Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from Paul Patterson. Go ahead, your line is open.
Paul Patterson
How are you? Just I wanted to just go over the coal for a little bit more here. The pricing that you've hedged in for, did you say 70% that you've hedged so far for 2010?
Niel Ellerbrook
Yes, for 2010.
Paul Patterson
And how does that compare to the price that's you guys have got so far in your hedges for 2009?
Niel Ellerbrook
Basically, the pricing that we have has what I'll just call slight or inflationary increases for 2010 on all the contracts, and so the prices are generally similar, but some inflationary increase.
Paul Patterson
Okay. And so when we look at this, and we look at let’s say the stuff in the appendix, do you think that the gross margin per ton should be increasing or about the same?
Niel Ellerbrook
Well, I think we would start off by thinking in terms; first of all, we would remind you of the ramp-up this year when you're looking at margin, but I think we would think in terms of the margin per ton being comparable with the exception of course that we would have a higher percentage at new prices. In other words, we have some legacy coal. We said 70% was re-priced, so we have 30% of this year's tonnage. Obviously those percentages would be different next year, depending on what prices we get on the coal that's not yet priced.
Paul Patterson
Okay. I guess, what I'm wondering here is what you're saying is that you've got some contracts that have increased that have escalators in them, but the amount that's uncontracted right now would have a lower price; is that right?
Niel Ellerbrook
What I'm really saying is all of the coal would have escalators, but the 30% that was not increased on January 1 that coal as a percentage of next year's tonnage would be a smaller percentage. So that's really all I'm describing. So we have 30% that did not have a price increase in 2009 and that same 30% of the coal, which has an escalator, but that same 30% of the coal would be a lower percentage of next year's production.
Paul Patterson
Okay. You also mentioned that gas; I think you might have said, could you just talk about gas displacing coal, because of its current price and what you see the outlook like that for going forward?
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