Posted by: bmeverett | February 5, 2011

High Speed Train Wreck


At a time of bloated government budgets and mounting debt, the transcript of President Obama’s January 25 State of the Union message includes the following extraordinary passage: “Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail. (Applause.)” I’m not sure which is more troubling – the idea of a national high speed rail network or the applause from the audience. There are lots of people advocating for a national high speed rail (HSR) system. If you look at any of these websites (for example, The US High Speed Rail Network at http://www.ushsr.com/ushsr.html), you’ll see the proposed rationale for this system. The system will supposedly reduce our dependence on imported oil, clean up the environment, provide new jobs and support local economic development. Besides, the Chinese and Europeans have HSR, and (perhaps most importantly) these trains are SUPERCOOL. They’re like a huge i-phone. Who wouldn’t want something that neat? All the other countries in the world would be green with envy. What you will not see from any of the advocates of this program is a persuasive argument for the only issue that really matters. Is this a cost-effective way to move people around?

Let’s by all means have a dialog on this proposal. As you consider the pros and cons offered in this discussion, I would suggest you bear in mind the following hard lessons we have learned from the history of US transportation projects.

Over the last 30 years or so, huge public works projects like this have had a tendency to suffer massive cost overruns. The best example is the infamous Central Artery/Tunnel Project in Boston, known as “The Big Dig.” The idea was pretty straight forward. Before this project, Interstate 93 ran through Boston on an antique elevated roadbed that was a traffic nightmare as well as an eyesore. The old central artery impeded travel in and out of Logan Airport and complicated commuting from both the north and the south of the city. The Big Dig moved the central artery underground, added a second tunnel to Logan and provided workable access along the way. Great idea. The project was projected to cost about $5½ billion (in $2000). The actual cost is now estimated at about $22 billion – four times the original estimate. The Big Dig is now nearly complete, but the litigation will go on forever. Shoddy materials, massive water leaks, a ceiling collapse that killed Milena Del Valle in 2006, and on and on.

Governor Christie of New Jersey canceled The Hudson River Tunnel Project last October, apparently fearing a repeat of the experience of The Big Dig. The project would have some clear benefits in easing commutes into Manhattan, but Governor Christie balked at the cost. The original budget was $8.7 B, but more recent estimates suggested an actual cost of $11-14 billion and growing. Furthermore, the deal signed by former New Jersey Governor Corzine required New Jersey taxpayers to cover any costs above the original $8.7 billion. Christie, who has been lambasted for his decision, simply recognized another Big Dig in the making.

Rail projects have been particularly susceptible to cost overruns. Seattle’s Link Light Rail was originally expected to cost $2.4 billion. As cost estimates began to escalate, the system was dramatically scaled back from 21 miles to 14 miles. The project is now nearly complete with a cost of $3.6 billion. In other words, the cost was $250 million per mile versus the original estimate of $114 million. The Minneapolis light rail project ended up costing $715 million versus the $480 million original estimate. Charlotte’s light rail was estimated to cost $225 million and ended up costing $467 million. There are lots of other scary stories.

One reason for these cost overruns is that Congress treats all federal projects as pork. Acela, the Amtrak moderately high-speed train that runs between Washington and Boston, has been crippled by the interference of politicians. For example, instead of whisking people point-to-point between Washington and New York, Acela makes six intermediate stops. The train’s top speed is 150 mph, but it averages 70 mph. (See my post on this topic “No to Infrastructure Stimulus on September 10, 2010.) Some pieces of a national HSR system might prove to be successful and efficient. The Amtrak experience, however, tells us that Congressmen and Senators will insist that the HSR system include components for their states and districts regardless of whether they make economic sense.

Since these projects take a long time to plan and construct, the elected officials who sell these projects to the public as low-cost efficient transport are generally long gone when reality begins to bite. Finger-pointing, back-stabbing and litigation against contractors are no substitute for real accountability. If the US actually attempts to construct this monstrosity, the discussion will be purely theoretical for years, including during the 2012 election cycle. By January 2017, President Obama will be out of the White House and giving speeches for $100,000 a pop. Someone else will have to clean up the mess.

Another significant problem with rail projects is that their economics involve high fixed cost and low variable cost. The right-of-way, track, stations and vehicles cost a lot of money, regardless of how many people actually use the system. If estimates of ridership fall short of expectations, which happens frequently, revenues will be disappointing, while the costs remain the same. Many rail systems find themselves in an impossible position. Raising fares discourages ridership and reduces revenue, while lowering fares does not increase usage enough to offset the lower ticket prices. Most rail systems operate at large, permanent financial deficits. A lose-lose situation, with shortfalls picked up by the taxpayer. Just what we need right now.

HSR advocates like to compare the system to Eisenhower’s national interstate highway system, generally regarded as a great success. There are two major differences between highways and HSR. First, Americans already owned automobiles in large numbers when the interstate highway system was planned. In other words, the demand was already there. Not so with HSR. Second, highways cost much less to build (roughly $10 million per lane-mile) and can accommodate huge numbers of vehicles. Roads are low fixed-cost, high variable cost systems. Most of the costs are borne voluntarily by drivers through their vehicle purchases.

A national high-speed rail system would compete primarily with the air travel system. The US has inexpensive, low-cost air travel which, since deregulation, has been available to almost everyone in the US. The air travel market is highly competitive, and airlines are the least profitable major industry in the US. What exactly is the need for an extremely expensive and economically dubious alternative? Consumer choice is often cited as a basis for HSR, but consumers are not entitled to an infinite array of expensive choices, particularly ones they must pay for even if they choose not to use them.

As a final point, the real political impetus behind HSR is jobs. We need to dismiss this fallacy once and for all. Government can create pseudo-jobs by hiring people to dig holes in the ground and fill them in again. Such jobs are welfare dressed up to look like work. Senators, Congressmen and Governors will in most cases accept any federal money for their districts for any purpose, allowing them to say to voters, “Look what I got for you!” Alas, as we have pointed out many times in this blog, the feds have no money other than what they take from the populace. Federal funding is in fact a negative-sum game. Each state gives tax money to the federal government and then tries to get as much back as it can after deducting the costs of the heavy administrative overhead the federal government. Poor states, like Louisiana and Arkansas might be able to win this game, but most states cannot. Why in the world would wealthy states like New York or California even want to play?

Let’s by all means discuss the President’s proposal for a national HSR system. Let’s include in that discussion a realistic evaluation of its costs and risks. I see three possible outcomes. First, we could sensibly decide that this proposal makes no economic sense and kill the “green jobs” fallacy once and for all. Second, we can start down the HSR road and spend a ton of money before we finally figure out that the system is not working. Finally, we could show real “political will” and build ourselves a multi-trillion dollar Big Dig on a national scale. You pick.

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Responses

  1. Halleujah – common sense prevails in the US. Help us get this message across in the UK. At least the US has a decent land mass within which to accomodate the HSR vanity and propaganda projects; we are facing losing huge proportions of our irreplaceable English countryside and heritage on a £34.7 bn vanity project. HSR is out of date, unwantd and their are more sustainable altenatives out there. There are huge influences internationally driving the lobby for HSR and China plays a huge role in this.
    Lizzy Williams Chairman STOP HS2 http://www.stophs2.org

  2. What a load of mostly NIMBY rubbish you anti HSR lobby come out with in the UK. Just read your Stop the HS2 website and not a single argument of substance. Just contradictions and scare stories. I use your very busy rail network all the time when in the UK and everyone I speak to on my travels thinks this new line should be built right away and connect with your High Speed 1 railway under the sea to Europe. This new electric HSR will transform your country and prove to be the only greener way of 21st century travel in a world soon running out of oil.
    I see no common sense in the protest against HSR at all. Well done UK for planning your second HSR to follow on from your first already built. Many millions of us in the USA salute you and hope to follow your lead.

    • Human beings learn from experience. Before we entrust trillions more dollars to the federal government, we need to review how well the government has done on similar projects in the past. That’s not “scare stories”, just common sense.

  3. Well, I understand the UK built their first High Speed Railway on time and within budget and it’s now doing very well with increasing use every year. Will do even better when connected to the new HS2 planned. If they can do it why not us!

    • Two points in response to this comment. First, Europe’s population is much denser and thus more suitable to train travel than the US, where airlines are often the more economical choice. Second, empirically, the US federal government has done an extraordinarily poor job on public works projects for many years. Not that poor performance is inherent in government, but entrusting a few more trillion dollars to the feds after The Big Dig, TARP, the stimulus and annual pork-laden transportation and farm bills makes no sense to me.

  4. I am amazed how public funds (basically what taxpayers pay) are misused even in most advanced democracies such as the US. Thanks for the informative post!

  5. I guess if you don’t want the project proposed in the first place, for what ever reasons, your bound to call it a misuse of public funds. Millions of others, who do want the project, may call it transport investment for the future needs of our own and other countries. Get real guys, peak oil is running out.
    Also, how very strange UK HSR protesters say in their arguments the very opposite to your comments, regarding the US is not suitable for train travel. They say HSR is NOT suitable for smaller countries like the UK because the population is much denser in Europe, (despite HSR already running in smaller countries all over the world and more being planned).
    You protesters do have a habit of contradicting each other all the time over many aspects of HSR!

    • The issue with HSR is whether it is an economical means of transportation. Calling it “transport investment for the future needs of our own and other countries” is a statement without substance. Before we spend $53 billion we don’t have, we want to be really, really sure that this system works not only technically but economically.

  6. But High Speed Rail has been running since the 60’s in Japan and other countries since worldwide, that is very much substance. I don’t think HSR worldwide would be expanding at the current rapid rate if not viable or worthwhile. This seems to be more a case of the US out of touch with the rest of the world and falling behind with current Tech already proven and in use for many years abroad.
    The current and next generation HSR Electric Train Traction Sets are becoming faster and use less power than older units, the Tech is advancing all the time. No doubt at all the system works and developing all the time. The US just needs to try and catch up, with a bit of help and understanding from other HSR countries.
    We can’t carry on as we are with peak oil running out. Renewable energy to power a US HSR Network is the only option long term, plane travel will become to costly to the climate and pocket.

    • A few comments to Julie’s post. HSR has to justified on the grounds of economics, both in terms of the cost per passenger-mile compared to alternatives and the cost of carbon mitigation compared to alternatives. The fact that HSR systems “work” in a technical sense is not relevant. Helicopters work, but are not an economical form of personal transportation. Second, the fact that other countries have installed HSR means nothing. Each proposed HSR segment has to stand on its own merits based on the local conditions and the costs of alternatives. Finally, “peak oil” is a hypothesis not very well supported by facts. The recent US experience with shale gas reinforces something we have known for a long time: we have no idea how big the global hydrocarbon resource base is, and technology constantly allows us to acce3ss new resources. Personally, I expect peak oil to occur when better substitutes are available and not before.

  7. Sorry, but all of your points in reply are the very reasons HSR is being adopted and developed worldwide. It is the most economic way of moving the masses as quick or quicker than plane travel. HSR electric traction is becoming more energy friendly with each new generation of trains built.
    The US is stuck in the dark ages with it’s notion that oil will last for ever or other shale deposits will do just as well. We can not carry on with carbon heavy fossil fuels at the expence of climate change that could well have devestating effects for the US the world and everyone in it.
    I repeat, if HSR is such a bad transport system, why is the rest of the world forging ahead with HSR in countries both small and large? Answer, it works very well, it’s very fast but very safe, it’s economic per passenger, it’s very carbon friendly compaired to plane travel and can be powered by renewable energy as more comes on tap. All very relevant indeed.
    What other alternatives are there that tick as many boxes? none.

    • Sorry, Julie, the fact that other countries are using HSR is just not an argument. Proponents need to show numbers, not concepts. Take a look, for example at US Light Rail systems, which are currently the darling of urban planners. The average cost per passenger-mile for light rail is about three times the cost for private vehicles. Almost every city that has built such a system in the past ten years has ended up with a permanent operating deficit. If the president wants HSR, he needs to make his case to the people.

      • Why is a world moving over to HSR not an argument then Bruce? You don’t seem able to answer. Countries around the world are embracing HSR because it meets all the points I have highlighted. Many countries are also building Light Rail networks too, including the UK, I have used a number of them on my travels and they are superb and many in the UK and Europe are expanding.
        Just because the US can’t make things work is no justification to ignore the outside world who can. Suggest some in the US learn from the rest of the world first before saying the systems are not viable.
        What ‘numbers’ are you talking about Bruce?

      • Julie-

        The “numbers” I’m talking about are specific and realistic estimates of (a) how much a specific HSR route will cost to build and operate, (b) how many people are willing ride it at what price, (c) how many passenger-miles will be diverted from driving or flying, (d) how much energy does that particular HSR route use compared the alternatives and (d) how much carbon or pollution does the electric power system emit to generate the required power compared to alternatives. You cannot determine these critical parameters by riding HSRs in other countries and deciding your like them. I like riding in an S-class Mercedes, but that doesn’t make it an economical form of transportation.

        Here’s one particular issue to think about. President Obama’s $53 billion HSR proposal would upgrade existing track – much less expensive than building dedicated roadway. Unlike Europe, however, the US moves an enormous amount of freight by rail – an inexpensive and very energy-efficient system. HSR would cause significant problems for the freight lines, since slow freight trains would have to get out of the way every time a high-speed passenger train went past. The higher cost would encourage some shippers to switch to trucks. How big an effect would that be? Wouldn’t you want to know things like this before you built these systems? You can’t build major infrastructure systems just because you think they are cool.

  8. Sorry Bruce but you seem way out of touch with understanding over HSR, your comments show that all to clearly. ”HSR would cause significant problems for the freight lines, since slow freight trains would have to get out of the way every time a high-speed passenger train went past.”……Bruce, ‘true’ HSR uses it’s own dedicated tracks, no freight is carried on them, although plans do exist to run fast freight at night on some HSR networks when passenger demand is not present.
    I don’t support HSR just because you claim I think it’s cool. Come on Bruce, I have provided many reasons for my HSR support, sweeping those reasons under the carpet won’t rid HSR of it’s fast growing network worldwide outside of the US for the positive reasons I highlight.
    I understand Spains new HSR is removing demand for internal Spanish air travel by around 86% now, with one airline stopping all services as of today. Other countries around the world with HSR are seeing the same transport modal shift happen from plane to train.
    The same could well start to happen in parts of the US when HSR begins services. That is great ‘lower carbon/energy’ news for our planet.
    As a country who placed men on the moon, we are in great danger of being left far behind the rest of the world by dismissing HSR as not needed in the US. Lets examine and learn why the world is going HSR first, instead of casting doubt all over it ‘before’ we fully understand the concept.

    • Julie, we seem to approach problems in different ways. The “reaasons” you offer in support of HSR are just assertions. These claims should be backed by numbers and analysis. If the US attempts to build an HSR system on entirely new dedicated tracks, the cost will be astronomical. Are you sure that Spain’s HSR is more economical and less carbon intensive than air travel? Would the same be true over thousands rather than hundreds of miles? Over the last 15 years, the US has invested $24 billion into local light rail systems which cost four times as much per passenger-mile as private automobiles. These LR systems save a tiny amount of carbon at an average cost of $14,000 per tonne. Do you regard those economics as successful? Perhaps we should make sure we are not repeating this error before investing another $50-100 billion we don’t have.

  9. Bruce, I can assure you none of my comments are assertions. There is a wealth of information on the web that will confirm all my points raised, please research.
    I travel to Europe and other parts of the world on a regular basis and take great interest in rail projects as a worldwide rail user myself.
    We in the US are totally out of touch with modern rail and see our own rail system as something ‘left over’ from days gone by. The rest of the world does not see rail this way. Electric Rail abroad is seen as the only 21st century transport mode that is sustainable, hence the huge amount of investment being spent on rail including HSR all over the world.
    The Spanish and French HSR networks have now all but removed most internal plane travel in those countries, only a few flights remain. The latest HSR line in Spain replaced 46% of internal flights in the first year of service. Demand for flights is now only around 10% of former levels (and still declining) before HSR arrived. As I said in my last post, one of the few remaining airlines has now pulled out.
    Germany the UK and other countries around the world are also seeing modal shift from plane to train. Please research on the web before claiming this all to be assertions. It clearly is not, more a case of the US with it’s head stuck deep in the past.
    The US has to take note of developing high tech rail transport in the rest of the world and learn from that world how to develope, run and construct a modern sustainable rail network that takes the US into the future and reduces our heavy carbon footprint as well. Expensive yes, but not half so expensive as doing nothing.

    • Julie-, we’re just going to have to agree to disagree on this issue. Thanks for contributing to a lively dialog.

  10. Thanks Bruce, i respect your opinion and agree all transport projects should be looked at in detail as should what’s happening in the rest of the world. We have a bad habit of not doing that as often as we should. We should never ever consider our nation not capable of learning from others around the world.
    Respect.


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