For an Idea of what National Health Care would be like just ride Metro-North

Posted by PITHOCRATES - February 23rd, 2014

Week in Review

People don’t want national health care.  Which is why President Obama lied when he said “If you like your health care plan, you can keep it.”  Because if he told the truth and told people they would lose the health care plans and doctors they liked and wanted to keep they would have opposed the Affordable Care Act (aka Obamacare) with a passion.  For they would have seen the Affordable Care Act as nothing but a prelude for national health care.  A health care system run by government.  And we know how well government runs things (see The Perils of Metro-North by Lynnley Browning posted 2/20/2014 on Newsweek).

The high-profile trains, run by the state of New York entity Metro North Commuter Railroad, convey middle-class commuters but also a sizable chunk of the 1 percent, all along a 74-mile stretch between New Haven, Conn., and New York City — to hedge funds in Connecticut and to global banks, consulting, design and advertising firms in Manhattan. But these days, the rail’s increasingly delay-plagued service to one of the planet’s largest metropolises seems less an odd contrast of Third World and First World and more a taste of Dante’s Inferno…

Epic frustration and stress have reached an inflection point for the estimated 136,600 weekday riders on Metro-North’s New Haven Line, the transportation lifeblood of America’s monied and professional class living in Connecticut and working in New York (though some riders reverse commute to hedge funds in Greenwich and banks in Stamford). Long plagued by outdated cars, sketchy, aging tracks and accusations of mismanagement, the commuter rail has seen its dwindling reputation tarnished further in recent months by mishaps and delays, some lasting hours in freezing, unheated cars…

The entire line needs $3.6 billion in urgent repairs, according to the Regional Plan Association, an independent think tank.

Trash and piles of metal parts line many tracks. Smelly cars dating to the 1970s shake passengers in stiff seats from side to side like livestock. Floors are perpetually grimy, and train cars are in short supply. Expensive equipment sits idle. “One day the toilet flooded and the water was just seeping into the vestibule,” recalls Noelle Villanueva, a trader at First New York Securities who commutes from Fairfield, Conn., a large commuter town.

Engineers – the people driving the trains – occasionally “overshoot” their stops and, if the tracks allow it, have to back up, leaving commuters like Lamorte to wonder if the people behind the wheel are asleep, or drunk. Trains come in unannounced on the wrong platform, sending riders to scamper like voles across crumbling overhead passageways to the correct platform. A 117-year-old bridge spanning the Norwalk River, in Norwalk, Conn., sports gaping holes beside the tracks. “They have a rescue boat, but the guy’s usually 1,000 feet away, fishing, so you’ll be dead by the time he gets to you,” says Bill, an ironworker for Metro-North. (He declined to give his last name, citing a fear of retaliation…)

Commuters are increasingly wondering when someone else might die. Late last July, as temperatures soared near 100 degrees, a train near Westport broke down in the afternoon, leaving passengers, including several pregnant women, trapped in unairconditioned cars whose doors and windows would not open…

The lack of communication – think digital signs at stations that almost uniformly announce “Good service” – irks riders, some of whom pay $400 a month and more.

Passenger rail is a horrible economic model.  The costs are so great that it is virtually impossible for it to work without government subsidies.  But in places like the island of Manhattan there are few viable transportation options.  For though costly it can move a lot of people into and out of a very congested city.  But the problem with passenger rail in big cities is all the other big city problems that come with it.  Unions, lack of competition, corruption, etc.  It’s so bad that even when some of the 136,600 weekday riders pay $400 a month (the equivalent of a car payment) the money is so mismanaged that wear and tear adds up on the system over time to the tune of $3.6 billion.  Which is why people don’t want national health care.  They don’t want a health care system operated like Metro-North.  Which is why they are so mad at President Obama for his lie about Obamacare.  And taking away the health care plans and doctors they liked and wanted to keep.


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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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The Poor Economic Model of Passenger Rail

Posted by PITHOCRATES - November 25th, 2013

Economics 101

The Amtrak Crescent is about a 1,300 Mile 30 Hour Trip between New Orleans and New York City

An Amtrak train derailed this morning west of Spartanburg, South Carolina.  Thankfully, the cars remained upright.  And no one was seriously injured (see Amtrak Crescent with 218 aboard derails in SC by AP posted 11/25/2013 on Yahoo! News).

There were no serious injuries, Amtrak said of the 207 passengers and 11 crew members aboard when the cars derailed shortly after midnight in the countryside on a frosty night with 20-degree readings from a cold front sweeping the Southeast.

This is the Amtrak Crescent.  About a 30 hour trip one way.  It runs between New Orleans and New York City.  Approximately 1,300 miles of track.  Not Amtrak track.  They just lease track rights from other railroads.  Freight railroads.  Railroads that can make a profit.  Which is hard to do on a train traveling 1,300 miles with only 207 revenue-paying passengers.

People may board and leave the train throughout this route.  But if we assume the average for this whole trip was 207 and they were onboard from New Orleans to New York City we can get some revenue numbers from the Amtrak website.   We’ll assume a roundtrip.  They each have to pay for a seat which runs approximately $294.  Being that this is a long trip we’ll assume 20 of these people also paid an additional $572 for a room with a bed and a private toilet.  Bringing the total revenue for this train to approximately $72,298.  Not too shabby.  Now let’s look at the costs of this train.

Diesel Trains consume about 3-4 Gallons of Fuel per Mile

If you search online for track costs you will find a few figures.  All of them very costly.  We’ll assume new track costs approximately $1.3 million per mile of track.  This includes land.  Rights of way.  Grading.  Bridges.  Ballast.  Ties.  Rail.  Switches.  Signals.  Etc.  So for 1,300 miles that comes to $1.69 billion.  Track and ties take a beating and have to be replaced often.  Let’s say they replace this track every 7 years.  So that’s an annual depreciation cost of $241 million.  Or $663,265 per day.  Assuming 12 trains travel this rail each day that comes to about $55,272 per train.

Once built they have to maintain it.  Which includes replacing worn out rail and ties.  Repairing washouts.  Repairing track, switches and signals vandalized or damaged in train derailments and accidents.  This work is ongoing every day.  For there are always sections of the road under repair.  It’s not as costly as building new track but it is costly.  And comes to approximately $300,000 per mile.  For the 1,300 miles of track between New Orleans and New York City the annual maintenance costs come to $390 million.  Or $1 million per day.  Assuming 12 trains travel this rail each day that comes to about $89,286 per train.

Diesel trains consume about 3-4 gallons of fuel per mile.  Because passenger trains are lighter than freight trains we’ll assume a fuel consumption of 3 gallons per mile.  For a 1,300 mile trip that comes to 3,900 gallons of diesel.  Assuming a diesel price of $3 per gallon the fuel costs for this trip comes to $11,700.  The train had a crew of 11.  Assuming an annual payroll for engineer, conductor, porter, food service, etc., the crew costs are approximately $705,000.  Or approximately $1,937 per day.  Finally, trains don’t have steering wheels.  They are carefully dispatched through blocks from New Orleans all the way to New York.  Safely keeping one train in one block at a time.  Assuming the annual payroll for all the people along the way that safely route traffic comes to about $1 million.  Adding another $2,967 per day.

Politicians love High-Speed Rail because it’s like National Health Care on Wheels

If you add all of this up the cost of the Amtrak Crescent one way is approximately $161,162.  If we subtract this from half of the roundtrip revenue (to match the one-way costs) we get a loss of $88,864.  So the losses are greater than the fare charged the travelling public.  And this with the freight railroads picking up the bulk of the overhead.  Which is why Amtrak cannot survive without government subsidies.  Too few trains are travelling with too few people aboard.  If Amtrak charged enough just to break even on the Crescent they would raise the single seat price from $294 to $723.  An increase of 146%.

Of course Amtrak can’t charge these prices.  Traveling by train is a great and unique experience.  But is it worth paying 80% more for a trip that takes over 7 times as long as flying?  That is a steep premium to pay.  And one only the most avid and rich train enthusiast will likely pay.  Which begs the question why are we subsidizing passenger rail when it’s such a poor economic model that there is no private passenger rail?  Because of all those costs.  Congress loves spending money.  And they love making a lot of costly jobs.  And that’s one thing railroads offer.  Lots of costly jobs.  For it takes a lot of people to build, maintain and operate a railroad.

Which is why all politicians want to build high-speed rail.  For it doesn’t get more costly than that.  These are dedicated roads.  And they’re electric.  Which makes the infrastructure the most costly of all rail.  Because of the high speeds there are no grade crossings.  Crossing traffic goes under.  Or over.  But never across.  And they don’t share the road with anyone.  There are no profitable freight trains running on high-speed lines to share the costs.  No.  Fewer trains must cover greater costs.  Making the losses greater.  And the subsidies higher.  Which is why politicians love high-speed rail.  It’s like national health care on wheels.


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Power Outage stranding Electric Trains show the need for Coal and Oil

Posted by PITHOCRATES - September 29th, 2013

Week in Review

There are few more costly ways to move people than by train.  Running a passenger train is incredibly expensive.  With the biggest cost in maintaining all the infrastructure before point A and point B.  Track, signals, rights-of-way and people.  Lots and lots of people.  To build this infrastructure.  To maintain this infrastructure.  With electric trains requiring the most costly infrastructure of all.  Especially high-speed trains.  These costs are so great that they are greater than their fuel costs.  Unlike the airlines.  That provide a much more cost-efficient way to move people.

Trains are slower than planes.  And they make a lot of stops.  So they appeal to a small group of users.  So few travel by train that it is impossible to charge a ticket price that can pay for this infrastructure that people can afford.  Which is why governments have to subsidize all passenger rail except for maybe two lines.  One Bullet line in Japan.  And one high-speed line in France.  Governments pay for or subsidize pretty much every other passenger train line in the world.  Which they are only more willing to do because those ‘lots and lots of people’ are union workers.  Who support their friends in government.

So governments build passenger rail lines more for political reasons than economic.  For passenger rail is bad economics.  In a highly dense city, though, they may be the only option to move so many people.  But even then the ridership can’t pay for everything.  So it requires massive subsidies.  Worse, by relying on electrified trains so much these rail lines are subject to mass outages.  Unlike diesel electric trains.  Trains that don’t need such a costly infrastructure as electric trains do.  And with a full tank of diesel they can move people even during a large-scale power outage.  Like that currently happening with Con Edison (see Stranded NYC Commuters Ask Why Metro-North’s Power Failed by Mark Chediak & Priya Anand posted 9/27/2013 on Bloomberg).

Less than a year after Consolidated Edison Inc. (ED) left 900,000 customers in the dark during Hurricane Sandy, the utility faces the wrath of stranded commuters over a power failure that has crippled trains from New York to Boston.

Con Edison, based in New York, has warned it may take weeks to restore electricity to the Metro-North Railroad’s busiest line, which serves Connecticut and parts of suburban Westchester County. An electrical fault cut power on a feeder cable while an alternate was out of service for improvements…

The latest high-profile power failure for Con Edison follows Sandy, the worst storm in the company’s history, which brought flooding that left lower Manhattan without power for days. A few months before Sandy, New York Governor Andrew Cuomo, a Democrat, stepped in to resolve an employee lockout by the company that led to protests outside the Upper East Side home of Kevin Burke, the chairman and chief executive officer…

The rail operator is running buses and diesel-powered trains to accommodate no more than a third of the New Haven route’s regular ridership…

The power failure also affected Northeast Corridor passenger-rail service, as Amtrak canceled its Acela Express trains between New York and Boston through Sept. 29.

How about that.  Dirty, filthy, stinky diesel comes to the rescue.  Refined from petroleum oil.  As much as people hate it they can’t live without it.  No matter how hard they try.

This is what you can expect when you wage a war on reliable and inexpensive coal.  Pushing our power provides to become green only raises the cost of electric power generation.  Disconnecting coal-fired power plants from the grid removes more reliable power while replacing it with less reliable power.  And forcing power companies to invest in renewable power reduces their margins.  As they have to maintain their entire electric distribution system even if everyone has a solar power at home.  Because solar power won’t turn on your lights once the sun goes down.  And windmills won’t spin on a calm days.  So while power companies have to maintain their systems as if there is no solar or wind power they can’t bill for that capacity when the people get their power from renewable sources.  So they have little choice but to cut costs.  Leading to conflict with the unions.  And making an aging infrastructure go longer without maintenance.

You can’t have it both ways.  You can’t wage a war on coal and oil without getting costlier and less reliable power.  If you want lower-cost and more reliable power than you use coal and oil.  If you want to pay more for less reliable power then you can’t bitch when the trains stop running.  And the more we move away from coal the more our train will stop running.


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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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India seeking Private Railway Investment to fund Modernization and Capacity Addition face Union Opposition

Posted by PITHOCRATES - November 24th, 2012

Week in Review

India had an explosion of economic growth as they unleashed free market activity.  So much that their infrastructure is struggling to keep up with it.  Especially their railways (see Union Cabinet okays private sector investment in railways by Mahendra Kumar Singh posted 11/23/2012 on The Times of India).

Desperate to attract private investment in the cash-strapped railways, the Cabinet on Thursday cleared the state-run transporter’s plan to rope in the private sector for building new rail lines and plants, and augment capacity, a move that was red-flagged by the unions.

With the policy in place, the railways will be able to get the private sector to connect ports, mines and industrial plants with the rail network by allowing them to invest in laying the tracks for last-mile connectivity. The move is expected to lower the transportation cost and help evacuate minerals, coal and finished products from the production centres…

The move comes as the railways, in the absence of fare increase, has failed to generate resources for funding modernization, leave alone capacity addition despite successive rail ministers adding new trains to appease their constituency. In fact, it has repeatedly failed to meet the targets…

Even this time, the unions are opposing any attempt to hand over operation and maintenance to private players, which could deter investors looking to enter the BOT space for building new lines.

That’s a pity.  For it’s those operation and maintenance costs that consume the capital that they otherwise could use to fund modernization and capacity addition.

In the US there are two types of railways.  Those that make money.  And those that lose money.  Those that make money are privately owned.  Those that lose money are publicly owned.  Every subway, commuter train and Amtrak train loses money because of high operating and maintenance costs.  For the usual reasons.  High pay, pensions and health care costs for active workers and retirees.  While the heavy freight railways make money.  Despite their high operating and maintenance (all union) costs.  For there is no better alternative to moving heavy freight across land.  While every other way to move people (bicycle, motorcycle, car, bus, ship, plane, etc.) is a more cost efficient way to move people than by train.

The freight railways in the US are a modern marvel.  Moving so much freight that main line rails are like polished chrome.  While the best passenger train still pulls onto a siding to let a money making freight train pass.  Clearly showing who makes money.  And who doesn’t.  As well as the difference between a private sector union and a public sector union.  One has accountability.  The other doesn’t.  Customers moving freight have choice between rail shippers.  While people traveling by train have no choice.  The freight railroads have to be able to stay in business by being competitive.  While the passenger railways just keep raising fares.  Or beg for more taxpayer subsidies.  Which is why public sector workers don’t want to privatize their industries.  Because they don’t want to be accountable.  Or work within budgets.  Like everyone in the private sector does.  Including their union brethren in the private sector.  Who often don’t live as comfortably as their public sector brethren live.

If India is to continue her move into a free market economy she needs to privatize her freight railways.  Which could easily become and stay state of the art.  While biting the bullet on her passenger rail that probably will never make enough money to fund modernization or capacity addition.  But at least the money-making private railways can help bolster the economy.  Producing greater tax revenue for investment in the black hole that is passenger rail.


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Amtrak can’t make a Profit on a Cheeseburger they sell at $9.50

Posted by PITHOCRATES - October 27th, 2012

Week in Review

Poor Amtrak.  Always the example of government at its worst.  Subsidizing passenger rail when all private railroads gave up on it long ago.  Because you can’t make money on passenger rail.  So what does the government do?  They furnish a service that no one is demanding.  Pouring billions of tax dollars into a failed economic model to desperately try to keep it afloat.   And Amtrak still loses money.  Despite selling cheeseburgers at $9.50 (see Amtrak’s food service: How to lose money on $9.50 cheeseburgers posted 10/23/2012 on The Economist).

JOHN MICA, the Republican chairman of the House Transportation and Infrastructure committee, has held many hearings on Amtrak, America’s government-run passenger rail company, over the past few years. Few, though, have drawn as much attention as an August discussion of—what else!—hotdogs and beer, when Mr Mica noted that, over the past three decades, Amtrak has not once broken even on its food offerings.

… Andrew Biggs at the American Enterprise Institute, a conservative think-tank, suggests that Amtrak’s labour costs are to blame.

If you follow that link you will see these numbers:

How do you lose $85 million per year selling $9.50 cheeseburgers, as Amtrak reportedly has?

One way is to pay Amtrak employees 19% more in salaries and benefits than comparable private sector workers.

… Amtrak salaries were on average 4% lower than private sector levels. However, benefits were 81% higher than private sector levels, including 19% more paid leave, 181% more generous health coverage, and 51% more generous retirement benefits. This helps explain why, over a 7-year period, Amtrak quit rates averaged 2-3% per year while private sector quit rates were 26-27%. No one wants to give up a job with so many perks.

Going back to the Economist article:

Labour costs are part of Amtrak’s problem, but they’re not the heart of it. That honour goes to the company’s unprofitable, unpopular, slow and generally indefensible long-haul routes…

Amtrak loses a lot of money providing food service on its long-haul routes because it loses a lot of money on almost everything related to those routes. Long-haul passenger train trips, especially at Amtrak speeds, are for hobbyists, people with lots of time and very restricted budgets, and people who are afraid of flying. No private-sector company without Amtrak’s political and legal obligations would continue to operate its long-haul routes without substantial changes.

All passenger rail loses money.  Except for, perhaps, the Bullet Train in Japan.  And the TGV in France.  These are the only two trains (at least they were at one time) that actually make a profit.  All other trains cannot survive without taxpayer subsidies.  Because rail transportation is very expensive.  Moving heavy freight by train works because it’s the most cost efficient option for heavy freight.  And sometimes the only option.  But moving people?  There are a lot of other options.  We can drive ourselves.  Take a bus.  Or fly.  All of which are more cost efficient than a train.  A commuter jet, for example, can make three round trips in the time it takes a train to make one trip.  One-way.  So that’s six revenue-producing trips for the commuter jet versus one for the train.  Which is a big reason passenger airlines can be profitable while Amtrak cannot.

Trains require an enormous amount of infrastructure.  And a lot of people.  All of this just to move a few passengers.  Who don’t weigh much.  But require a lot of space for their weight.  So your typical passenger train doesn’t carry a lot of people.  To recover the full cost of moving a passenger train from point A to point B in the ticket price would require a ticket price far greater than anyone would pay.  Which is why the government subsidizes passenger rail.  Because no one would board a train otherwise.

The long-haul trains add porters, bartenders, food staff, wait staff, etc.  Greatly adding cost to a money losing route.  Making these trains the biggest losers.  In large part to those employee benefits.  For those employees on the train. And those not on the train.  To all of those who help get it from point A to point B.  And the insufficient number of revenue-producing trips these trains make to cover those costs.


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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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Passenger Rail losing Money in Vancouver like they do Pretty Much Everywhere

Posted by PITHOCRATES - April 8th, 2012

Week in Review

Governments love trains.  Not because they’re good economic models.  They’re not.  Unless you’re hauling heavy freight.  No.  They love them because they are so costly.  And require lots of workers from union construction workers to union maintenance people to union operators.  And that’s a lot of votes.  Which is why governments love trains.  And hate gasoline and the freedom it gives their people (see TransLink revenue took a hit despite higher ridership, cross-border gas trips by Andrea Woo posted 4/5/2012 on The Vancouver Sun).

Ridership grew on Metro Vancouver’s public transit system last year, but wavering revenues from TransLink’s gas tax and lower-than-expected use of the Golden Ears Bridge contributed to the transportation authority’s deficit, according to its annual report…

TransLink attributes the shortfall to a 5.9-per-cent decrease in fuel sales volume last year, brought on by high gas prices. Drivers also likely fuelled up in neighbouring regions, such as the Fraser Valley Regional District and Whatcom County, according to the report…

The gas tax, which is applied to gasoline and diesel fuel sales in Metro Vancouver, rose two cents to 17 cents per litre on April 1.

Meanwhile, ridership grew 8.6 per cent in 2011, with a total of about 233 million paid trips during the year. That figure is 18.5 million more than the target goal for the year, according to the report…

“Although [the bridge] experienced growth in traffic volumes over 2010, it was not to the level assumed in the budget,” the report stated. “Another contributing factor to the lower revenues were the toll discounts provided in April and May for off-peak and weekend travel.”

The TransLink Golden Ears Bridge Task Force is working on a number of initiatives to increase revenue and “enhance customer convenience,” according to the report. They include a public awareness and education program, market research and real-time web monitoring of traffic conditions on the bridge.

Most passenger trains lose money.  Because they are poor economic models.  Due to the costly infrastructure they require.  Other than the Bullet Train in Japan and the TGV in France no passenger train can pay for itself.  And that’s only a total of two lines that can.  So all passenger rail requires government subsidies to survive.  And it’s no different in Vancouver.

In Vancouver they have a 17 cents gas tax per liter of gas.  Which is about $0.64 per gallon.  Which is pretty high.  If you fill up a 17 gallon gas tank that’s about $11 in taxes.  So if you’re wondering why gas is so expensive here’s your answer.  Of course if you’re going to penalize people for using gasoline people are going to use less gasoline.  Which can be a problem if you’re funding your passenger rail with gasoline taxes.

To reduce congestion on the Golden Ears Bridge they’ve offered discounts to cross during off-peak hours.  Because gas taxes are so high people take advantage of the lower toll and travel off-peak hours.  Which can be a problem if you’re funding your passenger rail with a tax on bridge tolls.  But they’re trying to “enhance customer convenience.”  And based on what they just said that can only mean finding a way to make people pay more.  By either removing the discount toll and increasing congestion during peak hours.  Or increasing the toll.  Whichever they choose the result won’t enhance anyone but the taxing authority.

Perhaps they should cut the gas tax and the toll tax.  Which will encourage more gasoline purchases.  Increasing tax revenue even at the lower gas tax rate.  And making the streets so congested that people will avoid it by leaving their cars at home in favor of using passenger rail.  This increase in economic activity will translate into more sales and other taxes for the taxing authority. 

Counterintuitive, yes, for government officials.  But they should give it a try.  Better yet, in the future, they should just say ‘no’ to passenger rail and save themselves this headache in the first place.  And stick with busses.  Which are a far more successful economic model.


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High-Speed Rail will do what Planes can do, only for a lot, lot more Money

Posted by PITHOCRATES - October 3rd, 2011

There may be only two High-Speed Lines in the World that Actually Pay for Themselves

There won’t be high-speed rail any time soon.  Chalk up another one in the ‘lose’ column for Obama (see Senate: ‘No confidence’ in Obamarail by Barbara Hollingsworth posted 10/3/2011 on The Washington Examiner).

… the $100 million the Senate left as a “placeholder” is likely to be zeroed out by the House, Orski notes, effectively killing President Obama’s dream of a high-speed rail network throughout the U.S.

In February, the president asked Congress to appropriate $53 billion through 2018 to provide high-speed rail service. The $100 million is the Democrat-controlled Senate appropriations committee agreed to keep in the budget (by a voice vote) is a drop in the bucket.

“Senate appropriators have done more than merely declare a temporary slowdown in the high-speed rail program. They have effectively given a vote of ‘no confidence’ to President Obama’s signature infrastructure initiative,” Orski says.

You know, $53 billion was a little light to begin with to provide access to high-speed rail to 80% of all Americans.  So that $100 million placeholder obviously wasn’t going to pay for much of anything.  Not even the environmental impact studies.  At best it could maybe pay off a campaign donor or two.

“Their posture is understandable,” he added. “After committing $8 billion in stimulus money and an additional $2.5 billion in regular appropriations, the Administration has little to show for in terms of concrete results or accomplishments. Aside from an ongoing project to upgrade track between Chicago and St. Louis (a $1.1 billion venture that promises to offer a mere 48 minute reduction in travel time between those two cities), no significant construction has begun on any of the authorized rail projects.”

And the only really high-speed rail project in the works – a 220 mph, 160-mile, $67 billion bullet train between Los Angeles and San Francisco – is in trouble because of public opposition (a new poll found that two-thirds of likely voters in California are against it) and the fact that the cost estimates have doubled since 2008.

Orski reports that analysts now believe that the California high-speed rail project cannot and will not be built without a substantial federal subsidy – which is not likely to materialize.

Gee, I wonder where that $8 billion of stimulus funds went to.  Campaign donors?

Can NOT be built without federal subsidies?  You know why?  There may be only two high-speed lines in the world that actually pay for themselves.  One in France.  And one in Japan.  High-speed rail loses money.  Just like Amtrak.  Only more.  They’re just so incredibly costly to build.  And to operate.  To get them to pay for themselves you need numerous trains per hour.  Packed with paying customers.  And, preferably, few automobiles.

Private Railroads aren’t Building High-Speed because Passenger Rail is not Profitable.  High-Speed or Otherwise.

Japan is the home of the Bullet Train.  They ushered in high-speed rail.  To move the people of one of the most populous nations on the planet.  They are so crowded that they use 747s for commuter jets.  Now that’s population density.  Which is what you need to make high-speed passenger rail work.  Which is why the Tokaido route works (see The Difference Engine: Fast track to nowhere posted 5/20/2011 on The Economist).

OF ALL the high-speed train services around the world, only one really makes economic sense—the 550km (340-mile) Shinkansen route that connects the 35m people in greater Tokyo to the 20m residents of the Kansai cluster of cities comprising Osaka, Kobe, Kyoto and Nara. At peak times, up to 16 bullet trains an hour travel each way along the densely populated coastal plain that is home to over half of Japan’s 128m people…

The sole reason why Shinkansen plying the Tokaido route make money is the sheer density—and affluence—of the customers they serve. All the other Shinkansen routes in Japan lose cart-loads of cash, as high-speed trains do elsewhere in the world. Only indirect subsidies, creative accounting, political patronage and national chest-thumping keep them rolling.

This one Japanese high-speed rail line makes money because they pack them in like sardines.  Affluent sardines.  Who don’t need subsidized tickets.  So these trains can charge enough to cover their costs.  And with 16 packed trains an hour each way during peak time keeps these expansive rails nice and shiny.  And shiny rails produce enough revenue to cover costs.

California wants a share of that bullet-train hubris. Where Florida, Ohio and Wisconsin have turned down billions of federal dollars for high-speed rail, the Golden State has been pressing on with its $43-billion scheme to build a high-speed rail service from Los Angeles to the San Francisco Bay Area, with spurs eventually to San Diego, Sacramento and San Luis Obispo.

The irony is that California has the highest rate of car-ownership in the country, if not the world. It also, despite years of neglect, has one of the best road networks anywhere—certainly leagues ahead of Japan’s. On top of that, it enjoys a highly competitive network of budget airlines serving its main cities. The Los Angeles Times got it about right when it editorialised on May 16th that “California’s much-vaunted high-speed rail project is, to put it bluntly, a train wreck”.

Lots of cars, good roads and cheaper gas than in Japan.  That’s three strikes already against high-speed rail in California.  Will people leave their cars at home to pay more to be packed in like sardines and travel according to a train schedule instead of their own whim.  Which you can do with a car.  You want to go somewhere.  Just hop in the car and go.  That’s nice.  And convenient.  And you have no one coughing in your face.  Or groping you in the crowd.  Pretty nice benefits.  Especially if you’re a young lady.

And an expensive one at that. Between them, the federal government, municipals along the proposed route and an assortment of private investors are being asked to chip in some $30 billion. A further $10 billion is to be raised by a bond issue that Californian voters approved in 2008. Anything left unfunded will have to be met by taxpayers. They could be dunned for a lot. A study carried out in 2008 by the Reason Foundation, the Howard Jarvis Taxpayers Association and Citizens Against Government Waste put the final cost of the complete 800-mile network at $81 billion…

The problem in making the case for high-speed rail in California is that, though it is the most populous state in the union, there are simply not enough people packed into the 50-mile wide coastal strip that wends its way 350 miles from Los Angeles to San Francisco. Put it this way: the Shinkansen plying the Tokaido route have access to some 180,000 potential passengers per mile of high-speed track. Even by 2025, when California’s population is likely to have grown from today’s 38m to 46m or so, the number of people within the coastal strip is unlikely to exceed 85,000 per mile of track.

No wonder the Los Angeles Times called it a train wreck.  Lots of cars, good roads, cheaper gas and lower potential passenger density along the line.  No wonder they need federal subsidies.  It’s a black hole for money.  That’s why private railroads aren’t building these things.  They can’t make money with passenger rail.  High-speed or otherwise.

We should not Invest in Rail because Track is Expensive whereas Airspace is Free

Passenger rail is not a working business model.  They bleed money.  Which makes them very attractive to politicians.  That’s why they love them.  Because they know they will require more and more taxpayer money.  And they are always happy to raise taxes to pay for this public good that the public prefers not to have.

As can be seen, rail projects don’t happen fast.  So including high-speed rail projects in a stimulus bill wasn’t going to stimulate anything.  So why do it?  I don’t know.  Pay off a campaign donor or two?

Japan is built for high-speed rail.  When your cities are so crowded that they have capsule hotels you are a candidate for high-speed rail.  You have the population density that will pack trains like cans of sardines.  When you have vast tracks of open country you’re not a good candidate for high-speed rail.  The U.S. has vast tracks of open country.  And is therefore not a good candidate for high-speed rail.

We should not, then, invest in rail.  Americans will drive their cars for most trips.  And fly when it’s too long to drive.  For planes cost less per passenger mile to operate.  Because all of their infrastructure is at airports.  Unlike trains.  This is why air travel is cheaper than train travel.  Because track is expensive.  Whereas airspace is free.


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