Flying is Quicker and more Cost Efficient than Passenger Rail

Posted by PITHOCRATES - February 8th, 2014

Week in Review

Politicians everywhere want to build high-speed rail.  Why?  Because there are maybe only 2 high-speed rail lines in the world that operate at a profit.  All other passenger rail requires government subsidies.  Because the massive capital and operating costs for passenger rail are so great they cannot recover them via ticket prices.  And high-speed rail is the costliest of all.

So passenger rail requires new taxation to support it.  And politicians like new taxes.  Also, building passenger rail requires an enormous infrastructure.  Built and maintained by lots of people.  Union people.  Something else politicians love.  Rewarding their union friends with lots of new union jobs.  Which is why politicians love high-speed rail.  They get a lot ‘thank you’ votes for all that government spending.  No matter how costly or inefficient passenger rail is as a means of transportation.  As we can see here (see I Spent 28 Hours on a Bus. I Loved It. by Eric Holthaus posted 2/4/2014 on Slate).

traveling by plane car train bus R1

The infrastructure between point A and point B for cars and buses is already there.  Paid for with fuel taxes.  Planes need no infrastructure between point A and point B.  But trains do.  A very costly infrastructure.

Trains carry more people than buses.  But not as many as planes.  Which means the far greater cost of passenger rail is divided by fewer ticket purchasers.  Whereas the less costly flying is divided by more ticket purchasers.

Planes can fly around 500 mph.  Passenger rail can travel up to 100 mph on some sections of track.  While high-speed rail travels at speeds of just under 200 mph on dedicated (and very expensive) track.

You add these points together and it’s little wonder that traveling by train costs about 20% more than flying.  While taking 5.8 times as long.  Or a little less for high-speed rail. Making the plane the undisputed champion of long-distance travel.  And it works without massive government subsidies.  Which is the best kind of travel there is.  The kind where the people traveling pay for their travels.  And not everyone else.  As is the case with passenger rail.

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Despite the Left’s Opposition to Fracking even the Environmental British are Joining In

Posted by PITHOCRATES - August 4th, 2013

Week in Review

One of the reasons the government tells us we must ‘invest’ in clean energy is to wean us off of costly foreign oil.  To give us energy independence.  And so we stop sending out money to nations in the world who don’t much care for us.  That’s why we must spend enormous amounts of tax dollars on things like solar and wind power.  Because we need them.  But because they are such poor business models they can’t operate without government subsidies.  So is there another option to give us that energy independence?  That doesn’t require government subsidies?  While even lowering our energy costs?  Yes there is.  And the British are now trying to play catch up to the United States (see The potential prize from fracking is huge by Michael Fallon posted 7/31/2013 on The Telegraph).

North, south, east and west, shale gas represents an exciting new potential resource for Britain that could contribute to our energy security, growth and jobs.

We only have to look across the Atlantic to see how it has reinvigorated the US economy: gas prices have halved, cutting costs for industry and consumers, and creating thousands of jobs and billions in new investment. Countries from India to Australia have looked on in envy at this boom – and are now joining in.

For its part, this Government is serious about shale. We are encouraging industry to find out how much is recoverable in all parts of the country. Given increasingly volatile international gas and oil prices, and our commitment to helping hard-pressed families with their bills, it would be irresponsible to ignore a new energy source right underneath our feet…

…residents understandably want reassurances that their water will not be contaminated. The facts are that around 2.5 million wells have now been fracked worldwide, more than 27,000 of them in the US in 2011. There is no evidence from America of fracking causing any groundwater contamination.

Other than in Hollywood movies.  And on television shows.  There it’s contaminating groundwater like there’s no tomorrow.  But with all that fracking going on in the United States the news is surprisingly barren of contaminated groundwater reports.  And you know they’d be leading all the news programs if there were.  Because the left hates fracking.  And the mainstream media leans left.  Way left.

That energy boom is a private boom.  It’s not because of the government.  It’s in spite of the government.  Who has launched a war on coal and oil.  Shutting down oil production on the Gulf of Mexico.  And on all federal lands.  Or making it very difficult for those who try.

Much of the global warming nonsense came from the University of East Anglia.  Making Britain near ground zero in the battle against global warming.  And here they are.  Wanting to frack to bring energy costs down for households.  Create jobs.  And reduce dependency on foreign oil.  Pity the United States government doesn’t care enough about the American people to do the same.

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Air Transport vs. Rail Transport

Posted by PITHOCRATES - July 29th, 2013

Economics 101

Trains require an Enormous Amount of Infrastructure between Terminal Points whereas a Plane does Not

Trains and jets are big and expensive.  And take huge sums of money to move freight and passengers.  Each has their strength.  And each has their weakness.  Planes are great for transporting people.  While trains are best for moving heavy freight.  They both can and do transport both.  But pay a premium when they are not operating at their strength.

The big difference between these two modes of transportation is infrastructure.  Trains require an enormous amount of infrastructure between terminal points.  Whereas a plane doesn’t need anything between terminal points.  Because they fly in the air.  But because they fly in the air they need a lot of fuel to produce enough lift to break free from the earth’s gravity.  Trains, on the other hand, don’t have to battle gravity as much.  As they move across the ground on steel rails.  Which offer little resistance to steel wheels.  Allowing them to pull incredible weights cross country.  But to do that they need to build and maintain very expensive train tracks between point A and point B.

To illustrate the difference in costs each incurs moving both people and freight we’ll look at a hotshot freight train and a Boeing 747-8.  A hotshot freight gets the best motive power and hustles on the main lines across the country.  The Boeing 747-8 is the latest in the 747 family and includes both passenger and freighter versions.  The distance between Los Angeles (LA) and New York City (NYC) is approximately 2,800 miles.  So let’s look at the costs of each mode of transportation moving both people and freight between these two cities.

Railroads are so Efficient at moving Freight because One Locomotive can pull up to 5,000 Tons of Freight

There are many variables when it comes to the cost of building and maintaining railroad track.  So we’re going to guesstimate a lot of numbers.  And do a lot of number crunching.  An approximate number for the cost per mile of new track is $1.3 million.  That includes land, material and labor.  So the cost of the track between LA and NYC is $3.6 billion.  Assuming a 7-year depreciation schedule that comes to $1.4 million per day.  If it takes 3 days for a hotshot freight to travel from LA to NYC that’s $4.3 million for those three days.  Of course, main lines see a lot of traffic.  So let’s assume there are 8 trains a day for a total of 24 trains during that 3-day period.  This brings the depreciation expense for that trip from LA to NYC down to $178,082.

So that’s the capital cost of those train tracks between point A and point B.  Now the operating costs.  An approximate number for annual maintenance costs per mile of track is $300,000.  So the annual cost to maintain the track between LA and NYC is $840 million.  Crunching the numbers the rest of the way brings the maintenance cost for that 3-day trip to approximately $278,671.  Assuming a fuel consumption of 4 gallons per mile, a fuel cost of $3/gallon and a lashup of 3 locomotives the fuel cost for that 3-day trip is approximately $100,800.  Adding the capital cost, the maintenance expense and the fuel costs brings the total to $566,553.  With each locomotive being able to pull approximately 5,000 tons of freight for a total of 15,000 tons brings the cost per ton of freight shipped to $37.77.

Now let’s look at moving people by train.  People are a lot lighter than heavy freight.  So we can drop one locomotive in the lashup.  And burn about a gallon less per mile.  Bringing the fuel cost down from $100,800 to $50,400.  And the total cost to $516,153.  Assuming these locomotives pull 14 Amtrak Superliners (plus a dining car and a baggage car) that’s a total of 1,344 passengers (each Superliner has a 96 passenger maximum capacity).  Dividing the cost by the number of passengers gives us a cost of $384.04 per passenger.

Passenger Rail requires Massive Government Subsidies because of the Costs of Building and Maintaining Track

A Boeing 747-8 freighter can carry a maximum 147.9 tons of freight.  While consuming approximately 13.7 gallons of jet fuel per mile.  At 2,800 miles that trip from LA to NYC will consume about 38,403 gallons of jet fuel.  At $3/gallon that comes to a $115,210 total fuel cost.  Or $778.97 per ton.  Approximately 1,962% more than moving a ton of freight from LA to NYC by train.  Excluding the capital costs of locomotives, rolling stock, airplanes, terminal infrastructure/fees, etc.  Despite that massive cost of building and maintaining rail between point A and point B the massive tonnage a train can move compared to what a plane can carry makes the train the bargain when moving freight.  But it’s a different story when it comes to moving people.

The Boeing 747-8 carries approximately 467 people on a typical flight.  And burns approximately 6.84 gallons per mile.  Because people are a lot lighter than freight.  Crunching the numbers gives a cost per passenger of $123.11.  Approximately 212% less than what it costs a train to move a person.  Despite fuel costs being almost the same.  The difference is, of course, the additional $465,753 in costs for the track running between LA and NYC.  Which comes to $346.54 per passenger.  Or about 90% of the cost/passenger.  Which is why there are no private passenger railroads these days.  For if passenger rail isn’t heavily subsidized by the taxpayer the price of a ticket would be so great that no one would buy them.  Except the very rich train enthusiast.  Who is willing to pay 3 times the cost of flying and take about 12 times the time of flying.

There are private freight railroads.  Private passenger airlines.  And private air cargo companies.  Because they all can attract customers without government subsidies.  Passenger rail, on the other hand, can’t.  Because of the massive costs to build and maintain railroad tracks.  With high-speed rail being the most expensive track to build and maintain.  Making it the most cost inefficient way to move people.  Requiring massive government subsidies.  Either for the track infrastructure.  Or the electric power that powers high-speed rail.

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Britain is looking to sell the Royal Mail to escape Out of Control Pension Costs

Posted by PITHOCRATES - July 13th, 2013

Week in Review

The United States Postal Service isn’t the only postal service flirting with the idea of privatization.  So is the Royal Mail.  And, predictably, some are not happy about making government jobs like private sector jobs (see Royal Mail privatisation ‘will lead to soaring prices and job losses while taxpayer keeps debts’ by Graham Hiscott posted 7/11/2013 on the Mirror).

STAMP prices will soar and jobs will be slashed when the Royal Mail is privatised.

The warning came from critics as the Government announced its controversial plan to kick off a £3billion sale.

It is feared the sell-off could see a big chunk of the company snapped up by foreign investors, with investment banks raking in millions in fees.

So while the Treasury pockets a pre-election windfall, the taxpayer will still be paying for Royal Mail’s £12billion pension deficit.

Chuka Umunna, Labour’s Shadow Business Secretary, said it amounted to “nationalising its debts and privatising its profits”.

This pretty much says it all.  Pension costs are so out of control that the only way the Royal Mail can survive is with huge government subsidies.  And if they cut those subsidies they will have to pay for those pensions with the revenue from stamps.  Which means stamp prices will have to rise to replace those lost subsidies.  So these government workers can continue to enjoy those generous pensions.

Britain has an aging population.  Like most of the developed world.  People are living longer.  Giving them more time to suffer more diseases.  Raising the cost of pensions and health care for retirees.  Ponzi schemes like state pensions worked when there was an expanding population growth rate with more people entering the workforce than were leaving it.  But those days are long gone.  As are the days of defined benefit pension plans.  Where today they only result in unfunded pension obligations.  And companies like the United States Postal Service and the Royal Mail unable to pay their bills.

The reason why unions resist the privatization is that these business models cannot survive in the private sector.  For their labor costs (pay and benefits) far exceed anything available in the private sector.  And the only way they can keep those generous pay and benefit packages is by having the taxpayer subsiding their cost.  But if they go private and it costs $7.50 to mail a utility payment people aren’t going to mail their utility payments anymore.  And people will see the true cost of union labor.  Which means either unions must match the pay and benefit packages they have in the private sector.  Or they will lose all their union jobs.  Because no one is going to pay $7.50 to mail a letter.

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Solar Power grows at 76% Annual Growth but you wouldn’t know it by the Power it Adds to the Grid

Posted by PITHOCRATES - March 16th, 2013

Week in Review

The government subsidized solar power industry is growing like gangbusters.  Thanks to all those government subsidies.  For it appears if it weren’t for that there would be no solar power industry.  Except in space.  Where it is the best choice.  But here on earth?  It just doesn’t work that well (see U.S. Solar Market Grew 76% in 2012 by Ucilia Wang posted 3/14/2013 on Forbes).

Imagine 16 million solar panels blanketing large pieces of land and covering roofs of homes and businesses. That was the number installed in the United States in 2012, when 3.3 gigawatts of the solar equipment materialized to representing a 76% annual growth.

Cumulatively, the country had about 7.2 gigawatts of solar generation capacity from solar panels by the end of 2012, according to a report by GTM Research the Solar Energy Industries Association. That capacity doesn’t mean consumers could tap that much power from solar power projects. The amount of production depends on whether the sun is up and unobstructed by clouds.

So how much useable power do we get from that installed 7.2 gigawatts?  Well, to determine that we must look at the capacity factor.  Which is the ratio of actual power to potential power over a period of time.  According to the Carnegie Mellon Electricity Industry Center they calculated the capacity factor for a solar array in Arizona.  A pretty sunny place.  They found the capacity factor to be 19%.  So if we use that we can calculate the useable power from that installed 7.2 gigawatts.  Which comes to approximately 1.4 gigawatts (0.19 X 7.2 gigawatts).  Now, assuming a house with a 200-amp, 240-volt service uses about 30 amps on average over a period of time that 1.4 gigawatts could power maybe 190,000 homes.  Of course, this power can only go to the grid when the sun is shining.  And in Arizona that means the air conditioners are running at maximum capacity.  So if we assume these houses are consuming 100 amps on average when the sun is shining this 1.4 gigawatts may only power 57,000 homes.

The U.S. is one of the fast-growing solar energy markets in the world, thanks in part to the generous federal tax benefits, loans and grants to support solar technology development and deployment. On top of that, over half of the states require their utilities to sell an increasing amount of renewable electricity.

The declining prices for solar panels in recent years have helped to make them more attractive. The fall — 28% for wholesale silicon solar panel prices — came largely as a result of a global oversupply of solar panels and a fierce competition. While project developers and consumers benefit from the lower prices, dozens of manufacturers have filed for bankruptcy or needed financial rescues to stay alive.

According to the U.S. Census there were 132,312,404 housing units in 2011.  So that massive investment in government subsidized solar power can at best in the southern United States (where it is very sunny) power only 0.043% of the houses in the country.  While providing no power for our businesses or institutions.  Or our street lighting.  Which, of course, it can’t.  As the streetlights only come on when solar power doesn’t work.  When it’s dark.  Because the sun isn’t shining.

Which explains why solar power is so heavily subsidized by government.  Because it is so bad an alternative to coal-fired power plants that no private investors will provide the financing for these boondoggles.  Which is typical for any government investment.  For if there were any value in it private investors would be pouring money into it.  But they’re not.  Because solar power is a bad investment.  For it is such a poor producer of energy.  It has its applications.  Such as in space.  Where it is a cheaper alternative than running power lines to the International Space Station from a coal-fired power plant on earth.  But back on terra firma we are far better off running power lines from coal-fired power plants than from solar arrays.  Because coal is good.  Coal is right.  Coal works.  All of the time.  Even when the sun isn’t shining.

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The Government provides more Solar Power Subsidies to Encourage Bad Investments into Solar Power

Posted by PITHOCRATES - October 14th, 2012

Week in Review

When it comes to electric power the smart money is on coal.  So of course our government chooses solar (see US gov’t sets aside 285,000 acres for solar, wind development posted 10/12/2012 on EDI).

The US government has finalized a plan to encourage new solar-energy projects on federal lands in several western states. The area covered by the new agreement is 285,000 acres, consisting of seventeen “solar energy zones.” considered to be the best locations for solar development…

The Obama administration has authorized the development of 10,000 megawatts of solar, wind and geothermal projects. These would provide enough energy to power more than 3.5 million homes, said Salazar. According to Salazar, solar and wind energy production has doubled since Obama took office.

You know what the federal government doesn’t have to encourage?  The building of coal-fired power plants.  In fact, the demand for the electric power a coal-fired power plant produces is so great that the government has to increase the cost of building and operating them to discourage people from building them.  Why?  To please President Obama’s liberal, environmental base.  Which includes a lot of wealthy donors.  The environmentalists don’t like coal or the cheap and reliable electric power it produces.  So they attack coal.  And encourage government to subsidize solar power.  Because solar power is not cheap or reliable like the electric power produced by coal-fired power plants.  Which is why no one will build a solar power plant without massive government subsidies.

Power plants have capacity factors.  Which we calculate by dividing actual power produced by the maximum possible power a power plant can produce over a period of time.  A typical capacity factor for a coal-fired plant is approximately 90%.  Because all you need is fuel.  Unlike a solar power plant.  Which has a capacity factor of approximately 20%.  The reason why it’s so much lower than a coal-fired power plant is that solar power plants turn off every evening at dusk and turn back on at dawn.  Something you don’t have to do with coal.  Because you can burn coal all day long.  Even at night.  Which is when we use electric power the most.  To light our homes.  To run our air conditioners after work.  To power our televisions we watch after dinner.

So 10,000 megawatts is not likely to power 3.5 million homes.  Especially at night.  Unless they build a very expensive energy storage system to store the electric power they make during the day to use at night.  As long as no one needs any electric power during the day.  As you can see solar power is not what the government thinks it is.  It’s a novelty at best.  That is very, very expensive despite sunlight being free.  Why is it so expensive?  Because that 285,000 acres needs to be covered with solar panels.  And for this power to be useful at night there’s that aforementioned energy storage system.  All of this to provide what a coal-fired power plant can produce with about 30% the installed capacity of the solar power plant.  Which makes the logical and rational choice coal.  Not solar.  Yet our government chooses solar over coal.  Which tells us what?  Our government is neither logical nor rational.

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President Obama’s Green Energy Investment into Electric Cars is a Failure According to CB0

Posted by PITHOCRATES - September 22nd, 2012

Week in Review

Saving the planet with electric cars is a costly endeavor.  Part of the problem is that no one wants these cars.  Even with fat government subsidies.  Because people would rather have big SUVs, trucks and full-size sedans.  Vehicles that are useful.  Safe.  And have big gasoline engines in them that will always get you home.  Which is why the government’s green energy investment into the electric car industry will never deliver any of its promises (see U.S. electric car policy to cost $7.5 billion by 2019: CBO by Bernie Woodall and Deepa Seetharaman posted 9/20/2012 on Reuters).

U.S. federal policies to promote electric vehicles will cost $7.5 billion through 2019 and have “little to no impact” on overall national gasoline consumption over the next several years, the Congressional Budget Office said in a report issued on Thursday.

Consumer tax credits for buying electric vehicles, which can run as high as $7,500 per vehicle, will account for about 25 percent of the $7.5 billion cost, the CBO said.

The rest of the cost comprises of $2.4 billion in grants to battery makers and projects to promote electric vehicles as well as $3.1 billion in loans to auto companies designed to spur production of fuel-efficient vehicles.

“The more electric and other high-fuel-economy vehicles that are sold because of the tax credits, the more low-fuel-economy vehicles that automakers can sell and still meet the standards,” according to the report.

As a result, tax credits will have “little or no impact on the total gasoline use and greenhouse gas emissions of the nation’s vehicle fleet over the next several years.”

So auto makers are selling electric vehicles for two reasons.  Government subsidies.  And so they can sell more lower-fuel-economy and higher-polluting profitable vehicles.  The kind of vehicles the people want to buy.  And will buy without any government subsidies.  No one wants to buy the electric cars.  And the automakers can’t make any money selling the electric cars.  The only way any sales of electric cars happen is by transferring a large chunk of their cost to the taxpayers.  Against their will.  But, then again, that’s what government is for these days, isn’t it?  Going against the will of their constituents.

While drivers of these electric vehicles use less gasoline and emit less greenhouse gas such as carbon dioxide, the cost to the government can be high, the CBO found. The U.S. government will spend anywhere from $3 to $7 for each gallon of gasoline saved by consumers driving electric vehicles…

The CBO said an average plug-in hybrid vehicle with a battery capacity of 16 kilowatt-hours is eligible for the maximum tax credit of $7,500.

“However, that vehicle would require a tax credit of more than $12,000 to have roughly the same lifetime costs as a comparable conventional or traditional hybrid vehicle,” the CBO said.

And, the bigger the battery the greater the cost disadvantage for buyers of plug-in vehicles and conventional vehicles, the CBO said.

What happened to that laser-like focus on creating jobs?  That’s what President Obama said back in 2009.  And here we are in 2012 still suffering in the Great Recession.  Despite their Recovery Summer back in 2010.  The president is spending a lot of money.  Some $500 billion or more to the solar panel maker Solyndra now in bankruptcy.  As well as other green energy investments.  Including the investment into electric cars to wean us off of expensive gasoline.  While the cost of the subsidies for these electric cars will basically double the price of gasoline the rest of us pay (the price of the subsidy costs us as much as what gasoline costs us).

We’d be better off just paying for the expensive gasoline to put into the cars we want to buy.

But it’s worth the price to save the planet.  That’s what they say.  But I can’t help but notice that the planet has never been in worse shape since we started trying to save it.  We know volcanic eruptions can lower the earth’s temperature with the amount of smoke, soot, ash and sulfur dioxide they put into the atmosphere.   Periods of global cooling correlate to active volcanic activity.  So that’s a given.  We know it for a fact.  So is it any coincidence that when we started putting scrubbers onto our coal-fired power plants to remove these same things from our smoke stacks that global temperatures began to rise?

Once upon a time we all burned coal in our houses for heat.  Coal-fired locomotives transported people and freight.  And every factory had a coal-fired steam engine.  We covered our cities in smoke, soot and ash from all the coal we burned.  But there was no global warming then like we have today.  Why?  Can it be that burning coal releases the same stuff volcanoes release when they erupt?  And cool the planet?  Perhaps.  If the global warming alarmists were right then the attack on coal and all the emission controls they mandated on our cars should have made the planet a chilly place.  Shortening our growing seasons.  And given us a famine or two along the way.  But that hasn’t happened.  Because the global warming alarmists have been warning us that the end of the world was only 3 years away for the last 30 years.  How much longer are we to quake in our shoes from their nonsense?

The earth is fine.  We need to stop listening to these people.  Because all they’re doing is transferring enormous sums of money from the private sector to the public sector.  To play their games.  And live comfortably.  While those of us paying the taxes and buying the things they make ever more expensive have to sacrifice our quality of life so these talentless alarmist hacks can live a comfortable elitist life at our expense.  And they’re laughing at us all the way to the bank.

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Car Company misleads People with their Deceptive Electric Car Ads

Posted by PITHOCRATES - August 25th, 2012

Week in Review

How do you sell an electric car?  You avoid telling too much of the truth (see Banned, electric car ad that was miles from reality: Vauxhall commercial forgot to mention model’s petrol engine by Sean Poulter posted 8/21/2012 on the Daily Mail).

For carbon-conscious drivers, the advert for an electric car with an impressive 360-mile range seemed too good to be true.

Unfortunately, it appears it was, as the real range of the electric batteries in the Vauxhall Ampera is a rather more modest 50 miles.

And to go beyond that, it relies on help from a somewhat less green source – a petrol engine…

Vauxhall insisted its claims about the Ampera were genuine and that once in ‘range extender mode’, it can indeed keep going for 360 miles…

The advert for the car – which costs just under £30,000, including a £5,000 Government grant – briefly showed the vehicle plugged into an electricity source…

Vauxhall insisted the Ampera is a truly electric car because the petrol engine does not drive the wheels, but acts as an on-board generator for the electric motor.

The US company also argued that the 360-mile claim was conservative and significantly understated the range achieved in vehicle tests in order to allow for ‘real world’ driving styles.

So the US company used a £5,000 (approximately $7,910 US) Government grant to advertise this car.  Something systemic in the electric car industry.  Government subsidies.  For they just won’t work without them.

Glossing over that petrol (i.e., gasoline) engine is pretty significant.  Because probably the biggest thing holding back all-electric car sales is range anxiety.  Will a driver be able to make it home before their battery runs out of charge?  Which is really not an issue for someone with a 20 minute roundtrip commute.  But a huge issue for someone who drives 25 minutes or more one way.  For once you arrive at your destination you have to find a receptacle to plug in your car.  And you probably won’t be able to go anywhere for lunch.  Unless you have a friend with a gasoline-powered car.  So imagine a person’s surprise if they bought what they thought was an all-electric car and marveled at their 360-mile range.  Never noticing the gasoline engine coming on.  And never buying gasoline.  Until their car coasts to a stop somewhere.  Away from home.  With no lights, radio or heat.  And probably in a unfamiliar neighborhood.

Unless you strip a car down to nothing but batteries you’re not going to get much more than a 50 mile range.  At least for now.  Because that’s about all current battery technology will get you.  Which is why no one is taking these all-electric cars on the family vacation.  Or to work.  The carbon-conscious will at best drive a gasoline-electric hybrid.  And drive most of their miles on gasoline.  But they will still have that smug look of satisfaction on their face because they know they are saving the planet by driving a hybrid.  Even though they may be burning just as much gas as they once did.  Unless they drive in the dark.  With no heat in the winter.  Or air conditioner in the summer.

Why was this car company not exactly being forthright in their ad?  Because they want to sell their cars.  In a market where so few people want to buy what they’re selling.  So they embellish the truth in advertising a wee little bit.  But it sure makes one wonder what they tell these people when they’re in their showroom.  Because it is really hard to believe that someone would actually buy a hybrid thinking it was an all-electric car.  I mean, these people are probably going to look under the hood.  And they may even ask if the car is an all-electric car.  Like that ad led them to believe.  What then?

Could there be another reason?  One that hasn’t anything to do with people buying their cars?  Could this just have been a way to help obtain further government subsidies?  By pointing out great advances they’re making in their battery technology.  As well as showing how much more was possible with just a little more government funding.  Perhaps.  It sure seems more plausible than lying to customers.  Who are generally smart.  As opposed to government bureaucrats.

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With Further Escalating Train Fares it may be Cheaper to Drive in Britain than to Take the Train

Posted by PITHOCRATES - August 18th, 2012

Week in Review

Britain privatized their trains in the Nineties.  But they still have to subsidize them.  Despite incredibly high rail fares (see Rail commuters face ‘Great Train Robbery’ as fares rocket by up to 11% with some season tickets costing £6,000 by Ray Massey posted 8/14/2012 on the Daily Mail).

Rail passengers face fare rises of up to 11 per cent next year after a higher-than-expected jump in the inflation rate.

The increases will add hundreds of pounds to annual season tickets, with some commuters seeing season ticket fares to London crash through the £6,000 barrier.

And there is no end in sight to the inflation-busting hikes, as ministers admitted they will continue every year until at least 2015.

Train company bosses, whose firms will pocket much of the extra cash, passed the buck by insisting it was not their decision to hike the fares – it was government policy.

From next January 1, train firms can raise their ‘regulated’ fares – which include rush-hour commuter travel, season tickets and off-peak fares – by three percentage points more than the RPI inflation figure for July, which was revealed yesterday as 3.2 per cent.

That means commuter and other ‘regulated’ fares will be allowed to rise by 6.2 per cent…

But passenger groups, campaigners and unions said it was a ‘rip-off’ and yet another ‘Great Train Robbery’ that would benefit only rail bosses and their bonus pots at the expense of hard-pressed travellers and commuters…

By 2015 the annual cost of commuting to London from Birmingham will have soared from £9,004 to £10,663, which accounts for 28 per cent of the average London salary, says the campaign group.

That’s a lot of money, £10,663.  Based on today’s exchange rate that comes to about $16,741 US.  Or about $321.94 each week.  So how much gas would that buy?  A lot.  Who pumps $321.94 of gas into their tank each work week (5 days)?  I’m guessing not many.  If we did what would that get us?  Well, let’s make a few assumptions.  If gas was $6/gallon that would get us 53.7 gallons of gasoline.  Or as they say on the other side of the pond, petrol.  If you’re driving something shoe boxy like they do in Europe that gets 35 miles per gallon on the highway that would let you travel 1,878 miles each work week.  Or 376 miles each work day.  Or 188 miles one way.  And another 188 miles back home.  So how far are Birmingham and London from each other?  Approximately 120 miles.  Which means ‘saving money’ by using mass transit will cost more than driving a car.  As you can drive a distance three times longer for the same cost as the train.

The above figures don’t even take into account government subsidies.  So on top of these incredible rail fares are government subsides.  Making passenger rail even less of a bargain.

Trains are simply not the bargain people claim them to be.  Other than hauling heavy freight.  Where only a ship can compete with them.  But passenger rail?  It’s a money loser.  Requiring heavy government support.  Or astronomically high passenger fares.  Or both.  Why are they so expensive?  Because they require so much infrastructure.  And enormous amounts of people to make them work.  Which is why in the transportation industry they are least affected by spikes in fuel costs.  Because unlike trucking, bussing and flying, fuel is not their greatest expense.  Because everything else costs so much more than fuel.

This is something to keep in mind whenever politicians talk about building passenger rail.  Especially high-speed rail.  Very few of these can pay for themselves.  Freight railroads can operate at a profit for they are the best alternative to transporting heavy freight.  But when it comes to transporting passengers there is always a better alternative.  And a more cost efficient alternative.  From flying to driving to taking the bus.

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Poverty is Down in Chile thanks to Job-Creation and Subsidies paid for by those Newly Created Jobs

Posted by PITHOCRATES - July 29th, 2012

Week in Review

Job-creation reduces poverty in Chile.  And it goes back to the Seventies.  But you wouldn’t know it by reading this (see Poverty indicators decline posted 7/25/2012 on Economist Intelligence Unit).

Improvements in Chile’s poverty indicators in the past two decades are back on track after a setback in 2009. The proportion of the population living in poverty fell from 15.1% in 2009 to 14.4% in 2011, according to the latest Caracterización Socioeconómica Nacional (Casen) household survey. There was also a substantial drop in the proportion of people living in extreme poverty, from 3.7% in 2009 to 2.8% in 2011. The main factor explaining these trends was the strong level of job-creation recorded in Chile in the past two years, but well-targeted government subsidies also played an important role…

Within the IEF programme, the monthly bonuses under the “dignity” component, worth Ps6,000 (US$12.5) per person in the household, plus Ps13,000 per household, are targeted at those in extreme poverty, and will be unconditional. Beyond that, if the children in the household attend their mandatory healthcare check-ups and achieve a school attendance rate of at least 85%, the household will receive a monthly bonus of Ps8,000 per child. This yields Ps53,000 per month to a household with two adults and two children satisfying these conditions, or US$97 per month for one with one adult and two children.

Yes, job-creation was a strong factor.  Targeted government subsidies?  Not really.  First of all, you can’t do targeted subsidies if you don’t have a lot of jobs creating a lot of tax revenue.  You can have jobs without subsidies but you can’t have subsidies without jobs.  Because jobs pay for subsidies.

Paying people to have children?  Where have I heard this before?  Oh, yes.  LBJ’s Great Society.  That gave us AFDC.  Aid to Families with Dependent Children.  That destroyed poor families by encouraging single mothers to have more babies to collect more benefits.  Allowing men to father as many children as they pleased with as many women as they pleased because they don’t have to pay to raise their children.  The state became the father to these children (and husband to these women).  Raised them in crime-infested housing projects.  And sent them to broken, substandard schools.  Which these kids dropped out of and joined gangs.  Yeah, AFDC worked so well that Bill Clinton, a Democrat, reformed welfare to fix this ill-conceived policy.  Because even he knew you can’t fix problems by simply throwing money at them.  Jobs were better.  And families.  Where a child grew up with a mother and a father to nurture and discipline the child.  To put them on the right path.  Something the state just couldn’t do.

Missing from this piece is any mention of Milton Friedman.  The Chicago Boys.  El Ladrillo.  The economic plan put together by the Chilean economists who studied at the University of Chicago.  In the Chicago school of economics.  It was so thick they called it The Brick.  Or El Ladrillo.  Milton Friedman and these great Chilean economists, the Chicago Boys, turned the Chilean economy around.  The dictator Augusto Pinochet even invited Milton Friedman down to Chile to help.  Friedman went.  Gave some advice.  And Pinochet followed it.  Turning their horrible economy around (see Monetarism, Laissez-Faire Capitalism, Augusto Pinochet, Chile, Hyperinflation, El Ladrillo, Chicago Boys, Milton Friedman and Miracle of Chile).

He ditched the mercantilist policies.  Embraced laissez-faire capitalism.  Privatized the state industries.  Established free trade.  Cut government spending.  And stopped printing money.  Ending the hyperinflation.  Replacing it with a strict monetary policy… Friedman’s monetarism turned the Chilean economy around.  Creating a prosperous market economy.  With a growing middle class.  The strong economic growth led to some healthy tax revenue.  Which in later years funded antipoverty programs.  The Miracle of Chile even replaced the military junta with a democratic government.  Chile now has one of the healthiest and freest economies in the world.

It was these sound economic policies that created the Miracle of Chile in the Eighties.  Not targeted subsidies.  Real economic growth provides prosperity.  People with jobs.  Who earn money to spend in the economy.  And pay taxes.  That’s the way it always works.  Jobs first.  Then prosperity.  And then the tax revenue that funds government spending.  It just doesn’t work the other way around.  If it did Greece wouldn’t be in the trouble it’s in.  The United States wouldn’t still be lingering in the Great Recession.  And President Clinton wouldn’t have reformed welfare to end the family killer AFDC.  No.  Excessive government spending only creates great debt.  High inflation.  And a permanently impoverished underclass.  At least this is what history has shown us.

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