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Competition in the U.S. Energy Industry
Mr.
Evins: "Is this competitive bid process really injecting any
competition into your purchases?"
Mr.
Wagner: "Well, in competitive bidding we have not gotten
generally uniform prices on coal. We have gotten a good spread of
prices on coal and even in the negotiating prices there is not
uniform pricing." and,
Mr.
Evins: "You have not seen any evidence of conspiracy or
combination or uniformity in prices?"
Mr.
Wagner: "I have not seen any evidence that I can put my hands
on and say that is it."
PRICE
BEHAVIOR
We turn now
to a closer investigation of pricing behavior in the coal industry,
relating it to output behavior and to changes in wage costs and
productivity rates. We analyze pricing behavior before and after
1968 to determine whether mergers with noncoal companies have had
an anticompetitive impact. This section also investigates recent
pricing behavior of mines in specific states to assess the effect
of different regional market structures in pricing patterns.
Finally we separate coal exports (excluding exports to Canada) from
domestic shipments to calculate the effect of export prices on
average coal realization and to determine price-output behavior in
that special submarket.
Price-Output Relationships
Table D-4
summarizes measures of productivity, wage costs, prices, output,
and capacity utilization in the coal industry from 1958-1972. The
"modified wage cost" data in column 3 requires some explanation: It
shows figures which relate tons per man-day (the standard industry
measure for productivity) to average hourly earnings in the
industry. If tons per man-day were converted to a figure
representing output per hour and if that number were divided into
average hourly earnings, the result would be a figure closely
approximating labor costs per ton related to wages paid. It would
still exclude such nonwage costs as contribution to the union's
welfare fund, social security contributions, etc. The "modified
wage costs" figure is thus a kind of proxy for wage costs, and is
calculated to show the effect on wage costs of changes in
productivity and earnings' rates.
The decade
from 1958 to 1968 was marked by a fairly sharp reduction in wage
costs. Prices declined in the first half of the decade in the face
of stagnant tonnage and fairly low operating rates. From 1963 to
1968, average realization reversed its downward trend and recovered
moderately as output and operating rates increased. Wage costs
during this period, however, leveled off.
Steadily
declining prices from 1958 to 1963 in the face of a moderate
increase in output and operating rate shows an evident lack of
market