Trains.com

Railroad Stocks starting to climb back to highs

4968 views
46 replies
1 rating 2 rating 3 rating 4 rating 5 rating
  • Member since
    December 2009
  • 1,751 posts
Posted by dakotafred on Sunday, November 13, 2016 7:33 PM

At this point, let the market, rather than government, decide. Past regulation has already cleaned coal to the point that it is almost unrecognizable. Remember it used to be burned in almost every home, with no controls, for heating. As a longtime Bismarck legislator asked once: "Did anybody die?"

  • Member since
    January 2014
  • 8,217 posts
Posted by Euclid on Sunday, November 13, 2016 6:11 PM

I expect regulatory easing that will soon reverse the downward trajectory of coal.  I don't think the markets are wrong about this.   

  • Member since
    February 2016
  • From: Texas
  • 1,552 posts
Posted by PJS1 on Sunday, November 13, 2016 5:51 PM

Euclid

 

 
oltmannd

I fear that RR stocks are up because the stock markety is breathing too many coal fumes.  Yeah, undoing some of the coal regs may cause a bit more coal to move, but certainly not enough for the euphoria of last week.

The low cost of natural gas is the prime killer of coal.  I wouldn't expect that to change much in the next several years.

 

 

 

 

Is it the low cost of natural gas or the high cost of coal that is killing coal?  Regulations generally increase the cost of production.  Easing regualtions lowers the cost of production. 

As long as natural gas is cost competitive, utility executives would prefer to use it as opposed to coal.  

The natural gas pipelines run into the plant. To use the gas all that is required basically is to turn it on.

Coal requires extensive handling.  In most instances it has to be unloaded from trucks, rail cars or conveyer belts.  Its storage has to be managed, and it has to be ground into powder before it can be injected into the burners. 

Waste is an issue.  There is practically no after burn waste from natural gas.  Not so with coal.  Burning coal produces a lot of ash.  In Arkansas, Louisiana, and Texas, where many of the plants burn lignite coal, sometimes referred to as brown coal, the after-burn ash can be a significant percentage of the coal burned. Higher grades of coal produce less ash. 

Irrespective of the amount of ash created, however, it has to be gotten rid of.  Frequently a utility can sell the ash, but its ability to do so is dependent on a volatile market.  Historically the utilities have not always been able to recover the cost of handling and disposing of the ash.

In addition to the handling issues, baring a break through in clean coal technology, coal fired plants have significant air pollution hurdles to overcome.  Even to meet today’s EPA requirements means installing scrubbers, etc. that add millions of dollars to the cost of a coal plant.

Oltmannd is correct.  The long term demand curve for coal is a continual downward sloping to the right, with some dips from time to time, but the nation's power generators are going to abandon coal as a boiler fuel.

Rio Grande Valley, CFI,CFII

  • Member since
    January 2014
  • 8,217 posts
Posted by Euclid on Sunday, November 13, 2016 5:19 PM

oltmannd

I fear that RR stocks are up because the stock markety is breathing too many coal fumes.  Yeah, undoing some of the coal regs may cause a bit more coal to move, but certainly not enough for the euphoria of last week.

The low cost of natural gas is the prime killer of coal.  I wouldn't expect that to change much in the next several years.

 

 

Is it the low cost of natural gas or the high cost of coal that is killing coal?  Regulations generally increase the cost of production.  Easing regualtions lowers the cost of production. 

  • Member since
    January 2001
  • From: Atlanta
  • 11,971 posts
Posted by oltmannd on Sunday, November 13, 2016 4:32 PM

I fear that RR stocks are up because the stock markety is breathing too many coal fumes.  Yeah, undoing some of the coal regs may cause a bit more coal to move, but certainly not enough for the euphoria of last week.

The low cost of natural gas is the prime killer of coal.  I wouldn't expect that to change much in the next several years.

 

-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/

  • Member since
    June 2009
  • From: Dallas, TX
  • 6,952 posts
Posted by CMStPnP on Sunday, November 13, 2016 3:25 PM

MidlandMike

The Congress will work with the incoming Pres. Trump on any conservative agenda items, but will not be any more receptive to infrastructure spending than they were with Pres. Obama.  They consider government infrastructure spending a democrat program, and they largely consider Trump an outsider.

They passed everything Obama asked for in regards to infrastructure spending in the first Tranche.   Problem was the first Tranche 85%-90% was increases to social programs and only 10-15% was Infrastructure spending.    His second stimulus attempt was met with skepticism because his first had almost no lasting stimulus effect on the Economy........as soon as the money ran out.... so did most of the positive effects.   That impact turned the Congress and Public off to further stimulus programs because the perception was after the first flop that we were wasting money.    Had he reversed his approach he would have done a lot better, in my view.

If it was me having had the second tranche rejected in large part.    I personally would have moved on to deregulation in areas that would stimulate the economy but President Obama made no such move.   Absent of any money to spend, his thinking was that his hands were tied so he just sat pat and watched the economy struggle.

Your going to see an effective stimulus program in the next two years and the philosophy used will be to apply stimulus in all areas at once.    Government spending, Government deregulation, Private Business spending and investment, as well as individual spending.    Sit back and watch how much more effective it is than just focusing on government spending alone.

  • Member since
    September 2011
  • 6,445 posts
Posted by MidlandMike on Friday, November 11, 2016 8:22 PM

The Congress will work with the incoming Pres. Trump on any conservative agenda items, but will not be any more receptive to infrastructure spending than they were with Pres. Obama.  They consider government infrastructure spending a democrat program, and they largely consider Trump an outsider.

  • Member since
    February 2003
  • From: Guelph, Ontario
  • 4,818 posts
Posted by Ulrich on Friday, November 11, 2016 7:48 AM

dakotafred

 

 
RME

 

 
CMStPnP
Sharp gains since the election.

 

Not if you're KCS.

 

 

 

The faint hearts always overreact to the day's news. Good investment opportunity for the rest of us. KCS has a great, strategically located  franchise independent of Mexico, and will be fine for as long as the railroad industry itself is basically sound.

 

 

I think so too. Trade with Mexico is likely to grow, even under Trump. 

  • Member since
    December 2009
  • 1,751 posts
Posted by dakotafred on Thursday, November 10, 2016 7:59 PM

RME

 

 
CMStPnP
Sharp gains since the election.

 

Not if you're KCS.

 

The faint hearts always overreact to the day's news. Good investment opportunity for the rest of us. KCS has a great, strategically located  franchise independent of Mexico, and will be fine for as long as the railroad industry itself is basically sound.

RME
  • Member since
    March 2016
  • 2,073 posts
Posted by RME on Thursday, November 10, 2016 7:36 PM

CMStPnP
Sharp gains since the election.

Not if you're KCS.

  • Member since
    June 2009
  • From: Dallas, TX
  • 6,952 posts
Posted by CMStPnP on Thursday, November 10, 2016 4:03 PM

The hauling of aggregates was sure to increase (Sand, Cement, Rock) with either candidates infrastructure program so I am not sure this is just a Trump thing, I think it would have happened with Hillary as well.

  • Member since
    February 2003
  • From: Guelph, Ontario
  • 4,818 posts
Posted by Ulrich on Thursday, November 10, 2016 2:48 PM

Victrola1

Northern Securities, anybody? 

 

 

JJ Hill was 100 years ahead of his time. 

  • Member since
    December 2001
  • 1,486 posts
Posted by Victrola1 on Thursday, November 10, 2016 2:44 PM

Northern Securities, anybody? 

 

  • Member since
    February 2003
  • From: Guelph, Ontario
  • 4,818 posts
Posted by Ulrich on Thursday, November 10, 2016 2:27 PM

I guess we'll see. So far Trump's win hasn't hurt the markets, but tomorrow is another day. 

  • Member since
    May 2003
  • From: US
  • 25,277 posts
Posted by BaltACD on Thursday, November 10, 2016 2:19 PM

We all have heard the Campaign brags that Trump announced.

What will actually get enacted going through Congress?

Talk is cheap.  Congress can't be fired.

Never too old to have a happy childhood!

              

  • Member since
    February 2003
  • From: Guelph, Ontario
  • 4,818 posts
Posted by Ulrich on Thursday, November 10, 2016 2:13 PM

NS and CSX in particular have rallied since yesterday. Maybe because Trump has promised to end the "war on coal". If the tariffs go up, though,  were likely to see a drop in shipments from Asia and a corresponding drop in container loads from the ports. Localized manufacturing will benefit the truckers more than it will the railways who do better with those juicy long hauls from the ports... i.e. lots of loads from Peoria to Indy and fewer loads from Long Beach to Chicago. 

  • Member since
    September 2014
  • 1,180 posts
Posted by ROBERT WILLISON on Thursday, November 10, 2016 12:17 PM

This is good news, but must be a short term projection. Are we  not bringing all those jobs back here to the US. No need to send coal to China whe we are making it right here in the US.

  • Member since
    June 2009
  • From: Dallas, TX
  • 6,952 posts
Railroad Stocks starting to climb back to highs
Posted by CMStPnP on Thursday, November 10, 2016 11:57 AM

Sharp gains since the election.  I think Wall Street is projecting a LOT more traffic for the railroads in the next few years do to infrastructure programs and the proposals to allow export of low-sulphur coal from the PRB.

Join our Community!

Our community is FREE to join. To participate you must either login or register for an account.

Search the Community

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy