Tuesday, May 17, 2011

High-Speed Trains Fail to Impress

President Obama's dream of connecting 80 percent of Americans to a high-speed rail line appears to be dead. Congress appropriated $8 billion for high-speed rail in the 2009 stimulus bill and $2 billion more in the 2010 appropriations bill. But, after newly elected governors of Florida, Ohio and Wisconsin rejected high-speed rail projects in those states, Congress declined to include any more funds in 2011 and it is unlikely to spend any more on this boondoggle as long as Republicans have a hold on the House, says Randal O'Toole, a senior fellow with the Cato Institute.

What will Americans get for the $10 billion or so already committed?

California appears ready to spend $5.5 billion building a 220-mile per hour (mph) rail line from Corcoran -- a town south of Fresno mainly known for the prison housing Charles Manson -- to Borden -- a ghost town north of Fresno; considering that trains were not scheduled to stop in either Corcoran or Borden, this will truly be a train to nowhere.

Illinois is spending more than $3 billion, adding three trains per day (to the current five) between Chicago and St. Louis and increasing average train speeds from 51.6 to 56.8 mph, saving train travelers 30 minutes on the current 5.5-hour trip.

Washington state is spending $700 million, adding two trains per day (to the current three) between Seattle and Portland and increasing average train speeds from 53.4 to 56.1 mph, thus saving rail travelers 10 minutes on the current 3.5-hour journey.

North Carolina is spending $545 million, adding two trains a day (to the current three) between Charlotte and Raleigh and increasing speeds from 54.1 to 57.7 mph, saving travelers 12 minutes on the current 3.2-hour trip.

Unless a miracle occurs, it appears the only added impact of Obama's dream will be the cost to state taxpayers of running a few extra trains per day in Illinois, North Carolina, and Washington, says O'Toole.

Source: Randal O'Toole, "Dodging the High-Speed Bullet Train," Cato Institute, April 29, 2011.

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Saturday, May 14, 2011

O'Toole: The Great Train Con 2 - Michigan Cooks the Books

Randal O'Toole / / The Michigan View.com

When the Michigan Department of Transportation first applied for federal high-speed rail funds, it justified its application using a 2006 economic analysis that claimed the benefits would be 1.8 times greater than the costs. A close scrutiny of that analysis, however, shows that Michigan cooked the books.

The state wildly exaggerated the benefits while underestimating the costs of high-speed rail.

The report was written by a consulting firm called Transportation Economics and Management Systems, which specializes in analyses of passenger rail projects. From the reports it has written, its staff never met a train they didn't want someone else to subsidize. Rail advocates like to hire consultants like this because they know they will come up with the answer they want - no matter how much the proposed train project will cost.

Exhibit 11.2 of the Midwest report is a chart projecting benefits and costs (in billions):

System revenues: $8.3 billion
Consumer surplus: 8.9
Air congestion relief: 1.6
Highway congestion relief: 2.7
Airline benefits: 0.9
Emissions benefits: 0.6


Capital costs: $6.1 billion
Track maintenance: 0.3
Operating costs : 6.5



True? Let's take a closer look at the ingredients.

The largest benefit is "consumer surplus." This means that some really wealthy people might be willing to pay a lot more to ride the trains than the actual fares. The analysts are counting that willingness to pay as a benefit - even though those people won't actually have to pay it! Note that if they did have to pay it, they wouldn't be able to spend the money on something else, so someone else would lose.

The point is the analysts are saying that they want to use your tax dollars to subsidize tickets for really wealthy people who would be willing to pay more but won't have to - and they count that as a benefit. How generous of them!

While economists debate the importance of consumer surplus, the idea that it can be used to justify subsidies to the wealthy is absurd. This is especially true since poor people will still have to ride a bus because today's rail fares are at least twice bus fares, and high-speed rail fares tend to be even higher.

The calculations of air and highway congestion relief assume that nothing else will be done to relieve that congestion. Yet there are many things that can be done to relieve congestion that would cost a lot less than high-speed rail. In fact, most of those things probably will be done whether high-speed rail is built or not, so the congestion won't even be there to be relieved.

The supposed "airline benefits" are the most laughable part of the analysis. The writers literally say the airlines will be so happy to lose customers to high-speed trains that they would be willing to pay $28.13 per stolen customer. (The to-the-penny precision makes it even more laughable.) Of course, no one has any intention of asking the airlines to pay $900 million to support the trains, but the report still counts this as a benefit.

The calculations of emissions benefits assume that cars in the future will be no cleaner than cars today. In fact, our auto fleet is getting cleaner every year - while pushing diesel locomotives up to 110 mph will produce a lot more pollution. By 2025, the average car on the road will be cleaner than any diesel-powered high-speed train, so the report should really calculate an emissions cost.

On the cost side, $6.1 billion for capital costs is ridiculously low. The Midwest Regional Rail Initiative calls for five 110-mph corridors, three 90-mph corridors, and two 79-mph corridors all of roughly the same length. But Illinois says it needs at least $4.9 billion just to get the Chicago-St. Louis corridor up to 110 mph, and the Michigan corridor needs at least $1.6 billion.

The real cost for all ten corridors will be well over $10 billion.

In estimating track maintenance costs, the analysts appear to have looked ahead only 30 years. But the real rail maintenance costs begin AFTER the system is 30 years old - when the entire system must be rebuilt at nearly the same cost as the original construction. The 35-year-old Washington Metrorail system is falling apart today because no one foresaw or budgeted for this cost. Discounted to the present, the cost is likely to be well over $3.0 billion on top of the $0.3 billion calculated for the first 30 years.

A more realistic assessment would look something like:

System revenues: $8.3 billion
Capital costs: 10.0
Maintenance costs: 3.3
Operating costs: 6.5



In short, for every dollar spent on Midwest high-speed rail, taxpayers and the economy will lose 60 cents. That's a bad deal for Michigan taxpayers.

Randal O’Toole is a senior fellow with the Cato Institute and author of Gridlock: Why We’re Stuck in Traffic and What to Do About It.

Tuesday, May 10, 2011

Chicago to get high-speed trains from federal rail grants

SUN-TIMES MEDIA WIRE May 9, 2011 10:52PM

When Chicagoans can ride an Amtrak train to St. Louis or Detroit at 110 mph, they can thank the federal government and the governor of Florida.

The U.S. Department of Transportation on Monday announced awards for the final $2 billion in high-speed and intercity passenger rail grants from the federal stimulus act, and Chicago is right in the middle of the action.

Trains traveling to or from the area will be directly impacted by five of the grants, totaling about $800 million, including nearly $200 million that was rejected by Florida.

About $186.3 million will go toward upgrades on the Chicago-to-St. Louis Corridor between Dwight and Joliet, with trains operating at 110 mph for more than 220 miles, according to a release from the DOT.

Another $13.5 million will go toward design work on replacing the Merchant’s Bridge Project, which built over the Mississippi River in the 1890s.

U.S. Sen. Mark Kirk said earlier this month the projects “will create nearly 6,000 direct and indirect jobs, decrease delays and improve performance. High speed rail projects like this will ensure that Illinois remains at the center of the nation’s infrastructure network, attracting more jobs and making us more economically competitive.”

Another $196.5 million will be awarded to the Michigan–Kalamazoo-Dearborn Corridor to rehabilitate track and signal systems, bringing trains up to speeds of 110 mph on a 235-mile section of the Chicago-to-Detroit corridor, reducing trips by 30 minutes, according to DOT.

And $2.8 million will go toward engineering and environmental analysis to construct a high-speed rail station in Ann Arbor, Mich., to allow more than one train to use the station simultaneously.

Last month, Kirk and U.S. Sen. Dick Durbin led a group of Illinois legislators in expressing support for Illinois’ application for the federal funding rejected by Florida. In their letter to Sec. of Transportation Ray LaHood, they stressed the importance of the Chicago-to-St. Louis route as the backbone of the Midwest passenger rail system.

“We believe Illinois offers the greatest opportunity for your department to enhance mobility, reduce reliance on foreign oil, lessen congestion and provide steady employment in a region hard hit by job loss,” wrote the congressmen.

“The Midwest rail system, with Chicago as its hub, could provide 3,000 miles of high speed rail service and serve 90 percent of the 60.3 million people living in its nine-state region. A significant federal investment into this region will create a rail system that could carry nearly as much traffic as regional air service,” they wrote.

Chicago riders will also beneift from a $336.2 million investment in state-of-the-art locomotives and rail cars for the Midwest and California. “Next Generation” equipment will deliver safe, reliable and high-tech American-built vehicles, according to the DOT.

Other projects announced Monday include:

$5 million to complete engineering and environmental work for establishing the Northern Lights Express, a high-speed intercity passenger service connecting Minneapolis to Duluth, Minn., with 110-mph service.

A $795 million upgrade in the Northeast Corridor, which will increase speeds from 135 mph to 160 mph on critical segments, improve on-time performance and add more seats for passengers.

A $300 million grant to continue laying groundwork for the nation’s first 220-mph high-speed rail system in California, extending the current 110-mile segment an additional 20 miles to advance completion of the Central Valley project, backbone of the Los Angeles-to-San Francisco corridor.

Twenty-four states, the District of Columbia and Amtrak submitted nearly 100 applications for the money, according to the DOT release.

“President Obama and Vice President Biden’s vision for a national rail system will help ensure America is equipped to win the future with the fastest, safest and most efficient transportation network in the world,” LaHood said in the release. “The investments we’re making today will help states across the country create jobs, spur economic development and boost manufacturing in their communities.”

Monday, May 9, 2011

Michigan To Get Nearly $200M For High-Speed Rail

State To Get Nearly $200M For High-Speed Rail

Transportation Secretary Makes Announcement In Detroit

DETROIT -- The federal government is pumping nearly $200 million into high-speed passenger rail projects in Michigan.

Transportation Secretary Ray LaHood says Monday the funds are part of a $2 billion investment stretching from the country's northeast corridor, through the Midwest and on to California.

Lahood says the investments will help create jobs and spur economic development.

About $195 million will be used to upgrade tracks and signals between Kalamazoo in southwestern Michigan to Dearborn, just outside Detroit. The work also will increase train speeds to 110 mph between Chicago and Detroit.

“President Obama and Vice President Biden’s vision for a national rail system will help ensure America is equipped to win the future with the fastest, safest and most efficient transportation network in the world,” said LaHood. "The investments we’re making today will help states across the country create jobs, spur economic development and boost manufacturing in their communities.”

Another $2.8 million will be used for an analysis of a new station in Ann Arbor.

The money had been awarded to Florida, but that state's governor canceled the project.

Video of Secretary LaHood discussing today's high-speed rail announcement is available for download via the following links: