Why California’s bullet train should not stall (forget the billion$ - go green)

San Diego Union-Tribune ^ | 2/15/19 | ROBERT CRUICKSHANK

[Libloather]

**SNIP**

Perhaps the biggest blow to the high-speed rail project came in 2010, when Republicans won control of the U.S. House of Representatives.

They proceeded to block any further federal funding for high-speed rail, undermining the California project’s financial plan. Ironically, Gov. Newsom’s decision to pause high-speed rail comes just as Democrats have retaken the majority in the House, making possible a Green New Deal and billions in high-speed rail funding.

California ought to show the country how to overcome these obstacles. If we believe climate change is real, then we are obligated to do something about it, and not let cost concerns or bureaucratic issues become a justification for giving up and going home while the state and the planet burn.

[DoodleBob]

The reported cost of this boondoggle is $76 billion.

It cost $200 to fly round trip from LAX to SFO, a route traveled by about 3.7 million passengers annually. This means there is about $740 million in annual revenue produced by this route.

Assuming all air passengers decided to take the train (a heroic assumption), and the train tickets are also $200 round trip, it will take over 100 years to break even.

[monkeyshine]

Project costs ballooned from $30 billion to near $100 billion and who knows how much more by the time they completed it. It’s been a decade since over $6.5 billion was allocated ($3B from CA Bonds in 2008 and $3.5B from Federal allocations in 2010) and in the months before the governor scrapped the plan, they were still arguing about where to lay tracks.

Meanwhile, a private company that runs inter-city trains in Florida is working building a fully electric high-speed train from San Bernardino to Las Vegas - 185 miles of track and to include its own private train station. It was announced in late 2018 and scheduled to complete in 2022... basically 3 years of construction.

What’s wrong with the picture? Government is incapable of handling these large projects like they could in the past. The interstate highways, the transcontinental railroad... Now it can’t even decide where to put a train with 10 years to make up its mind.

I am all for high speed rail. But it is clear it must be fully privatized. The airlines (Southwest, Jet Blue etc) make money flying from SoCal to NorCal all day every day. They didn’t need subsidies, just opportunity.

[monkeyshine]

I personally like trains. I take the train from time to time from Los Angeles to San Diego. It isn’t faster than a car ride, but a lot more relaxing. I have taken trains to destinations across the southwest USA; I have taken trains in Europe including slow diesel trains (example, Paris to Rome) as well as the high-speed TGV (example, Paris to Marseilles and London to Paris).

Personally I would take a train over driving or flying almost anytime these days if it made sense and only a few hours difference either way. Now with ride-sharing it is even easier - you don’t necessarily need a car at your destination. But, like ride-sharing, it is clear to me it needs to be done with private money. AFAIK, most of Europe’s trains are now privatized.

[monkeyshine]

You seem correct in your math but missing a lot of other factors. Don’t get me wrong I opposed this CA train initiative from day one. But, you are omitting a lot of other travelers that would have taken the train shorter distances e.g. Bakersfield to Fresno. I don’t know the actual numbers but it isn’t just LAX to SFO. Even adding up flights you should add Burbank, John Wayne (Orange County CA), Sacramento and San Jose as profitable airline routes.

Ancillary factors would be the numbers of cars, buses and trucks that make these treks. Personally I would have loved to see it but never voted for it or even wanted it the way they were trying to do it. As I wrote above, 10+ years from the 2008 bond issue to today and nothing has been done but waste the $6.5 billion appropriated to it.

[neverevergiveup]

If these people are concerned about global warming, they should be pushing a decrease in the birth rate in Central and South American countries (among others), and stopping deforestation in these countries. They should be against illegal and legal immigration increasing the population of the US, and thus contributing to loss of habitat, deforestation, and pollution.

They aren’t. It’s easier to blame us for everything.

[neverevergiveup]

I’ve taken the Eurostar, and use trains periodically in the US, and I agree with you about the advantages of trains - when they are a viable option. That said, there are a lot of considerations. First, distances in Europe are different (relatively shorter) than those in the US. Second, as it stands, the price of train travel in the US is often more than flying. That would have to change to get people to take a train from say San Diego to San Francisco instead of flying. Third, the way things are currently in the US, train systems like Amtrak have to rent miles and miles of track from freight companies - and the freight takes precedence when there is a conflict. This has a significant effect on pricing and timetables.

There are additional issues, but these are significant.

[Some Fat Guy in L.A.]

If we believe climate change is real, then we are obligated to do something about it

Only fools like the author believe it's real - the Al Gores and Michael Manns of the world know better. But they benefit from the scam so they let it ride.

[roadcat]

Say Cruickshank, just how much will tickets cost to ride on the bullet? Hmmmmm?

All public transportation funded projects are heavily subsidized. Less than one-third of costs come from ticket sales for most public rail and bus systems. This one is intended to be heavily subsidized, to the point that tickets will probably fund less than one-tenth of maintenance costs - taxpayers on the hook for the rest. (Note I said maintenance costs, not build costs.)

[DoodleBob]

You are right. To be fair to myself, this is a pretty simple, back-of-the-envelope calculation with transparent data (Expedia for the airfare, Wikipedia for the # of travelers) and bare-bones assumptions. Thus you don't need a doctorate in finance to follow the trail.

It is possible the short haul traffic would help cover the costs. But assuming a 10-year payback (with no interest cost, which is generous), we'd need to see $7.7 billion in annual revenue to break even, I simply don't see how you'd get there.

I'll go a step further...let's say people dump their cars and flock to this rail line such that it breaks even. Well, that's cannibalization of auto traffic....sure, they'd be less congestion but there would be a decline in auto purchases, gas stations, and attendant unemployment. Furthermore, there would be deadweight loss, i.e. A permanent loss of efficiency caused by a price support (subsidized train ticket prices) and transfer of private sector/producer surplus to train passenger (and govt) surplus.

[DoodleBob]

...there will be an open book test on Thursday...

[Seaplaner]

High-speed rail systems have been successful in attracting high ridership in every country where they have been built, and that includes the United States’ own Acela in the Northeastern Corridor. Ridership studies for California’s planned system suggests similarly strong usage.

Interestingly, passenger rail service in the United States has failed because passengers choose to not take it.

And, as for as the "High Speed" lie, this is not now, and will never, ever, ever be the case between SF and LA or San Diego.

Never.

If it worked (it wouldn't, typically) it would suffer the embarrassment of perpetual delays (equipment issues, maintenance, llamas on the tracks, one could go on).

Add to that, there would be time delays in ...

1. driving to the train station and parking

2. ticketing and baggage

3. security, TSA or the equivalent

4. car rental at the destination (it is highly unlikely that the station is your destination).

This, when you include the choo choo ride, is a full day, nothing "high speed" about it.

.

As a once and former resident of the once-Golden State, I know many progressives and those even farther to the left.

None of them, not one, has said that they would like to take high speed rail.

And thus, to the first point, nobody wants to or will take this train (if it worked, which it would not).

.

[monkeyshine]

I agree with you and wasn’t trying to be argumentative. I never did anything but a back-of-envelope calculation myself and agree it never made sense. Perhaps a 10 year payback is too optimistic - under the tax law as I know it there is a 27.5 year depreciation schedule and just for we consumers I’d use a 30 year timeline for ROI though you are right most commercial investors look at a 10 year return even if they don’t recoup 100% they look to the cash flow.

But since you mentioned car purchases etc, there is another factor I didn’t consider (but had thought of separately) which is whether trains are going to be obsolete anyway. It may be 5 years or 15 years, but eventually cars are going to be driving themselves. They will communicate with each other as they drive too, so that each car knows the others intentions eg. stay straight, merge, exit, speed up, slow down. This will make highways more efficient, fuel more efficient, and imo will devastate the auto industry. A lot of people who own cars or would have otherwise owned cars won’t buy them but instead use some kind of ride-sharing or similar cooperative. Need a ride, dial it up on your phone (or your brain implant lol) and the car comes to get you, drop you off, and then off to pick up someone else. Right now ride sharing is roughly equivalent to the cost of a taxi (actually sometimes a “fare” bit lower pardon the pun). It will continue to drop to where a monthly user would break-even just renting a self-driving car as and when needed. Consider that for most of us, the car we own sits idle in a parking space for 80%-90% of each day.

The idea of a single train car on a singular destination track is imo going the way of the buggy whip. I think the auto industry is the best long-term “short” play of the century. Just short it and wait, they are all going bankrupt imo... and the same sort of transition will happen with trucking, warehouse management etc. Using the same loose back envelope calculating I figure that in the next generation or so we may lose 50 million jobs to automation - they are already installing automatic burger flippers, kiosks are replacing cashiers... this trend will continue as labor costs increase and technology costs decrease.

So, to pay $100 billion now for a train that is likely to be obsolete by the time your 10-year estimated ROI (which is very generous) makes even less sense, and especially for the intermediate distance traveler.

[monkeyshine]

Rare enough to find anyone who understands the relationship between quantity demand, quantity supply and price. It’s so much easier to just let some grandstanding pol tell us the way it should and must be, and how much we need to pay to have it.

[monkeyshine]

One other point implicit in your argument... the train they planned had something like 15 stops on the route (and they were still arguing for more, such as re-routing the Los Angeles segments through the northern exurbs like the Antelope Valley).

So consider 5 minute stops each, 15 times along roughly 380 miles. That’s 1.25 hours of just stopped train along the entire route. Time to slow down and speed up at each depot not included.

[DoodleBob]

Excellent points. You are already seeing this trend in aggregate auto sales - slight year over year declines caused by decreases in car sales partially offset by truck sales growth:

I've read elsewhere that Millenials are not buying (especially where Uber and Lyft offer a cost effective substitute). The hope is that they go from being car-less to being SUV owners when they marry and have kids. We will see.

10 years ago there wasn't Uber (at LEAST where I lived) or Tesla. In 2029 who knows what we will be driving. Or not. To invest billions of public dollars without any thought of these trends is reckless.

[monkeyshine]

Not surprising to see the light truck business increase with the housing and employment boom. More independent contractors would be my educated but wild guess. It's only anecdotal but from my front porch I can point to and see at least 6 houses that have been nearly completely renovated (eg gutted and refurbished) in the last year or are being renovated right now. This is no exaggeration I could give you the street addresses of each. And the homes are not that old. More than 6 if I go back a few years. Even I did a fair bit of redecoration in the last few years, though I did not add square footage.

I never saw your chart before but did see a news article last week, something about EU car sales seeing its first YoY decline in like... ever.

[palmer]

e.g. Bakersfield to Fresno

Why would anyone make that trip?

[morphing libertarian]

Better yet, Bakersfield to Merced. I think Greyhound released a statement they had 167 passengers for those two cities in a 90 day period.

[morphing libertarian]

It’s a 2:15 drive so most will drive so they don’t have to rent a car or bother someone to pick them up.

[monkeyshine]

The Fuller Brush salesman?