Date of Graduation

1986

Document Type

Dissertation/Thesis

Abstract

After the 1973 Arab oil embargo and a drastic price rise in crude oil, the demand for coal and, subsequently, the price of coal rose to a new high, thus encouraging further production of coal. The increase in the production occurred in most of the coal fields of our nation except those in some specific areas, such as West Virginia. Preliminary studies indicate that the high transportation cost of coal contributes to this slacking coal production pattern. Three related objectives are studied in this dissertation: (a) Finding the least cost mode of coal transportation; (b) Determining the new pattern of trade under the chosen mode of coal transportation; and (c) Conducting a comparative static analysis of the coal market in the United States. Engineering models are used to calculate the average costs of transportation. These models are adjusted for the appropriate economic applications. The mainland United States is divided into five regions and the demand and supply of coal in each region is estimated. Given the results of the cost calculations and the estimated demand and supply functions, a quadratic programming procedure provides the optimal trade pattern in the coal market. The estimated cost of coal transportation for both the slurry pipeline and the unit train reveals that the slurry is the lower cost mode of coal transportation for any given distance or amount of coal handled by the system. This conclusion is drawn from a switching point analysis. The quadratic programming procedure shows that as a result of a lower cost of coal transportation--through the use of the slurry system--there should be additional movements of coal among the regions. The empirical result of the comparative static analysis calculates the effect of the change of the coal transportation cost on the quantity of coal moved interregionally and on the delivered price of coal.

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