High Speed Rail

High Speed Rail

I have fought the High Speed Rail since its inception.  The cost figures for this project were absurd from the start – currently $68 billion (more than $5,000 for every family in California) for a train that goes from Los Angeles to San Francisco in two hours longer than it takes to fly. Energy consumption for the HSR is estimated at 16,000 kilowatts of electricity per trip at a time of sky-rocketing electricity prices and when we can’t guarantee enough electricity to keep your refrigerator running this summer.

The sad fact is that we could add about ten times the passenger mile capacity of our transportation system simply by investing the same money into expansion of California’s chronically congested highway system.  I opposed this project in the legislature and, 17 years later, oppose the squandering of any federal funds on it in Congress.

 

The High Speed Train Wreck

Bond Buyer Conference - San Francisco - September 23, 1999

It truly is amazing that this proposal is being discussed anywhere other than on Jay Leno.  But here we are, proving McClintock's seventh law of political physics: the dumber the idea the more seriously it is taken.

We are discussing a project that will cost – a low estimate – of $23.8 billion in principal alone -- $40 billion when you throw in interest.  Art Laffer calls numbers like these M-E-G-O numbers -- "My Eyes Glaze Over."

So let me put it in real terms.  To retire principal and interest and to provide an operating subsidy to keep the ticket price to the $40 per trip promised -- will cost an average California family of four $370 per year every year for the next 20 years.

This for a train that will go from Los Angeles to San Francisco in three hours.  First, let's look at the arguments that we are supposed to take seriously.

The first argument is that there is a strong passenger market for high speed rail.  Well, let's just run through the basic math here.

The current operating expense of Amtrak's service is about 22-cents per passenger mile.  A 400-mile run will cost $88 in operating costs alone. 

By comparison, premium service on Southwest Airlines is $90.  And you save two hours.  So there's no savings for you, unless we're taking a huge taxpayer subsidy out of your other pocket.  But that's just the beginning.

If you make $35,000 per year, your time is worth about $20 per hour.  So your actual cost is about $130 to ride this train.  If you're earning $70,000 per year, the actual cost in time and money will be $170.  You guys are in the business of assessing markets.  Any takers?

The alternative is to drive your own car.  That will take between five and six hours.  But that's for doorstep to doorstep service.  By the time you add in an hour to get to the train station, get parked, get checked in and get on board and an hour to get off, arrange for ground transportation and get to your destination, your train trip is now five hours, you have the added cost of ground transportation to your destination.  So you've saved no time and paid for both the fare and the cab.

Despite this, the High Speed Rail Authority claims they will attract 23 million passengers per year by 2020.  Now let's see if this passes the smell test.  Last year, all air passenger service between the airports of Los Angeles, Burbank, Ontario, Orange County and Long Beach to San Francisco amounted to 2.9 million passengers.  Their ridership projection is nearly EIGHT TIMES the entire air passenger service between Southern California and San Francisco.

Now let's talk about the alternative, because there's also an opportunity cost.  What competing transportation projects could be built with $23.8 billion?

The Century Freeway was the most expensive freeway in the history of mankind.  It required the condemnation of huge tracts of land and buildings, it had to meet a plethora of pricey environmental regulations, and it was bled to death by litigation for two decades.  When it was finally completed, it provided 160 miles of new freeway lanes at the outrageous price of $2.2 billion -- or $13.75 million per lane mile.

Using the Century Freeway as a model of efficiency, however, the capital cost of the high speed rail alone is 1,730 miles of new freeway lanes in the most heavily congested regions of the state. 

So that's the trade: 1,730 miles of new freeways in the most congested urban routes of the state, or the 3-hour train from Los Angeles to San Francisco.  What will do more to alleviate congestion?

By the way, based on passenger patterns along the existing route, this train will produce 2.3 billion passenger miles per year.  The freeway lane mileage it will cost us would have produced 22.1 billion miles of passenger service.

So one way of looking at this opportunity cost is, we are roughly adding the capacity of one new Century Freeway with the high-speed rail -- if their passenger numbers are right -- for the price of TEN new Century Freeways.

What would do more to ease traffic congestion? 

But they say, “you're forgetting the environmental benefits.  The high-speed rail is clean, because it runs on electricity, and you can't begin to calculate the environmental savings from cleaner air."

OK.  Let's go there.  According to the Legislative Analyst's Office, it takes 16,000 kilowatts to run the train on a single trip.  Coal currently provides 20 percent of our overall mix of electricity, and produces virtually all of our peak demand.  Just at the average mix, it will take nearly two tons of coal burning for one train trip.  If it is peak power, it could be more than eight tons of coal burned into the atmosphere to produce the "clean" electricity for every trip of this train.  Unless, of course, the environmentally-minded train advocates are planning to dam additional rivers for hydro-electric or site additional nuclear plants.

Let's also consider the alternative.  Gridlocked automobiles create twice the NOX contaminants and six times the carbon monoxide contaminants as traffic flowing at peak efficiency.

So I put to you the environmental question: up to eight tons of coal per trip versus 1,700 miles of new freeway lanes to restore traffic speeds to peak environmental efficiency, producing the environmental equivalent of removing half the cars on the road for NOX and five out of six cars on the road for carbon monoxide.

That is the choice.

The proponents insist that their recommendation is based on hard-headed business sense.  Anyone who has followed the debate knows that politics, and not market forces, have determined much of the Rail Authority's recommendations.  When Orange County officials were cool to the idea, Orange County found itself completely out of the loop.  Here's what was reported by the Orange County Register: “Michael Tennenbaum, chairman of the authority, which received $4.5 million from the state legislature in 1995 for planning the system, made it clear just how political the process is.  Noting that Orange County leaders had not rushed to support the project early on, he said: 'My message to Orange County is, if you want us, you better get your political leaders to make the commitment.'" 

To keep things in perspective, at the beginning of this year, all of the outstanding general obligation debt of the state amounted to $19.3 billion, with an additional $14.3 billion authorized but not yet issued.  This bond measure would be $23 billion.  Our debt service ratio is already 4.3 percent.  At the beginning of the George Deukmejian administration, it was 1.1 percent. 

The bond would require raising the state sales tax to 9.25 cents per dollar of sales in most jurisdictions -- at a time when the Internet now gives sales-tax weary consumers an international cornucopia of tax free products at the click of a mouse.

California's transportation crisis is not the absence of rail.  It is the fact that despite the third heaviest taxes per vehicle in the country, we consistently rank dead last in per capita spending for highways.  The vehicle taxes that once paid for our roads have been siphoned off for general spending, and for mass transit schemes the masses don't use.

Prior to 1974, lane usage and lane construction matched perfectly.  As lane usage increased, lane construction increased in exact proportion.  But in 1974, a radical notion was introduced which basically reasoned, "if we don't build it, they won't come."   The result is that since 1974, lane capacity has increased just eight percent, while the miles driven by California drivers has increased 116 percent.  They came anyway.

This proposal will effectively kill any attempt to address this catastrophic capacity short-fall, by eating up critically needed transportation dollars.  It is the last gasp of a discredited ideology that has wrecked what just a generation ago was the finest transportation system in the world. 

 

A Simple Paper and Pencil Issue: The Debate on SB 1856 (Costa)

California State Senate - Sacramento, California - August 29, 2002

Mr. President:

When the definitive history of California boondoggles is written, this one will loom above all others.  You would think after the outrageously failed Los Angeles Metro-rail that we’d have learned our lessons.

The bond now being proposed doesn’t pay for the entire project -- $25 billion or so before we begin accounting for cost overruns.  It is enough to suck us into this quagmire.

We’re assured that it will attract 23 million passengers annually.  Now let me ask you if that assurance passes the smell test.  The entire air traffic between the Los Angeles Region – including Ontario, Los Angeles, Burbank and Orange County -- and San Francisco is less than 3 million passengers annually –one eighth that figure.  And that assumes that every current airline passenger immediately switches to high speed rail so that they can get to San Francisco two hours longer than it takes to fly.

We’re assured it will dramatically relieve congestion on our highways.  Let me ask you if that passes the smell test.  This serves the San Joaquin Valley Corridor – one of the least congested highway corridors in the state.  And also one of the cheapest to expand.  And what we lose is the equivalent of 1,700 miles of new freeway lanes on our most congested urban corridors – using Century Freeway prices.

Finally, we’re told it will relieve people from the army of insulting and abusive Inspector Clouseaus that now plague our airports.   I grant you that is a big problem. But there are far cheaper and more effective ways of solving it.

This is not an ideological issue.  It is a simple paper and pencil issue.  This is an outrageously expensive boondoggle that doesn’t pencil out – it will eat up virtually all of our transportation money for years into the future until our successors finally scrap it as they look back at us and ask, “What were those people thinking?”

 

Off On the Wrong Track: California High Speed Rail

Policy Paper - September 23, 1999

Summary

The costs and benefits of the California High Speed Rail Authority's proposal need to be clearly understood, both with respect to the validity of its assumptions and the opportunity costs involved.

The Authority estimates that the Los Angeles to San Francisco train will cost $23.8 billion in capital outlay, and will enjoy annual ridership of 23 million passengers by 2020.  It estimates that the fare box revenues ($40 for travel from Los Angeles to San Francisco) will pay for operating costs, with principal and interest to be repaid through a combination of sources, including general obligation bonds and sales taxes.

However, the actual operating experience of much less expensive conventional rail suggests the actual operating cost will be at least $88 per trip, costing taxpayers annual subsidies of over $1 billion annually.  However, the actual ridership figures themselves are highly dubious.  The projection of 23 million passengers annually between Los Angeles and San Francisco is nearly 8 times more than the entire 2.9 million annual passenger service between all airports in the Orange County/Ontario/Los Angeles region and San Francisco in 1998.  The construction costs, too, may be highly understated if past experience on similar projects is any guide.

Furthermore, when the added time of the rail is considered relative to air travel, even the subsidized rate offers no financial benefits over air service to wage earners earning over $35,000 per year.  Also, when the time of transportation to and from stations is considered, including the cost of rental cars or jitney service at the destination airport, the service also does not compare favorably to doorstep to doorstep automobile service.

In addition, the opportunity cost must be considered.  The High Speed Rail will consume enough capital to build 1,730 miles of additional freeway lanes, using the most expensive freeway ever constructed as a template of economy.  Again, using the Authority's very generous passenger projections, the high-speed rail will produce about the capacity of a single Century Freeway, at more than ten times the cost.

Its claims of environmental benefit also are questionable.  The 16,000 kilowatts necessary for a single train trip will require burning 1.67 tons of coal per trip for electricity generation, at the current mix of power in the state.  If it requires premium power, it could require up to 8 tons of coal per trip.

In addition to the opportunity cost, the actual cost must be understood.  To retire $40 billion of principal and interest will require approximately $242 per family every year for the next 20 years -- in addition to approximately $125 in operating subsidies.  To finance this through the sales tax would require boosting the sales tax rate in most parts of the state to 9.25 percent -- assuming a static economic model.

Introduction: California High Speed Rail Authority Proposal

The notion of high-speed rail in California has its antecedents in the historic transcontinental railroad that linked Sacramento to the western railhead at Omaha in 1869, making possible the rapid expansion of California's population.  In the first few decades of the 20th Century, rail was an integral part of California transportation; the Pacific Electric's Red Cars of Los Angeles being just one example.  As late as the 1930's, rail travel was an important component of California transportation.  Indeed, the San Francisco-Oakland Bay Bridge included railroad tracks on its lower level.  In April of 1925, an ambitious rail plan was proposed for Los Angeles at the (then) astronomical price of $133 million.

But as useful as rail travel was in the 19th Century, all but one of California's cities came of age in the 20th Century and rapidly formed around the automobile.  Beginning in the second decade, automobiles rapidly overwhelmed rail as the dominant form of transportation in the state, and the cities of California assumed the familiar horizontal shape of all 20th Century cities that grew up around the decentralized automobile.  The Pacific Electric's Red Cars withered on the vine as Angelenos found the automobile to be a vastly more flexible, economical, speedy and convenient alternative to the rigid schedules and limited destinations offered by rail.  By the 1950's, rail usage on the Bay Bridge was so small that the railroad tracks were removed to make room for more lane capacity. 

The advent of air transportation in the last half of the Century took enormous toll on long-distance rail service throughout the nation, as rail service disappeared along all but a few heavily subsidized government routes.

In 1993, the California Legislature adopted legislation forming a California High Speed Rail Authority to investigate the feasibility of building a high-speed rail system between Los Angeles and San Francisco, amidst much fanfare of "going back to the future." 

The current proposal, adopted by the Authority on July 14, 1999 will cost an estimated $23.8 billion to construct, and carry 23.1 million passengers per year, according to the Authority's estimates.  There is strong reason to be skeptical of these estimates, as discussed below.

So, too, there is strong reason to be skeptical of a scheme based on transportation concepts abandoned in the early 20th Century as uneconomical, inefficient, and inconvenient.

Arguments for the High Speed Rail

The arguments made in favor of the high-speed rail are couched in grandiose visions of luxurious, economical and reliable service offering vastly superior transportation compared to competing modes.  Ironically, this was a public relations battle lost in the 1950's as the New York and Pennsylvania railroads fought to retain passengers that were abandoning them in droves for the relative convenience of air and automobile.

A Strong Passenger Market Exists for High Speed Rail

The California High Speed Rail Authority has promised Los Angeles to San Francisco fares of $40,[1] and expects that fares will pay for operating costs.   But these figures fly in the face of actual experience.  Current service on the Los Angeles to San Diego Amtrak route costs $0.22 per passenger mile.[2]  Presumably, operating costs of the very high-speed train proposed by the Authority will be much higher than conventional operating expenses.  But even at $0.22 per passenger mile, the operating cost over 400 miles between Los Angeles and San Francisco can be expected to be $88 -- exclusive of capital costs -- comparable with the most expensive existing air service provided by Southwest Airlines ($90 on August 31st).  This figure is close to the estimate of John Stevens, former legislative aide to Assembly Transportation Committee Chairman Richard Katz of $100 per trip.[3]  Thus, the actual operating expenses will be much higher than advanced purchase airfares of $65 and senior citizen fares of $54 on the same route, before even calculating time savings by air.  Thus, an advanced booking would save $33 AND two hours travel time flying by air -- hardly a competitive edge for the high-speed rail in a highly competitive travel market.

The High Speed Rail Makes Environmental Sense

The Authority argues that the high-speed rail will improve the environment by reducing the number of cars on the roads, and produce lower emissions because it is powered by electricity.

This claim is highly suspect.  According to the Legislative Analyst's office, the high-speed rail will require approximately 16,000 kilowatt-hours of electricity to make the run between Los Angeles and San Francisco.  Currently, coal-fired plants produce 20 percent of California's electricity.  This means that 3,200 kilowatt-hours of each train trip's power will be provided by coal-fired plants, requiring the burning of 1.68 tons of coal.[4]  This number is, itself, a highly conservative estimate, since coal-fired plants provide much of the peak generating capacity of the state.  Unless proponents are also proposing the construction of additional dams to produce hydroelectric power or additional nuclear power plants, it is likely that the marginal electrical needs of the high-speed rail could be largely coal-produced.  The total could be as high as 8.4 tons of coal burned per trip -- which hardly paints an environmentally appealing case.

Furthermore, as discussed in greater detail below, the high-speed rail will cost as much as more than 1,731 miles of new freeway lanes in the most expensive and densely congested routes in the state.  This is an environmentally significant trade-off, since gridlocked traffic creates twice the NOX contaminants and six times the carbon monoxide contaminants as traffic moving at peak efficiency.



[1] Richard Simon, "A Look Ahead: Despite the Shadow of the Troubled MTA and Uncertain Financial Support, A State Agency Pushes Ahead as…$20.7 Billion Train Seeks Fast Track," Los Angeles Times, May 11, 1998, pg. B 1

[2] U.S. Department of Transportation, High Speed Ground Transportation for America,  Federal Rail Road Administration, September, 1997 pg. 8-14

[3] Mark Larsen, Bullet Train Plan to be Unveiled, Sacramento Business Journal, October 14, 1996

[4] Jason A. Weller, Legislative Analyst's Office, (Information Obtained from California Energy Commission), Memo to Assemblyman Tom McClintock, September 8, 1999