For many in the business community, Warren Buffet walks on water. He was recently in an interview on CNBC. A lot of topics were covered, and high-speed rail was brought up in passing, since Buffett had purchased BNSF, the second largest freight carrier after Union Pacific in the US.
His introductory and very positive remarks about the efficiency of freight rail are quite accurate. There is a vast difference in the cost/benefit and productivity capability between freight rail and passenger rail, with high-speed rail in particular.
For discussion purposes, the best analogy is a comparison between regular commercial aircraft now in service in the world. High-speed rail is the equivalent in aircraft to the British/French Concorde, now no longer in service. (see: Wikipedia) It was a Mach-2 aircraft, travelling at 1,400 mph when at 60,000 ft. Each seat cost $10,000., but the plane could connect NYC and London in about three hours.
There were 100 seats, but on most of the trans-Atlantic trips the planes were half empty. Let it be said that all the air carriers that used these aircraft lost money, even at exorbitant ticket prices. As they say in engineering, just because something is possible doesn't make it necessary.
Here, Buffett is making the point that for the same costs as building a high-speed rail system over 800 miles in California, he bought "Burlington" (BNSF) and it included all the things he lists in his comments, including 23,000 miles of "main route" rail corridor. Saying that HSR is "pretty expensive" is the understatement of the day.
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CNBC: Buffett Transcript Part 6: China and America's Diminishing Dominance
Published: Wednesday, 2 Mar 2011 | 5:13 PM ET
Warren Buffett appeared live on CNBC's Squawk Box this morning, March 2, 2011.
JOE: Yeah. Oh, I'm just— I'm not going to— not even going to make the comment that he's not investing a lot in any high-speed rail company. But never mind.
CARL: How about Tampa-Fort Lauderdale? Now, that's just crying out for high rail.
BUFFETT: Joe, let me give you an interesting figure. The 800-and-some miles of rail they're talking about in California, high-speed rail, I think they've talked about a cost of 43 billion for that. [Edit. It's now up to $65 billion and climbing.] We bought the Burlington with 23,000 miles of main route railroad and tens of thousands in sidings and all of that, 6,000-plus locomotives, how many cars I don't know, tunnels, bridges— we bought the whole thing, counting debt, for about 43 billion. So as you can see, it's pretty expensive to build that stuff.
