Montana Energy Policy Study : Final Report 1975

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At a price of $4.50 per ton in a midwest market, Montana coal enjoys a price advantage over midwest coal of 8 cents per million BTUs when shipped by rail, and about 18 cents per million BTUs if shipped by slurry (6). Transportation routes also give Montana coal a price advantage when sales are in the upper midwest. Even though trans- portation costs would appear to give Wyoming coal a price advantage when sold in the south, Montana coal has been sold at $7 per ton in Texas. This indicates that ...the resource availability may well be the dominant factor in today's coal market.
Because of Montana coal's price advantages and the nature of the coal market, an escalation in the effective overall tax rate to 25 percent (from 16.9 percent) is recommended. The increase, about 2.1 cents per million BTUs, -203- would equal only 1.8 to 3.5 percent of the price of coal at the destination depending on the selling price*--hardly enough to harm Montana coal's current price advantage. If supply capability is indeed the prime factor in coal buying decisions, small price increases may be totally irrelevant anyway.


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