The railroads have now succeeded in killing the legislation that would permit construction of a coal slurry pipeline to Baltimore. That's too bad, at least for Maryland's industry and for consumers. On the other hand, it's nice for the railroads, since it means industry and consumers will continue to subsidize them through power rates that are a little higher than they need to be. They reflect the high freight rates for coal charged by the Chessie System, which will be spared, at least for another year, the rigors of serious competition.
Whenever slurry pipelines come up, in Congress or in state legislatures, railroads attack them vehemently on grounds that they threaten jobs. That's true. Competition usually threatens jobs. Modern railroads are highly efficient, even in comparison with automated pipelines. But they frequently keep their freight rates high for bulk commodities like coal that can't move by highway. That enables them to keep their rates low for other kinds of shipments that they might otherwise lose to the trucks.
But the strategy works only as long as the coal shippers have no alternative to rail. The railroads' case against the pipelines, stripped of the usual blather, comes down to one assertion: that people ought to be willing to pay a modest subsidy to the railroads, via their electric bills, to support a healthy and reliable rail system capable of handling many kinds of freight and reaching all parts of the country. That's a serious argument, although not quite compelling.
Baltimore Gas and Electric, which uses huge volumes of coal, was a great supporter of the pipeline bill. Currently BG&E ships Appalachian coal by rail to Newport News and then brings it by barge up the Chesapeake Bay to its power plants. That's cheaper than sending it directly by rail to Baltimore. Why? Because two railroads link the coal fields with the Norfolk area, but only one goes to Baltimore.
That hints at another solution to the excessive coal rates into Baltimore. The federal government proposes to sell Conrail to the Norfolk Southern Corp. That would give Norfolk Southern and its coal routes access to Baltimore, among other ports. You scarcely need to be told that the Chessie System opposes that sale as vehemently as it opposed the pipeline bill.
The Chessie System beat this year's pipeline bill by cowing a number of state legislators who would prefer not to discuss your electric power rates with you just now. But there will be other years and other pipeline bills. It's a technology that deserves to be used. And if a pipeline can't be built in Maryland, because of the nature of the legislature, perhaps the sale of Conrail to the right buyer may produce some of the same benefits.