September 14, 2007

To our Customers:

The media reported yesterday that the American Chemistry Council, a Washington, D.C. based lobbying group, has released a "study" claiming that Union Pacific was among a group of railroads that over-charged for fuel during the past several years.

While commissioning a privately managed study is a well-known lobbying tactic in Washington, this particular project sets new standards for data manipulation and selective use of the facts.  Since the issue of fuel surcharges is important to many of you, I think it is important to correct the record.

Union Pacific has publicly reported data on its fuel surcharge program since 2003.  The data we reported included fuel consumption, average price per gallon, fuel surcharge revenue, and incremental fuel expense. This information is included in audited financial statements including the company’s Form 10-Q, which is filed with the Securities and Exchange Commission.  There is no question of its accuracy.

Truthful reporting shows that Union Pacific had a fuel expense recovery shortfall of $1.013 billion between January of 2003 and the end of March 2007.  This means we recovered only 77% of our increased fuel costs during that period. We recovered 89% of our incremental fuel costs during the first quarter of 2007.

Obviously, the differences between the actual audited, numbers and the conclusions of the ACC "study" will become clear as a detailed analysis of it is completed during the next few weeks.  But the charges against our company are so outrageous that I felt compelled to highlight the truth immediately.