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Author: tjscott0 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8883  
Subject: Re: Norfolk Southern (NSC) Date: 11/26/2012 11:58 AM
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The main factors in the decline in coal demand in the US are thought to be 1) low natural gas prices causing those who can to switch, and 2) increasingly stringent regulations causing older coal fired boilers to shut down.

There are also international components due to slowing economic activity and general concerns about carbon dioxide generation and global warming.

Coal interests continue to believe coal is an inexpensive fuel that will continue to find markets at least in the export market.

Of course NSC services the Eastern coal fields and ports where coal tends to be high in sulfur. Low sulfur western coal can be hauled by Norfolk Southern when it is shipped east of the Mississippi River, but Union Pacific and BNSF get most of that tonnage.

Until some of the uncertainties are resolved, it could be dicey times for coal investors.

NSC and CSX continue to have the problem of low clearance bridges and tunnels that prevent shipment of double stacked containers except on certain routes. They are investing to correct this problem. There is also the problem of massive rail congestion in the Chicago area.

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All valid points.

On the up side is that rail is still more fuel efficient & thus cheaper vs truck shipment. Though I expect shipment by truck is faster.

As gasoline price continue to raise rail becomes even more attractive.

I own NSC & will prolly purchase more though I'm sitting on the sidelines now as I expect fiscal cliff & bad news from the EU will will drive the the market down further.

There are prolly better purchases out there [MCD, COP, AFL, XOM] IMHO. Depends whether you already own them or not. But methinks NSC CSX are decent choices for yield & diversification. And as I said before-- waiting fer further decline in the market.
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