Following the Tragedy at Lac-Mégantic shipping Crude Oil by Train in Canada will be more Costly

Posted by PITHOCRATES - April 27th, 2014

Week in Review

On July 6, 2013, a 4,701 ft-long train weighing 10,287 tons carrying crude oil stopped for the night at Nantes, Quebec.  She stopped on the mainline as the siding was occupied.  The crew of one parked the train, set the manual handbrakes on all 5 locomotives and 10 of the 72 freight cars and shut down 4 of the 5 locomotives.  Leaving one on to supply air pressure for the air brakes.  Then caught a taxi and headed for a motel.

The running locomotive had a broken piston.  Causing the engine to puff out black smoke and sparks as it sat there idling.  Later that night someone called 911 and reported that there was a fire on that locomotive.  The fire department arrived and per their protocol shut down the running locomotive before putting out the fire.  Otherwise the running locomotive would only continue to feed the fire by pumping more fuel into it.  After they put out the fire they called the railroad who sent some personnel out to make sure the train was okay.  After they did they left, too.  But ever since the fire department had shut down that locomotive air pressure had been dropping in the train line.  Eventually this loss of air pressure released the air brakes.  Leaving only the manual handbrakes to hold the train.  Which they couldn’t.  The train started to coast downhill.  Picking up speed.  Reaching about 60 mph as it hit a slow curve with a speed limit of 10 mph in Lac-Mégantic and jumped the track.  Derailing 63 of the 72 tank cars.  Subsequent tank car punctures, oil spills and explosions killed some 47 people and destroyed over 30 buildings.

This is the danger of shipping crude oil in rail cars.  There’s a lot of potential and kinetic energy to control.  Especially at these weights.  For that puts a lot of mass in motion that can become impossible to stop.  Of course, adding safety features to prevent things like this from happening, such as making these tank cars puncture-proof, can add a lot of non-revenue weight.  Which takes more fuel to move.  And that costs more money.  Which will raise the cost of delivering this crude oil to refineries.  And increase the cost of the refined products they make from it.  Unless the railroads find other ways to cut costs.  Say by shortening delivery times by traveling faster.  Allowing them an extra revenue-producing delivery or two per year to make up for the additional costs.  But thanks to the tragedy at Lac-Mégantic, though, not only will they be adding additional non-revenue weight they will be slowing their trains down, too (see Rail safety improvements announced by Lisa Raitt in wake of Lac-Mégantic posted 4/23/2014 on CBC News).

Changes to improve rail safety were announced Wednesday by federal Transport Minister Lisa Raitt in response to recommendations made by the Transportation Safety Board in the aftermath of the tragedy in Lac-Mégantic, Que.

The federal government wants a three-year phase-out or retrofit of older tank cars that are used to transport crude oil or ethanol by rail, but will not implement a key TSB recommendation that rail companies conduct route planning when transporting dangerous goods…

There are 65,000 of the more robust Dot-111 cars in North America that must be phased out or retrofitted within three years if used in Canada, Raitt said, adding, “Officials have advised us three years is doable.”  She said she couldn’t calculate the cost of the retrofits, but told reporters, “industry will be footing the bill…”

The transport minister also announced that mandatory emergency response plans will be required for all crude oil shipments in Canada…

Raitt also said railway companies will be required to reduce the speed of trains carrying dangerous goods. The speed limit will be 80 kilometres an hour [about 49 mph] for key trains, she said. She added that risk assessments will be conducted in certain areas of the country about further speed restrictions, a request that came from the Canadian Federation of Municipalities…

Brian Stevens head of UNIFOR, which represents thousands of unionized rail car inspectors at CN, CP and other Canadian rail companies, called today’s announcement a disappointment.

“This announcement really falls short, and lets Canadians down,” he told CBC News.

“These DOT-11 cars, they should be banned from carrying crude oil immediately. They can still be used to carry vegetable oil, or diesel fuel, but for carrying this dangerous crude there should be an immediate moratorium and that should have been easy enough for the minister to do and she failed to do that.

“There’s a lot of other tank cars in the system that can carry crude,” Stevens explained. “There doesn’t need to be this reliance on these antiquated cars that are prone to puncture.”

Industry will not be footing the bill.  That industry’s customers will be footing the bill.  As all businesses pass on their costs to their customers.  As it is the only way a business can stay in business.  Because they need to make money to pay all of their employees as well as all of their bills.  So if their costs increase they will have to raise their prices to ensure they can pay all of their employees and all of their bills.

What will the cost of this retrofit be?  To make these 65,000 tank cars puncture-proof?  Well, adding weight to these cars will take labor and material.  That additional weight may require modifications to the springs, brakes and bearings.  Perhaps even requiring another axel or two per car.  Let’s assume that it will take a crew of 6 three days to complete this retrofit per tank car (disassemble, reinforce and reassemble as well as completing other modifications required because of the additional weight).  Assuming a union labor cost (including taxes and benefits) of $125/hour and non-labor costs equaling labor costs would bring the retrofit for these 65,000 tanks cars to approximately $2.34 billion.  Which they will, of course, pass on to their customers.  Who will pass it on all the way to the gas station where we fill up our cars.  They will also pass down the additional fuel costs to pull all that additional nonrevenue weight.

Making these trains safer will be costly.  Of course, it begs this burning question: Why not just build pipelines?  Like the Keystone XL pipeline?  Which can deliver more crude oil faster and safer than any train can deliver it.  And with a smaller environmental impact.  As pipelines don’t crash or puncture.  So why not be safer and build the Keystone XL pipeline in lieu of using a more dangerous mode of transportation that results in tragedies like that at Lac-Mégantic?  Why?  Because of politics.  To shore up the Democrat base President Obama would rather risk Lac-Mégantic tragedies.  Instead of doing what’s best for the American economy.  And the American people.  Namely, building the Keystone XL pipeline.


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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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Steam Locomotive

Posted by PITHOCRATES - November 13th, 2013

Technology 101

The Steam Locomotive was one of the Few Technologies that wasn’t replaced by a Superior Technology 

Man first used stone tools about two and a half million years ago.  We first controlled fire for our use about a million years ago.  We first domesticated animals and began farming a little over 10,000 years ago.  The Egyptians were moving goods by boats some 5,000 years ago.  The Greeks and Romans first used the water wheel for power about 2,500 years ago. The Industrial Revolution began about 250 years ago.  James Watt improved the steam engine about 230 years ago.  England introduced the first steam locomotive into rail service about 210 years ago. 

In the first half of the 1800s the United States started building its railroads.  Helping the North to win the Civil War.  And completing the transcontinental railroad in 1869.  By 1890 there were about 130,000 miles of track crisscrossing the United States.  With the stream locomotives growing faster.  And more powerful.  These massive marvels of engineering helped the United States to become the number one economic power in the world.  As her vast resources and manufacturing centers were all connected by rail.  These powerful steam locomotives raced people across the continent.  And pulled ever longer—and heavier—freight trains.

We built bigger and bigger steam locomotives.  That had the power to pull freight across mountains.  To race across the Great Plains.  And into our cities.  With the chugging sound and the mournful steam whistle filling many a childhood memories.  But by the end of World War II the era of steam was over.  After little more than a century.  Barely a blip in the historical record.  Yet it advanced mankind in that century like few other technological advances.   Transforming the Industrial Revolution into the Second Industrial Revolution.  Or the Technological Revolution.  That gave us the steel that built America.  Electric Power.  Mass production.  And the production line.  None of which would have happened without the steam locomotive.  It was one of the few technologies that wasn’t replaced by a superior technology.  For the steam locomotive was more powerful than the diesel-electric that replaced it.  But the diesel-electric was far more cost-efficient than the steam locomotive. Even if you had to lash up 5 diesels to do the job of one steam locomotive.

The Hot Gases from the Firebox pass through the Boiler Tubes to Boil Water into Steam

The steam engine is an external combustion engine.  Unlike the internal combustion engine the burning of fuel did not move a piston.  Instead burning fuel produced steam.  And the expansion energy in steam moved the piston.  The steam locomotive is a large but compact boiler on wheels.  At one end is a firebox that typically burned wood, coal or oil.  At the other end is the smokebox.  Where the hot gases from the firebox ultimately vent out into the atmosphere through the smokestack.  In between the firebox and the smokebox are a bundle of long pipes.  Boiler tubes.  The longer the locomotive the longer the boiler tubes. 

To start a fire the fireman lights something to burn with a torch and places it on the grating in the firebox.  As this burns he may place some pieces of wood on it to build the fire bigger.  Once the fire is strong he will start shoveling in coal.  Slowly but surely the fire grows hotter.  The hot gases pass through the boiler tubes and into the smokebox.  And up the smoke stack.  Water surrounds the boiler tubes.  The hot gases in the boiler tubes heat the water around the tubes.  Boiling it into steam.  Slowly but surely the amount of water boiled into steam grows.  Increasing the steam pressure in the boiler.  At the top of the boiler over the boiler tubes is a steam dome.  A high point in the boiler where steam under pressure collects looking for a way out of the boiler.  Turned up into the steam dome is a pipe that runs down and splits into two.  Running to the valve chest above each steam cylinder.  Where the steam pushes a piston back and forth.  Which connects to the drive wheels via a connecting rod.

When the engineer moves the throttle level it operates a variable valve in the steam dome.  The more he opens this valve the more steam flows out of the boiler and into the valve chests.  And the greater the speed.  The valve in the valve chest moved back and forth.  When it moved to one side it opened a port into the piston cylinder behind the piston to push it one way.  Then the valve moved the other way.  Opening a port on the other side of the piston cylinder to allow steam to flow in front of the piston.  To push it back the other way.  As the steam expanded in the cylinder to push the piston the spent steam exhausted into the smoke stack and up into the atmosphere.  Creating a draft that helped pull the hot gases from the firebox through the boiler tubes, into the smokebox and out the smoke stack.  Creating the chugging sound from our childhood memories.

The Challenger and the Big Boy were the Superstars of Steam Locomotives

To keep the locomotive moving required two things.  A continuous supply of fuel and water.  Stored in the tender trailing the locomotive.  The fireman shoveled coal from the tender into the firebox.  What space the coal wasn’t occupying in the tender was filled with water.  The only limit on speed and power was the size of the boiler.  The bigger the firebox the hotter the fire.  And the hungrier it was for fuel.  The bigger locomotives required a mechanized coal feeder into the firebox as a person couldn’t shovel the coal fast enough.  Also, the bigger the engine the greater the weight.  The greater the weight the greater the wear and tear on the rail.  Like trucks on the highway railroads had a limit of weight per axel.  So as the engines got bigger the more wheels there were ahead of the drive wheels and trailing the drive wheels.  For example, the Hudson 4-6-4 had two axels (with four wheels) ahead of the drive wheels.  Three axles (with 6 wheels) connected to the pistons that powered the train.  And two axels (with four wheels) trailing the drive wheels to help support the weight of the firebox.

To achieve ever higher speeds and power over grades required ever larger boilers.  For higher speeds used a lot of steam.  Requiring a huge firebox to keep boiling water into steam to maintain those higher speeds.  But greater lengths and heavier boilers required more wheels.  And more wheels did not turn well in curves.  Leading to more wear and tear on the rails.  Enter the 4-6-6-4 Challenger.  The pinnacle of steam locomotive design.  To accommodate this behemoth on curves the designers reintroduced the articulating locomotive.  They split up the 12 drive wheels of the then most powerful locomotive in service into two sets of 6.  Each with their own set of pistons.  While the long boiler was a solid piece the frame underneath wasn’t.  It had a pivot point.  The first set of drive wheels and the four wheels in front of them were in front of this pivot.  And the second set of drive wheels and the trailing 4 wheels that carried the weight of the massive boiler on the Challenger were behind this pivot.  So instead of having one 4-6-6-4 struggling through curves there was one 4-6 trailing one 6-4.  Allowing it to negotiate curves easier and at greater speeds.

The Challenger was fast.  And powerful.  It could handle just about any track in America.  Except that over the Wasatch Range between Green River, Wyoming and Ogden, Utah.  Here even the Challenger couldn’t negotiate those grades on its own.  These trains required double-heading.  Two Challengers with two crews (unlike lashing up diesels today where one crew operates multiple units from one cab).  And helper locomotives.  This took a lot of time.  And cost a lot of money.  So to negotiate these steep grades Union Pacific built the 4-8-8-4 articulated Big Boy.  Basically the Challenger on steroids.  The Big Boy could pull anything anywhere.  The Challenger and the Big Boy were the superstars of steam locomotives.  But these massive boilers on wheels required an enormous amount of maintenance.  Which is why they lasted but 20 years in service.  Replaced by tiny little diesel-electric locomotives.  That revolutionized railroading.  Because they were so less costly to maintain and operate.  Even if you had to use 7 of them to do what one Big Boy could do.


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Moving Big Things in Small Spaces

Posted by PITHOCRATES - September 11th, 2013

Technology 101

Ships once used Tugs to Maneuver around in Small Spaces but Today they use Tunnel Thrusters

As technology progressed the more things we needed to make other things.  Small factories grew into large manufacturing plants.  Which consumed vast quantities of material to produce vast quantities of goods.  Requiring ever larger means of transportation.  And we have built some behemoths of transportation.

Water transport has been the preferred method for heavy transport.  Which is why most early cities were on rivers.  As time passed our cities got bigger.  Our industry got bigger.  And our ships got bigger.  Huge bulk freighters bring iron ore, coal, limestone, etc., from northern ports across the Great Lakes to docks on small rivers and harbors further south.  On the open lakes these ships can put the pedal to the metal.  Roaring across these lakes at breakneck speeds of 15 mph.  If you’ve ever seen a Great Lakes freighter at full throttle you probably noticed something.  They push a lot of water out of their way.  Something they can’t do in those small rivers and harbors.  As their wake would push the river over its banks.  So they slow down to a non-wake speed of something slower than a person walking.

Lakes are huge bodies of deep water.  But these Great Lakes freighters, or lakers, often enter narrow and shallow rivers.  Some rivers even too shallow.  So they dredge a channel in them.  So these lakers don’t bottom out.  Some lakers have to travel upriver to offload.  Then turn around.  Which isn’t easy in a shallow river when your ship is 700-1,000 feet long.  They once used tugs to push these ships around.  But today they use tunnel thrusters.  An impeller inside a tunnel through the ship at the bow and stern perpendicular to the beam and below the water line.  Which can turn a ship without the forward motion a rudder requires.  Allowing it to move as if a tug is pushing it.  Only without a tug.

Interesting thing about Trains is that they don’t have a Steering Wheel

With the introduction of the railroad cities moved away from rivers and coastlines.  But the railroads only became a part of the heavy transport system.  Cities grew up along the railroads.  Where farmers in a region brought their harvests to grain elevators.  Trains took their harvests from these elevators to ports on rivers and coastlines.  Where they could offload to ships or barges.  And it would take a large ship or a barge.  Because one long train can carry a lot of harvest.

Interesting thing about trains is that they don’t have a steering wheel.  For there is only two directions they can go.  Forward.  And backward.  If you’ve traveled passenger rail to the end of the line you may have experienced a train turning around.  The train will reduce speed to a crawl as they switch over to a perpendicular-running track.  For trains do not travel well on curves.  Because the wheels are connected to a solid axel.  So in a turn the outer wheel needs to travel faster to keep up with the inner wheel.  But can’t.  Causing the wheels to slip instead.  Causing wear and tear on the train wheels.  And track.  Which is why curved track does not last as long as straight track.  The train travels a while on this perpendicular track at a crawl until the rear end passes another switch.  It then stops.  And goes backward.  Switching back to the track it was originally on.  Only now backing up instead of traveling forward.  The train then backs into the passenger terminal.  Ready to leave from this end of the line going forward.  To the other end of the line.

Freight trains are a lot longer than passenger trains.  Some can be a mile long.  Or longer.  And rarely turn around like a freight train.  Rail cars are added to each other creating a consist in a rail yard.  A switcher (small locomotive) moves back and forth picking up cars and attaching them to the consist.  In the reverse order which they will be disconnected and left in rail yards along the way.  Once they build the consist they bring in the go-power.  Typically a lashup of 2-3 locomotives (or more if they’re the older DC models).  The lead locomotive will typically face forward.  Putting the engineer at the very front of the train.  In the old days they had roundhouses to switch the direction of these locomotives.  Today they turn them around when they need to like the passenger train turning around.  Which is much easier as they only have to turn around one locomotive in the lashup.

Planes may Fly close to 500 mph in the Air but on the Ground they move about as Fast as Someone can Walk

Airplanes are big.  In flight they’re as graceful as a bird in flight.  But it’s a different story on the ground.  Planes are big and heavy.  They have a huge wingspan.  And the pilots sit so far forward that they can’t see how close their wingtips are to other things.  Such as other airplanes.  When they leave a gate they usually have a tug push them back and get them facing forward.  At which time they start their engines.  As it would be dangerous to start them while at the gate where there are a lot of people and equipment servicing the plane.  They don’t want to suck anything—a person or a piece of equipment—into the jet engines.  And they don’t want to blow anything away moving behind the engines as the jet blast from a jet can blow a bus away.  And has.  In flight they use their ailerons to turn.  The flaps on the tips of each wing that roll a plane left or right.  Causing the plane to turn.  The rudder is used for trimming a plane.  Or, in the case of an engine failure, to correct for asymmetric thrust that wants to twist the airplane like a weathercock.  On the ground they use a little steering wheel (i.e., a tiller) outboard of the pilot (to the left of the left seat and to the right of the right seat) to turn the nose gear wheel.

Pilots can’t see a lot out of the cockpit window while on the ground.  Which is why they rely on ground crews to give them direction.  And to walk alongside the wings during the pushback.  To make sure the wings don’t hit anything.  And that no one hits the plane.  Once the tug disconnects and the plane is under its own power the flight crew takes directions from ground controllers.  Whose job is to safely move planes around the airport while they’re on the ground.  Planes may fly close to 500 mph in the air but on the ground they move about as fast as someone can walk.  For planes are very heavy.  If they get moving too fast they’re not going to be able to stop on a dime.  Which would be a problem if they’re in a line of planes moving along a taxiway to the runway.

When we use big things to move people or freight they work great where they are operating in their element.  A ship speeding across an open lake.  A train barreling along straight track.  Or a plane jetting across the open skies.  But when we rein these big things in they are out of their element.  Ships in narrow, shallow rivers.  Trains on sharply curved track.  And planes on the ground.  Where more accidents happen than when they are in their element.  Ships that run into bridges.  Trains that derail.  And planes that hit things with their wings.  Because it’s not easy moving big things in small places.


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Elon Musk’s Hyperloop is Probably as Good an Idea as High-Speed Rail

Posted by PITHOCRATES - August 18th, 2013

Week in Review

We transport heavy freight over land by train.  And transport people over land by plane.  Have you ever wondered why we do this?  Especially you train enthusiasts who would love to travel by train more often?  Here’s why.  Cost.  Railroads are incredibly expensive to build, maintain and operate.  Because there is rail infrastructure from point A to point B.  And at their terminus points.    Whereas planes fly through the air between point A and point B.  Without the need for infrastructure.  Except at their terminus points.  Making railroading far more expensive than flying.

If planes are so much cheaper to operate than trains then why don’t we use planes to transport all our freight?  Here’s why.  Price.  Trains charge by the ton of freight they transport.  And they can carry a lot of tons.  An enormous amount of tons.  Which makes the per-ton price relatively inexpensive.  A plane can carry nowhere near the amount of freight a train can carry.  It’s not even close.  Which makes the per-ton price to ship by plane very, very expensive.  So only high priority freight that has to be somewhere fast will travel by plane.  Heavy bulk items all travel by train.

We may be having an obesity problem but in the grand scheme of things people are very light.  But take up a lot of volume for their given weight.  The space their body physically occupies.  And the greater space around them containing the air they must breathe.  That holds the food and drink they must consume.  And the toilets they need to relieve themselves.  Now let’s look at a 747-400 with 450 passengers on board.  Let’s say the average weight of everyone comes to 195 pounds.  So the total flying weight of the people comes to 87,750 pounds.  Assuming flying costs for one trip at $125,000 that comes to $1.42 per pound.  If we add 15% for overhead and profit we get a $1.64 per-pound ticket price.  So a 275-pound man must pay $451 to fly.  While a 120-pound woman must pay $197 to fly.  Of course we don’t charge people by the pound to fly.  At least, not yet.  No, we charge per person.  So the per-person price is $224, where the lighter people subsidize the price of the heavier people.

The 747-400 is one of the most successful airplanes in the world because it can pack so many people on board.  Reducing the per-person cost.  Now let’s look at that same cost being distributed over only 28 passengers.  When we do the per-person cost comes to $4,464.  Adding 15% for overhead and markup brings the per-person price to $5,134.  A price so high that few people could afford to pay for it.  Or would choose to pay for it.  And this is why we transport people by plane.  That can carry a lot of people.  And we transport heavy freight by train.  That can carry a lot of tons.  And why this idea will probably not work (see Elon Musk Is Dead Wrong About The Cost Of The Hyperloop: In Reality It Would Be $100 Billion by Jim Edwards posted 8/16/2013 on Business Insider).

Tesla CEO Elon Musk’s plan for a space-age Hyperloop transport system between Los Angeles and San Francisco would cost only $7.5 billion, he said in the plans he published recently…

But the New York Times did us all a favor by calculating the true cost of the Hyperloop: It’s going to be ~$100 billion…

The Hyperloop is a pressurized tube system in which passenger cars zoom around on an air cushion, at up to 800 miles an hour.

There is no greater infrastructure cost between point A and point B than there is for high-speed rail.  Because these rails have to be dedicated rails.  With no grade crossings.  All other traffic either tunnels underneath or bridges overhead.  These tracks are electrified.  Adding more infrastructure than just the tracks.  All of which has to be maintained to exacting standards to allow high-speed trains to travel safely.  Which is why high-speed rail is the most costly form of transportation.  Why there are no private high-speed rail lines as only taxpayer subsidies can pay for these.  And for all these costs these trains just don’t transport a lot of people.  Making high-speed rail the most inefficient way to transport people.

The Hyperloop will be more costly than high-speed rail as this is an elevated tube system of exacting standards.  Requiring great costs to build, maintain and operate.  While transporting so few people per trip (28 per capsule).  Not to mention high-speed travel is very dangerous.  Unless it is up in the air separated by miles of open air.  But on the ground?  When a high-speed train crashes it is pretty catastrophic.  And it can tear up the infrastructure it travels on.  Shutting the line down.  So traveling 800 miles an hour inside a narrow tube is probably not the safest thing to do.

Of course the biggest fear in a system like this is some politician will pass legislation to build it.  Because of all the taxpayer-subsidized union jobs it will create.  As they are constantly trying to build high-speed rail for the same reasons.  For the politics.  Not because it’s a good idea.  For any idea requiring taxpayer subsidies is rarely a good idea.


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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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Waterwheel, Rotational Motion, Reciprocal Motion, Steam Engine, Internal Combustion Engine and Hydraulic Brakes

Posted by PITHOCRATES - December 5th, 2012

Technology 101

To Keep People on Trains they Undercharge Passengers and make up the Difference with Government Subsidies

We built some of our first factories on or near a river.  Where we could use that river’s current to turn a waterwheel.  To provide a rotational motion that could do work for us.  We transmitted that rotational motion via a main drive shaft through a factory where it could drive machinery via belts and pulleys.  Once we developed the steam engine to provide that rotational motion we could move our factories anywhere.  Not just on or near a river.  Giving us greater freedom.  And permitting greater economic growth.  As we put those steam engines onto rails.  That transported freight and people all across the country.

Trains are nice.  But expensive.  To go anywhere on a train you need train tracks going there.  But train tracks are incredibly expensive to lay.  And maintain.  If you ever stared at a set of train tracks you probably noticed something.  There aren’t a lot of trains going by on them.  When a train stops you when you’re running late or bringing home dinner it may feel like trains are always stopping you.  But if you parked at those same tracks for a few hours you wouldn’t see a lot of trains.  Because even the most polished rails (the more train traffic the more polished the rails) are unused more than they are used.

This is why trains are very expensive.  Tracks cost a lot of money to lay and maintain.  Costs that a railroad has to recoup from trains using those rails.  And when you don’t have a lot of trains on those rails you have to charge a lot for the trains that do travel on them.  A mile-long train pulling heavy freight can pay a lot of revenue.  And make a railroad profitable.  But passenger trains are not a mile long.  And carry few people.  Which means to make money on a passenger train you’d have to charge more for a ticket than people would pay.  To keep people on trains, then, they have to undercharge passengers.  And make up the difference with government subsidies.

A Crank Shaft and Combustion Timing takes Reciprocal Motion of Pistons and Converts it into Rotational Motion

This is why people drive places instead of taking the train.  It’s far less expensive to take the car.  And there are roads everywhere.  Built and maintained by gas taxes, licenses and fees.  And if you’ve ever driven on a road you probably noticed that there are a lot of cars, motorcycles, trucks and buses around you.  With so many vehicles on the roads they each can pay a small amount to build and maintain them.  Which is something the railroads can’t do.  Only trains can travel on train tracks.  But cars, motorcycles, trucks and buses can all travel on roads.  This is why driving a car is such a bargain.  Economies of scale.

To operate a train requires a massive infrastructure.  Dispatchers control the movement of every train.  Tracks are broken down into blocks.  The dispatchers allow only one train in a block at a time.  They do this for a couple of reasons.  Trains don’t have steering wheels.  And can take up to a mile to stop.  So to operate trains safely requires keeping them as far apart from each other as possible.  Traveling on roads is a different story.  There are no dispatchers separating traffic.  Cars, motorcycles, trucks and buses travel very close together.  Starting and stopping often.  Traveling up to high speeds between traffic lights.  With motorcycles and cars weaving in and out among trucks and buses.  Avoiding traffic and accidents by speeding up and slowing down.  And steering.

Driving a car today is something just about anyone 16 and older can do.  Thanks to the remarkable technology that makes a car.  Starting with the internal combustion engine.  The source of power that makes everything possible.  Just like those early waterwheels the source of that power is rotational motion.  But instead of a river providing the energy an internal combustion engine combusts gasoline to push pistons.  A crank shaft and combustion timing takes that reciprocal motion of the pistons and converts it into rotational motion.  Spinning a drive shaft that provides power to drive the car.  As well as power all of its accessories.

The Friction of Brake Shoe or Pad on Steel slows the Car converting Kinetic Energy into Heat

The first cars required a lot of man-power.  It took great strength to rotate the hand-crank to start the engine.  Sometimes the engine would spit and cough.  And kick back.  Breaking the occasional wrist.  Once started it took some leg-power to depress the clutch to shift gears.  It took a little upper body strength to turn the steering wheel.  And some additional leg-power to apply the brakes to stop the car.  In time we replaced the hand-crank with the electric starter.  We replaced the clutch and gearbox with the automatic transmission.  We added power steering and power breaks to further reduce the amount of man-power needed to drive a car.  Today a young lady in high heels and a miniskirt can drive a car as easily and as expertly as the first pioneers who risked bodily harm to drive our first cars.

The internal combustion engine can spin a crankshaft very fast and accelerate a car to great speeds.  Which is good for darting in and out of traffic.  But traffic occasional has to stop.  Which is easier said than done.  For a heavy car moving at speed has a lot of kinetic energy.  You can’t destroy energy.  You can only convert it.  And in the case of slowing down a car you have to convert that kinetic energy into heat.  When you press the brake pedal you force hydraulic fluid from a master cylinder to small cylinders at each wheel.  As fluids cannot compress when you apply a force to the fluid that force is transmitted to something than can move.  In the case of stopping a car it is either a brake shoe that presses against the inside of the car’s wheels.  Or a caliper that clamps down on a disc.  The friction of brake shoe or pad on steel slows the car.  Converting that kinetic energy into heat.  In some cases of excessive braking (on a train or a plane) the heat can be so excessive that the wheels or discs glow red.

So as the internal combustion engine and the brakes play their little games of speeding up and slowing down a car the rotational power of the crankshaft drives other accessories.  Such as power steering.  Where a belt and pulley transfers that rotational power to a power steering pump.  The pump pushes fluid to the steering gear to assist in turns.  Another belt and pulley connects an alternator to the crankshaft to produce electricity to provide power for the car’s electrical systems.  And to charge the battery so it can spin the automatic starter.  Another belt and pulley connects another compressor to the crankshaft.  This one for air conditioning.  That allows us to alight from our cars shower-fresh on the hottest and most humid days of the year.  And, finally, antifreeze removes the heat of combustion from the internal combustion engine and transfers it to a heating core inside the passenger compartment.  Allowing a warm and comfortable drive home during the coldest of days.  As well as keeping our windows free of snow and ice so we can see to drive safely on our way home.  Through bumper to bumper traffic.  Something we do day after day with the ease of doing the laundry.  Thanks to the remarkable technology that we take for granted that makes a car.


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Static Friction, Kinetic Friction, Wheel, Axle, Roads, Steel Wheels, Steel Track, Coefficient of Friction and Intermodal Transportation

Posted by PITHOCRATES - November 28th, 2012

Technology 101

Friction Pushes Back against us when we try to Push Something

Have you ever done any landscaping?  Buy some decorative rocks to cover the ground around your flowers and shrubs?  If you go to a home improvement store with a garden center you probably bought your decorative rocks by the bag.  And those bags are pretty heavy.  Say you have a pickup truck.  And the good people at the garden center bring out a pallet of stone bags on a pallet jack.  Placing it down next to your truck.  Before loading it in your tuck do this experiment.

Don’t really do this.  Just imagine if you did.  Squat down behind the pallet.  Place your hands on the pallet.  And push with all of your might.  What do you think would happen?  Would you send that pallet sliding across the pavement?  Or would you fall on your face as your feet slipped out from underneath you?  You’d be kissing the pavement.  And possibly giving yourself a good hernia.  Now if they had put that pallet of stone into your pickup truck and you put the truck into neutral and tried pushing that what do you think would happen?  You may still get a hernia but that truck would probably move.

A pallet of stone may be too heavy to push.  But a pickup truck with a pallet of stone in it may not be too heavy to push.  How can that be?  In a word, friction.  It’s that thing that pushes back when we try to push something.  The heavier something is and the more surface area in contact with the ground the more friction there is.  Which is why that pallet is hard to push.  The force of friction is so great that we can’t overcome it.  But something that can be almost 10 times heavier sitting on 4 rubber tires bolted onto a greased axle?  That’s a different story.

The Two Basic Types of Friction are Static Friction and Kinetic Friction

There are two basic types of friction at play here.  Static friction.  Which prevents us from pushing that pallet of stone.  And kinetic friction.  Which we would have experienced with that pallet of stones if we were able to overcome the static friction.  Kinetic friction is what we encounter when sliding something across the ground.  Static friction is greater than kinetic friction.  As it takes more effort to get something moving than keeping something moving.

Now here’s why we are able to push a pickup truck easier than a pallet of stones.  With a pallet there is 48″X40″ of surface area in contact with the ground producing a large amount of static friction to overcome.  Whereas on the pickup truck the only thing that slides are the axles in highly greased bearings.  Which offer very little static friction.  The rubber tires offer some static friction due to the immense weight of the truck pushing down on them, flattening the bottom of the tires somewhat.  Once the resistance of the flattened tires is overcome the rubber tires offer kinetic friction in the direction of travel.  While offering static resistance perpendicular to the direction of travel.  Keeping the truck from sliding away from the direction of travel.  Which works most times on dry and wet pavement.  But not so good on snow and ice.  As snow and ice offer little friction.

The wheel and axle changed the world.  Allowing people to move greater loads.  People could grow wheat and other food crops in distant areas and load them onto carts to transport them to cities.  Which is what the Romans did.  Using their roads for their wheeled transportation.  Which increased the speed and ease they could pull these large loads.  Sections of Roman roads have survived to this day.  And in them you can see centuries old wheel ruts worn into them.

Intermodal Transportation combines the Low Cost of Rail and the Convenience of Trucking

The basic wooden-spoke wheel remained in use for centuries.  From Roman times and earlier.  To 19th century America.  While we were still using the wooden-spoke wheel we began using something else that offered even less friction.  Iron wheels on iron rails.  Allowing great loads to be transported over great distances. The friction of an iron wheel on an iron track was so low that the drive wheels would slip when starting to pull a heavy load.  Or going up any significant grade.  To prevent this slip trains carried sand and deposited it on the track in front of the drive wheels.  To increase the friction of the drive wheels for starting and travelling on inclined grades.   Iron wheels and iron track gave way to steel wheels and steel track.  Allowing trains to pull even greater loads.

There is no more cost-efficient way to move heavy freight over land than by train.  Thanks to exceptionally low coefficients of friction.  And the less friction there is the less fuel they need to pull those heavy loads.  Which is the reason why so many of our roads are pocked with potholes.  Roads are only so strong.  They can only carry so much weight before they break apart.  Which is why the heavier load a truck carries the more axles they must distribute that weight over.  Putting more tires on the pavement.  Increasing the friction to overcome.  Requiring greater fuel consumption.  Which is why a lot of truckers cheat.  And try to get by on fewer axles.  Increasing the weight per axle.  Which hammers potholes into the pavement.

The reason why we use trucks to transport so much freight is that there aren’t railroad tracks everywhere.  But we can still make use of the railroad tracks that are near our shipping points.  By combining rail and truck transportation.  We call it intermodal.  Using more than one means of conveyance.  Putting freight into containers.  Then putting the containers onto truck trailers.  Then driving them to an intermodal yard.  Where they take the containers from the truck trailers and put them onto rail cars.  Where they will travel great distances at low friction.  And low costs.  Then at another intermodal yard they’ll transfer the containers back to truck trailers for a short ride to their final destination.  Getting the best of both worlds.  The low-cost of rail transport thanks to the low friction of steel wheels on steel rail.  And the convenience of truck transportation that can go where the rails don’t.


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Iron, Steel, the Steam Engine, Railroads, the Bessemer Process, Andrew Carnegie and the Lucy Furnace

Posted by PITHOCRATES - November 21st, 2012

(Originally published December 14, 2011)

With the Steam Engine we could Build Factories Anywhere and Connect them by Railroads

Iron has been around for a long time.  The Romans used it.  And so did the British centuries later.  They kicked off the Industrial Revolution with iron.  And ended it with steel.  Which was nothing to sneeze at.  For the transition from iron to steel changed the world.  And the United States.  For it was steel that made the United States the dominant economy in the world.

The Romans mined coal in England and Wales.  Used it as a fuel for ovens to dry grain.  And for smelting iron ore.  After the Western Roman Empire collapsed, so did the need for coal.  But it came back.  And the demand was greater than ever.  Finding coal, though, required deeper holes.  Below the water table.  And holes below the water table tended to fill up with water.  To get to the coal, then, you had to pump out the water.  They tried different methods.  But the one that really did the trick was James Watt’s steam engine attached to a pump.

The steam engine was a game changer.  For the first time man could make energy anywhere he wanted.  He didn’t have to find running water to turn a waterwheel.  Depend on the winds.  Or animal power.  With the steam engine he could build a factory anywhere.  And connect these factories together with iron tracks.  On which a steam-powered locomotive could travel.  Ironically, the steam engine burned the very thing James Watt designed it to help mine.  Coal.

Andrew Carnegie made Steel so Inexpensive and Plentiful that he Built America

Iron was strong.  But steel was stronger.  And was the metal of choice.  Unfortunately it was more difficult to make.  So there wasn’t a lot of it around.  Making it expensive.  Unlike iron.  Which was easier to make.  You heated up (smelted) iron ore to burn off the stuff that wasn’t iron from the ore.  Giving you pig iron.  Named for the resulting shape at the end of the smelting process.  When the molten iron was poured into a mold.  There was a line down the center where the molten metal flowed.  And then branched off to fill up ingots.  When it cooled it looked like piglets suckling their mother.  Hence pig iron.

Pig iron had a high carbon content which made it brittle and unusable.  Further processing reduced the carbon content and produced wrought iron.  Which was usable.  And the dominate metal we used until steel.  But to get to steel we needed a better way of removing the residual carbon from the iron ore smelting process.  Something Henry Bessemer discovered.  Which we know as the Bessemer process.  Bessemer mass-produced steel in England by removing the impurities from pig iron by oxidizing them.  And he did this by blowing air through the molten iron.

Andrew Carnegie became a telegraph operator at Pennsylvania Railroad Company.  He excelled, moved up through the company and learned the railroad business.  He used his connections to invest in railroad related industries.  Iron.  Bridges.  And Rails.  He became rich.  He formed a bridge company.  And an ironworks.  Traveling in Europe he saw the Bessemer process.  Impressed, he took that technology and created the Lucy furnace.  Named after his wife.  And changed the world.  His passion to constantly reduce costs led him to vertical integration.  Owning and controlling the supply of raw materials that fed his industries.  He made steel so inexpensive and plentiful that he built America.  Railroads, bridges and skyscrapers exploded across America.  Cities and industries connected by steel tracks.  On which steam locomotives traveled.  Fueled by coal.  And transporting coal.  As well as other raw materials.  Including the finished goods they made.  Making America the new industrial and economic superpower in the world.

Knowing the Market Price of Steel Carnegie reduced his Costs of Production to sell his Steel below that Price

Andrew Carnegie became a rich man because of capitalism.  He lived during great times.  When entrepreneurs could create and produce with minimal government interference.  Which is why the United States became the dominant industrial and economic superpower.

The market set the price of steel.  Not a government bureaucrat.  This is key in capitalism.  Carnegie didn’t count labor inputs to determine the price of his steel.  No.  Instead, knowing the market price of steel he did everything in his powers to reduce his costs of production so he could sell his steel below that price.  Giving steel users less expensive steel.  Which was good for steel users.  As well as everyone else.  But he did this while still making great profits.  Everyone was a winner.  Except those who sold steel at higher prices who could no longer compete.

Carnegie spent part of his life accumulating great wealth.  And he spent the latter part of his life giving that wealth away.  He was one of the great philanthropists of all time.  Thanks to capitalism.  The entrepreneurial spirit.  And the American dream.  Which is individual liberty.  That freedom to create and produce.  Like Carnegie did.  Just as entrepreneurs everywhere have been during since we allowed them to profit from risk taking.


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Animal Power, Waterwheel, Ship Transport, Steam Engine, Railroad, Steel Industry, Robotics, Rust Belt and Minimills

Posted by PITHOCRATES - November 14th, 2012

Technology 101

Rent-Seeking Captains of Industry and Commerce give Capitalism a Bad Name

Once upon a time you lived, worked and died all within a short walk from each other.  In feudalism people owned land and lived well.  The landed aristocracy.  And other people (the peasants) worked the land.  But did not live as well as those who owned it.  For it was back-breaking work for long hours with no respite except in death.  For those who worked the land belonged to the land.  Just as the trees and fields and rivers did.  Peasants belonged to the land and the land belonged to the landowner.  The peasants couldn’t leave.  And they couldn’t work hard to provide a better life for their children.  For they were bond to the land as their patents were.  With no choice but to work the land like their parents did.

This was how life was before we started to use power to make our work easier.  We had long been using animal power to do things we didn’t have the strength or the endurance to do.  Such as pulling a plow.  Or a wagon full of goods.  Or to travel great distances more quickly than we could by walking.  Harnessing the power of moving water changed all of that.  For a river moves constantly.  And when you place a waterwheel in moving water you can convert the linear motion of the water into rotational motion.  This rotational motion could turn a main shaft running though a factory.  Belts and pulleys could transfer this power to workstations throughout the factory floor.  And these powered workstations could do far more work than a person could.  Lumberjacks could transport logs down a river to a lumber mill.  Where a waterwheel could spin a saw that made lumber out of those logs at such a rate that great cities could arise around these mills.  Cities with other factories powered by waterwheels.  And homes.

So it’s no surprise that our early cities grew up on rivers.  Both for water power.  And the ability to use them to ship bulk goods.  Ship transport.  Something even animals weren’t good at.  It is in these cities that wealth and political power grew.  Centers of industry and commerce.  Creating great wealth for those who controlled the resources that made all of that possible.  So another aristocracy grew.  Rent-seeking captains of industry and commerce.  Who give capitalism a bad name.  Who use their political power to maximize their profits.  And buy favors from those in power to protect their particular interests.  Such as using the power of government to create monopolies for themselves.  But advancing technology made that harder to do.  Especially the steam engine.  And the railroad.

The Steel and Heavy Manufacturing Industries required a Massive Infrastructure and Regionally Located Raw Materials

Control of rivers, ports and harbors provided a great opportunity to amass wealth at other people’s expense.  For when economic activity centered on water it made land around that water very valuable.  Which concentrated wealth and power on the rivers.  Until the steam engine replaced the waterwheel.  And the railroad provided a way to transport people and goods inland.  So not only did cities grow up along the waterways they grew up along the rail lines.  Those controlling these resources still had great wealth and power.  But they also offered competition.  And more economic liberty.  For while there can only be one Tennessee River flowing through Chattanooga, Tennessee, there can be more than one railroad running through Chattanooga.  Which made Chattanooga an important city to hold during the American Civil War.  For there was a great rail junction in that city.  Giving anyone who controlled the city access to any part of the Confederacy.

While the steam engine and railroad allowed industries to grow anywhere in the country some industries still clustered in regional areas.  Such as the steel industry.  It required three ingredients to make steel.  Iron ore, coke (coal cooked into hard charcoal briquettes) and limestone.  To make steel you use 6 parts iron ore, 2 parts coke and 1 part limestone.  Iron ore was plentiful around Lake Superior.  Because it takes a lot of iron ore and a lot of iron ore is located around Lake Superior the steel makers built their mills long the Great Lakes.  In Milwaukee.  Chicago.  Gary.  Detroit.  Toledo.  Cleveland.  Or in places like Pittsburgh where coal and iron ore deposits surround the city.  These cities made up the Manufacturing Belt.  Places with access to bulk ore shipping (on Great Lakes freighter or river barge).  And where the steel mills arose so did heavy industry that built things from that steel.  From structural steel.  To automobiles.

For a while these new industries dominated the economic landscape.  Big, heavy industries that couldn’t move.  Concentrating money and political power.  Giving rise to organized labor.  Who took advantage of the fact that these heavy industries could not move.  Negotiating lucrative union contracts.  With generous pay and benefits.  Raising the price of steel and the things we made from steel.  Like automobiles.  Making the rank and file like rent-seekers of old.  Looking to personally benefit from their near-monopoly conditions.  Like those early captains of industry and commerce.  Life was good for awhile for the rank and file.  Who lived very well.  And better than most American workers.  Thanks to those monopoly-like conditions in these steel and heavy manufacturing industries.  Allowing them to charge high prices for their goods to pay for those generous pay and benefits.  As there was no competition.  For the steel and heavy manufacturing industries required a massive infrastructure and an abundant supply of regionally located raw materials, making it very difficult for a new competitor to open for business.  At least, in the United States.

High Costs and Low Efficiencies have shuttered most of America’s Steel Making Past

Foreign competition changed all that.  And large ocean-going ships.  So new industries in other countries with lower labor costs could manufacture these goods and ship them to the United States.  And did.  Challenging the monopoly-like conditions of the rent-seeking steel and heavy manufacturing industries.  So the rent-seekers turned to government for protection.  And got it.  Import tariffs.  Which raised the price of those imported goods to the higher price level of the domestic goods.  Which did two things.  Insulated the domestic manufacturers from market pressures allowing them to continue with the status quo.  And forced the foreign manufacturers to find less costly and more efficient ways to make their goods to counter those import tariffs.

So what happened?  Technology advanced in these industries overseas while they stagnated in the US.  The US didn’t invest in new technologies like they did in the previous century to find better ways to do things.  Because they didn’t have to.  While the foreign competitors worked harder to find better ways to do things.  Because they had to.  As they weren’t insulated from market forces.  The Japanese invested in robotics.  Transforming their auto industry.  Improving quality and lowering costs.  Making their cars as good if not better than the Americans did.  And selling them at a competitive price even with those import protections.  So what did these US actions to protect the domestic manufacturers do?  Changed the Manufacturing Belt to the Rust Belt.

The big steel cities in America are no more.  High costs and low efficiencies have shuttered most of America’s steel making past.  Gone is the era of the sprawling steel mill.  Today it’s the minimill and continuous casting.  Small and efficient steel mills with small labor forces that can make small batches.  Thanks to their electric arc furnaces that are easy to turn on and off.  Unlike the big blast furnaces that took a while to reach operating temperatures and when they did they didn’t shut them down for years.  Making it difficult to adjust to falling demand.  Like the minimills could.  Which helped save the steel industry by finally adopted technology that allowed it to sell at market prices.  Making it harder for the rent-seekers these days.  But better for consumers.  Because of this relentless march of technology.  That allows us to continuously find better ways to do things.


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