What are some of the factors driving up the price of coal?
The high end of the cost curve is driven a lot by geology, and in the United States there’s been some tough geology in some of the eastern coalfields that’s led to high prices. But there’s also tightness in competing fuels. Coal competes directly with gas, for example, and for peak hours of the day it also competes with other fuels for baseload electricity. So those are things that have an impact on price. Overall, you held the line on cost increases to 5 percent this year. How? By focusing on process improvements as well as organic growth projects. This is a natural-resource industry, and Peabody has almost 10 billion tons of coal reserves, by far the world leader. If we can bring on capital projects and grow them organically, we can keep our cost structure level. At the same time, we have teams that are managing the consumption of equipment, such as tires, as well as the high cost of diesel fuel and explosives. We saved almost $50 million last year over the spot price on diesel-fuel
