Wednesday, March 21, 2012

With High-Speed Rail, will we get what we pay for? I don't think so.

Several factual problems with this article. The train won't be operating in 2025. The rail authority states the start date will be 2033.  Later the article suggests that the completion date will be 2040. Whatever. The substantive issue here is revenues, surplus revenues (usually mislabeled as profits), deficits and subsidies.

Most of the literature about high-speed rail that isn't actually marketing and promotion verbiage tells us that there are two high-speed rail systems, or routes in the world that break even.  One is the Paris-Dijon TGV route.  The other is the Tokyo-Osaka Shinkansen route, perhaps the two busiest of all high-speed rail routes world-wide.

Why we don't need it:

What can we learn from this?  It takes people, lots of people, to justify a high-speed rail system. And by people we also mean high population densities through and between which the train operates.  

Sort of like the US Eastern Seaboard, called the "Northeast Corridor." Although not actually high-speed rail as most people define it, the Amtrak ACELA line, which runs along this Northeast Corridor, also is ostensibly a break-even line, even though the rest of Amtrak costs the taxpayers a fortune in subsidies annually, like over $1 billion.  

For HSR to be successful, it also takes a foundation of an extensive networked regular passenger rail system upon which high-speed rail can be layered to become the premium, top of the line offering of that system.  

California has neither the sufficient population density, or the adequate underlying passenger rail network. One possibility is that near each of the two population centers, HSR would create urban sprawl and endless low cost housing developments affordable in ways that housing in the Bay Area and the LA Basin are not. But that would presume the commuter market that the CHSRA denies it is seeking, and also assumes that ticket prices were affordable for that population living in the new ex-urbia created by these trains. 

The subsidies problem:

Although prohibited by law, there should be no doubt that California's high-speed rail, in the unlikely eventually that it ever get built and operating, will cost subsidies galore in order to cover its operating costs. 

Ticket costs will already be very high, but were they actually sufficient to cover operating costs, no one could or would afford them.  So, ticket costs will doubtless be the highest, the most expensive, that is, among all passenger rail tickets.  And, it still won't be enough to cover their costs. 

As we've said many times. Speed costs; the faster, the more.  High speeds use up equipment far more quickly and require more frequent replacement of most moving parts. 

There are lots of electronics that require loving care. At higher speeds, tolerances are closer, maintenance, like on aircraft, must be more frequent, and power costs are far higher. Everything is more expensive. These are not your grandfather's heavy-rail passenger trains.  These are more like aircraft that never take off and fly, although their top speed is certainly take-off speed and then some.

High-Speed Rail is different:

A misconception that most of us carry around in our heads is that high-speed rail is like regular passenger rail only much faster and nicer. And that costs are about the same for all of us, whether we ride a 79 mph Amtrak passenger train, or this brand-new high-speed rail train.  

We could not be more wrong.  The difference is day and night.  It's much more like flying Coach vs. flying in a commercial aircraft that's all First-Class.  As you know the price differences between Coach and First Class are amazingly high.  Expect the same for high-speed rail.

And, therefore, why it's wrong:

That's why this article, and Prof. Alain Enthoven, say that high-speed rail needs billions in subsidies.  

And now, you, your neighbors, community and friends, and yes, also all your relatives, need to answer the question: Why should our tax-dollars pay over $200 billion to develop such a train from San Francisco to Los Angeles?  That cost forecast comes closer to reality than the one we are being told today, $117 billion.  

And once built, why must we tax payers continue to fund well-to-do, affluent people, and professionals with expense accounts, to ride a train that most of us can't afford? 

You know about all the jobs that this train will create for construction?  Those folk hired to do the building won't be able to afford to ride the train that they have created with their own hands. 
Study: High-speed rail needs billions in subsidies
March 21st, 2012, 2:58 pm ·

posted by Ronald Campbell

Bay area critics of the California High-Speed Rail Authority say the train, far from minting money, will require billions of dollars in subsidies.

The only alternative say the critics, led by retired Stanford management professor Alain Enthoven, is to price the service for luxury riders instead of mom-and-pop consumers — a politically unpalatable choice for backers of the 220-mph Anaheim-to-San Francisco train.

The 15-page study assumes the authority’s much-criticized ridership estimates are correct and that it can compete with airlines for passengers. It then poses the question: At what cost?

The authority is drastically understating the train’s future operating costs, the authors say. The authority’s business plan estimates an operating cost of about 10 cents per mile while large, well-established European high-speed rail lines operate at about 44 cents per mile.

Most of the European high-speed rail lines are subsidized, they wrote, with the exception of the heavily traveled Paris-Lyon line, which carries double-deck trains.

Proposition 1A, the 2008 voter-approved $9.95 billion bond measure that authorized the train, bans operating subsidies.

The math is telling: With a 10-cent-per-mile operating cost, the authority would make $180 million in 2025, during its first year of partial operation, and more than $1 billion in 2040 when the system is complete. If Enthoven et al. are correct, and the operating costs exceed 40 cents, then the system will be $740 million in the red in 2025, and the annual losses will swell to $2.67 billion when the train is completed in 2040.

We’ve asked the authority for a comment and will update this post when we hear back.

Enthoven’s group has published several previous studies criticizing the authority’s numbers. He himself owns a home in Atherton near the train’s alignment and acknowledges it would hurt his property values. This study, like previous studies from his group, was posted online by the Community Coalition on High-Speed Rail, a community group south of San Francisco.

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