Washington (Platts)--16Apr2012/522 pm EDT/2122 GMT

The 1.55 million carloads of coal hauled by US railroads in the first quarter of 2012 was the lowest for any quarter since the beginning of 1994, the US Energy Information Administration said Monday.

Coal carloads dropped 9.8% compared with the first quarter of 2011, when US railroads totaled 1.72 million carloads.

The impact of mild weather and low natural gas prices are more severe in the higher-cost eastern coal regions. CSX coal carloads plummeted 16.3% year-on-year in the first quarter and fellow eastern railroad Norfolk Southern saw its Q1 coal carloads drop 13.9%.

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The relative cheapness of Powder River Basin coal lessened the impact on western railroads. Coal carloads on Berkshire Hathaway's BNSF Railway fell 5.3% in the most recent quarter and Union Pacific traffic dropped 9.4% in Q1.

Western railroads, however, are still experiencing considerable switching by utilities as the cost of natural gas dips below the price where burning PRB coal is more economical. The power sector accounts for more than 90% of coal consumed in the US.

The NYMEX May natural gas futures contract settled 3.5 cents higher at $2.016/MMBtu Monday.

The share of US coal transported by rail increased to more than 70% through the first three quarters of 2011, compared with around 65% a decade ago and just more than 60% in 1994.

--Darren Epps, darren_epps@platts.com

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