falling 3.3 percent from the 1971 level, but average realization rose another 9.5 percent. Between 1970 and 1972 domestic coal prices increased an average of $1.35 a ton as production for domestic consumption fell 1 percent; overseas export prices went up $3.61 a ton while demand fell 28 percent!

A measure of the profitability flowing from increased export prices is revealed in the annual statements of Pittston Company, a major coal exporter. Their profits from coal increased from $9.5 to $23.5 million, 1970 vs. 1969, on almost identical total coal sales (roughly 20.5 million tons). Pittston's export sales for the period, however, rose from 6.3 to 11.2 million tons.

Cost increases doubtless account for part of the sharp run-up in export prices, especially between 1970 and 1972. Recall that wage cost increases for the period amounted to 46 percent (see Table D-4). But domestic coal production was subject to roughly similar cost pressures and managed smaller price increases under favorable demand conditions. Since most of the export coal moves under long term contracts, the sharpness of the price increases is even more puzzling. Built-in escalation provisions in the contracts should permit price increases based on increased costs—as they do in domestic contracts—but they would not account for increases of the magnitude indicated in Table D-4.

It might be illuminating to know the initial prices on new export contracts each year to determine the effect of these prices on average realization. It is conceivable that the average for all export shipments is made up of a combination of existing contracts whose prices increase in response to cost increases and new contracts whose prices exceed those covered by older, existing contracts. Unfortunately, the data to make this kind of analysis is unavailable.

A significant aspect of the export market situation is the concentration of sellers in a few hands. Twelve companies which are members of the Coal Exporters Association of the United States, Inc., affiliated with the National Coal Association, account for 75-80 percent of U.S. coal exports. Two nonmembers, A.T. Massey Coal Company, and Island Creek Coal Company handle a large share of the remaining tonnage. Most of the export companies primarily handle sales of their parent producer companies' output, but they also act as brokers for other producers. Any deeper investigation of export coal pricing behavior might investigate the effect of the market structure and the impact, if any, of an industry association binding together most of the leading exporters.