 mt spread is huge. Grain from Eastern WA costs less than $10 mt to Portland or Tacoma, thanks to competition from UP and the barge lines. Montana's grain belt is roughly halfway between PNW and Minneapolis, so logic would dictate that Montana grain should cost about $25 mt to PNW if there was competition from UP or some other rail service provider. As it is, truckers can carry grain out of Montana to Lewiston at a little over $30 mt, which makes the truck/barge combined rate the market maker, e.g. the "alternative" to BNSF's rates. It is ridiculous in this day and age that a low value bulk commodity is moving by long haul truck, but that's the price we pay for BNSF's monopoly. <br /> <br />I understand the point you're trying to make, but this acceptance of the monopoly position BNSF enjoys by perceiving it as not being a monopoly is hard to comprehend given the facts. <br /> <br />Ed: Have a nice life. Hope you figger out that there phone bill.
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