By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
By Michael Roberts
By Melanie Asmar
Coal interests also view the pending merger with alarm. It will be cheaper for Union Pacific to move coal from the flat Powder River Basin of eastern Wyoming than to extract it from the rugged country of northwestern Colorado and Utah. Some believe the newly expanded railroad could easily encourage its customers to buy Wyoming coal, potentially throwing hundreds of Colorado miners out of work and shutting down the coal mines.
"It's more expensive to transport the coal out of the Rockies," says Alex Jordan, director of the Salt Lake City-based Western Shippers' Coalition, which represents railroad customers. "The key factor is price. If you have one carrier serving both markets, it's cheaper for them to push Powder River coal. The danger is, you lose your Rocky Mountain coal and the economy goes bust. You could devastate a region of western Colorado and Utah. It's crucial to these areas."
Farmers and miners, however, have traditionally been captive customers for railroads due to the sheer bulk of the products they produce. While other industries can move their products by truck, coal and grain producers depend on the railroads to move thousands of tons of freight over vast distances. If Union Pacific decides to jack up fees on its western Colorado and Utah route, those industries will be at the railroad's mercy.
"Unlike other industries like airlines, it's practically impossible to lay new rail lines to compete with an established railroad," says Paul Dempsey, director of the transportation law program at the University of Denver. "The railroads will have an incentive to extract as much from people as they can."
If Union Pacific gets its way, the only line still serving western Colorado after the merger will be the Moffat Tunnel line that runs through Winter Park and then parallels the Colorado River into Grand Junction. And Dempsey thinks Union Pacific may decide to shift traffic from that line to its main route through southern Wyoming. The relatively flat route, through Laramie and Rock Springs, is one of the busiest transcontinental rail lines in North America, with 65 freight trains per day moving at speeds of up to 70 miles per hour. It's also a consistent cash cow for Union Pacific, and Dempsey fears the railroad may be tempted to simply shut down the high-maintenance Moffat Tunnel line, which winds through a series of smaller tunnels before reaching its namesake bore beneath James Peak.
"That last remaining [western Colorado] route will become less viable," Dempsey predicts. "If the Moffat Tunnel route is shut down, most of the state won't have rail service."
Union Pacific, however, insists it wants to haul Colorado coal. "We're interested in hauling coal anywhere," says Bromley. "Most of the coal mined in the Powder River Basin goes east and south. The Colorado coal goes to different markets. Union Pacific wouldn't make some sort of arbitrary decision to move Wyoming coal instead of Colorado coal."
Bromley says that far from attempting to carve out a new monopoly, Union Pacific is responding to competitive pressure. Last year's merger of the Burlington Northern and Santa Fe created the largest railroad in the country, boasting highly efficient and profitable routes between Chicago and the West Coast. Bromley insists that Union Pacific and Southern Pacific need to combine forces to deal with competitive pressure from BNSF. "The thing driving all of this was the combination of the Burlington Northern and Santa Fe last year," he says. "That skewed things and made them a formidable competitor. Without this merger, they'll dominate rail traffic in the United States."
And in anticipation of the charge that the merger would create a monopoly railroad between Denver and the Bay Area, Union Pacific has offered trackage rights along the Moffat Tunnel route to BNSF. Under such an arrangement, the competing railroad is allowed to use its competitor's tracks in exchange for a fee. But BNSF has made no commitment to run trains through western Colorado, and skeptics like Alex Jordan believe the proposed trackage fee is so high that the railroad won't be interested. He says western Colorado and Utah may be headed back to the bad old days of the robber barons.
"Monopoly is a real concern," says Jordan. "It's almost like a feeding frenzy of blue fish. If you're a swimmer, you can get your arm bit off. It's so easy to gouge the customer, it's like, 'Why not?'"
Railroads were notorious in the nineteenth century for exploiting farmers and small businesses that had no alternative way to ship their goods. The Southern Pacific, in particular, was known for its stranglehold on the entire state of California, a monopoly that was a frequent target of muckraking journalists like Frank Norris. His novel The Octopus portrayed a railroad so powerful that governors and congressmen would do backflips to keep it happy. Critics of the proposed merger charge that Philip Anschutz and Union Pacific have created just such a political machine for the 1990s, greased with generous donations to friendly officeholders and dedicated to pushing through a railroad with monopoly power.
Those critics are particularly critical of Roy Romer, who endorsed the merger in March. "Romer let down the employees and the shippers and the communities within the state," says William Gulliford, general chairman of the Brotherhood of Maintenance of Way Employees, which represents 350 railroad workers in Colorado. "If this merger goes through, it will be devastating, but it doesn't seem to concern the governor."