Thursday, March 27, 2014

High-speed rail: The dream/fantasy lives on

John McMurtrie, the book editor for the SF Chronicle, has to read a lot of fiction, so he has an excuse for being poorly-informed about the state's high-speed rail project (The Chronicle's editorial staff doesn't have that excuse). In a review of a book about trains last month McMurtrie tries his hand at fiction:

Which brings us to the sorry state of high-speed rail travel in this country. While we dither and stall, other countries, notably China, Japan, France and Spain, have far outpaced us. The Chinese government is spending $400 billion on its bullet trains....In the meantime, Spain, whose economy is significantly smaller than that of the United States, is now second only to China in laying the most high-speed rail track in the world.

President Obama's dreams of having high-speed rail sprout across the country in 10 regions---kick-started by a not-so-whopping $8 billion commitment---have fizzled. Congress and some states have shown that they're not in favor of investing in big infrastructure programs...

So it is now up to California, essentially alone, to prove it can lead the way forward with a successful high-speed rail project. Can it happen? [Tom]Zoellner remains hopeful: "There may be no more exciting time to be railroading than today." If we choose to go down the other track, one thing seems certain: The rest of the world will continue to zip past us.

Let's take Spain first. From a story in the Chronicle two years ago:

But despite assurances from the Spanish government that the long-distance AVE[Alta Velocidad Española] trains operate without a public subsidy, academics and analysts don't believe that even the busiest high-speed route---between Madrid and Barcelona---musters enough riders to cover operating costs, much less the billions of euros invested to build the infrastructure over the past 20 years...

"There is no question whether (Spain's system) can cover its costs. It cannot," [GermÀ]Bel said. "It actually has not recovered one single euro from the infrastructure investment. The government claims they are recovering the operating costs, but the numbers are not clear."

The busiest high-speed lines in the world are capable of making money, Bel said, including between Paris and Lyon, where about 25 million people ride the French TGV trains each year, and the Japanese Shinkansen trains between Tokyo and Osaka, which draw about 130 million riders a year." But this is not the case with any single line in Spain," Bel said...[Andreu]Ulied said Spain's efforts have been based not on serious economic analysis, but on political desires to connect the rest of the nation to Madrid. "We had the money, we had the ability to do so, so we did it," he said. "We didn't need all these lines, actually."

That is, only a few individual lines in the world make enough money to even cover costs. All high-speed rail systems in the world are built with taxpayers' money and then subsidized by taxpayers after they're built.

A story in the New York Times in 2009 verified that reality:

“High-speed rail is good for society and it’s good for the environment, but it’s not a profitable business,” said Mr. Barrón of the International Union of Railways. He reckons that only two routes in the world — between Tokyo and Osaka, and between Paris and Lyon, France — have broken even.

The problem with California's high-speed rail project: we don't have nearly enough money to even begin building it, and Proposition 1A prohibits any government subsidy if/when it's actually built. The project was sold to voters on the promise that it would be supported by its users, and the state's voters still passed it with only 52% of the vote.

More on Spain from the New Yorker last year:

"What did Spain do with its European money, its cheap debt?" [Cesar] Molinas said. "We made empty buildings and airports and high-speed trains." (As the Madrid banker told me, "The cost embedded in taking someone by high-speed rail to Galicia is so high that it would be cheaper just to give people in Galicia a free plane ticket.") Molinas would have preferred investments in what is often called human capital, the very stuff that the crisis was forcing Spain to stint on. "Now we are cutting education, research and development, health care. People making the laws don't understand" (Letter from Madrid, Nick Paumgarten).

China may be ruled by the Communist Party, but they still have to pay real money to build their rail system: see this, this, and this.

Go here and here for sensible analysis of the project.

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At 8:34 AM, Anonymous Gregski said...

Interesting how the train fetishists exhaust themselves trying to portray the United States as a second-rate country because we decline to invest in these sexy, passenger-rail money pits. At the same time, they are quite silent about America's efficient, environmentally-rational, world-leading freight rail system which for more than a century has been almost entirely underwritten by private capital (some eastern and mid-western railroads were consolidated under federal bankruptcy supervision in the 1970s and 80s).

Europe subsidizes passenger rail while its highways are choked with freight trucks. While it's true that U.S. highways are partially underwritten by income taxes, the solution to this is to simply increase (and re-allocate) tolls, fees and gas/diesel taxes, not to create an entirely new, to-be-eternally-subsidized passenger rail enterprise.

At 10:31 AM, Anonymous Anonymous said...

America's efficient, environmentally-rational, world-leading freight rail system

Apparently you've never seen how freight rail runs in Europe.

At 10:35 AM, Anonymous Anonymous said...

"the solution to this is to simply increase (and re-allocate) tolls, fees and gas/diesel taxes, not to create an entirely new, to-be-eternally-subsidized passenger rail enterprise."

Well, I absolutely agree. It's not just income taxes but sales and property taxes that are used to pay for roads. If we changed that to solely user fee based, the gas tax would have to more than double. At $7 per gallon passenger rail will look a *LOT* more attractive.

I am happy to see that you are finally figuring out that we are externalizing costs for road construction and maintainance to our overall economic detriment.

While there is an argument that those who choose not to drive private cars utilize the roadways for delivery of goods, those goods would then go up in price as shipping costs are passed through. This ia another huge benefit of economic efficiency as goods produced further away from use become less attractive and we spend more money on goods and less money on shipping.

At 11:39 AM, Anonymous Gregski said...

Hey, Anon, for what its' worth, Rob and I "finally" realized this many years ago.

Your numbers are exaggerated, by the way. If all road user fees (fuel taxes, tolls, license fees et al) were allocated to roads alone, the revenue shortfall would be less than 30%. Fuel taxes currently run less than $1.00 per gallon so we're only talking about a 70-cent increase which would leave gasoline in California less than $5.00/gallon. This would not change the economics of driving from SF to LA very much.

Oh, to the other Anon, yes, I have seen freight rail in Europe, in particular a rail yard on the French-Spanish border where the wheels had to be replaced on all the freight cars to accommodate two different rail gauges in the two countries.

At 2:26 PM, Anonymous Anonymous said...

Greg - Spain isn't really Europe, as we all know they speak Mexican

At 2:27 PM, Anonymous Anonymous said...

If all road user fees (fuel taxes, tolls, license fees et al) were allocated to roads alone, the revenue shortfall would be less than 30%. [1]

Ref [1] - Greg's Ass, 2014


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