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f'- "':'" t ~.~ .-- ( ~:; '-':"-:-1 Appendix 3. THE COAL ISSUE The United States has an estimated 475 billion tons of known coal reserves. This translates into about three centuries worth of supplies to meet domestic coal energy needs. To compete with the cost of coal on a BTU basis, oil prices would have to drop to $8 or less per barrel. Furthermore, it is possible that known oil reserves could be depleted within 50 to 100 years; and, with the downward trend in nuclear-fueled electric utilities, energy derived from coal steps to the forefront as America's one solid hope for a readily available low-cost energy source. However, coal must be able to compete economically with other energy sources today if it is to be a fully developed energy resource in the decades to come. The main problem in further western coal development is transpor- tation costs. With current rail freight rates, it is not economically feasible to fully develop the low-sulfur, high- BTU coal holdings and leases in Colorado, Wyoming, and Utah. As a typical example, the cost of coal at the mine may double by the time it reaches the customer due to freight charges-- charges that are ultimately passed on to the consumer (the American public). Until recently, rail freight rates have continued to rise. During the 5 years just prior to the 1982-83 recession, deregu- lated rail freights on some shipments have escalated at average annual rates of 20 percent, which results in doubling the rail transportation charges each 3-1/2 years. For comparison purposes, the cost of coal mining has also increased, but those increases have been quite similiar to the national inflation rate. This present inability to move coal economically, coupled with recession, has caused excess production capacity, mine shutdowns, and a high unemployment rate within the coal industry. Fully developed technologies to mine coal in a safe and enviromentally sound manner are already well established. Coal-burning technologies are developed, and pollution control techniques continue to progress. However, unless a lower cost transportation system is devised, much of our western coal will not become economically recoverable reserves. Conceptually, the proposed AQUATRAIN pipeline system could be enlarged and extended to transport over 100 million tons of coal annually and provide substantially lower freight rates than alternative delivery methods. This savings could for the most part be passed directly to coal customers and consumers. In addition, most of the coal that would be transported is 43