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[quote user="V.Payne"] On the existence of an Interstate Road Cross-Subsidy One poster was questioning whether Amtrak’s new Virginia trains are still a good investment even if they pay for operating expenses and then some, but depreciation is not added to the tab. I have suggested the historic Interstate Cross-Subsidy for automobiles is around $0.08/VM for capital and $0.03/VM for government borne accidents at a corporate bond rate in the Intercity Marketplace thread on the main discussion board. I also know through my work that these costs are going up. In Virginia, the DOT (VDOT) is looking to toll I-95 to pay for its reconstructing and a lane-mile expansion. This was alluded to in the recent post on Virginia’s Amtrak service. They are proposing a toll of $0.02/VM per Page 9 of this link: <a href="http://virginiadot.org/VDOT/Projects/asset_upload_file435_62288.pdf">http://virginiadot.org/VDOT/Projects/asset_upload_file435_62288.pdf</a>     A quote… If Virginia attempted to fund the entire $9.6 B gap over 25 years by tolls alone, the toll rate required would be: Using a closed system where all trips were charged based on actual miles traveled, the toll rate would be ~ $0.14 per mile VDOT analyzed rates from $0.02 to $0.15 per mile. VDOT is requesting approval to initiate tolling at a reduced rate of ~ $0.02 per mile So here is another independent verification that there will be an Interstate capital Cross-Subsidy of ($0.14/VM - $0.02/VM) = $0.12/VM even after the tolls, plus accident costs. The deficit will be made up from Federal borrowing through the HTF general fund bailouts and in Medicaid spending. This would be more than $20 an equivalent train-mile. If you had 8 passenger trains on the corridor the Way & Structures and Equipment capital depreciation is less than the interstate alternative. Virginia has simply demonstrated that you can indeed make a longer-distance (Norfolk to Boston is 679 miles on Regional 174) intercity train work. Some might know that the original 1960’s ICC reports defined the future intercity rail market to be for trips of less than 1000 miles even in the jet age. This was perhaps more of a recognition that automobiles were the true competitor. We are currently sitting at a point where roadway construction costs are (1.7 to 2.0 x) where they were a decade ago, despite supposedly minimal consumer inflation over the decade. When fuel super spiked around 2008 they were at (2.5 x) the cost of just a few years prior to then. This effect has continued to work its way through the industry. Asphalt is not being placed at anywhere near the volume it was a decade ago, and as some of you know the asphalt life cycle is 8-10 years. So that means by 2016-2018 we will be seeing some real problems on lower volume roads. A lot of Engineers have questioned whether we have built more roadways than the user can efficiently consume/pay for or would ever be able to without the Federal government borrowing and “investing”.  To a large extent the intercity marketplace is skewed. At the very least we should recognize this by computing a Shadow Toll (Government Pays the computed toll not the User) for the Interstates to aid in planning for the future as an alternative to pots of money. [/quote] Your analyses appear to miss several key points.  First, although the U.S. has undoubtedly made transport funding mistakes, i.e. skewed outcomes because of politics, as opposed to pure analytics, the costs are sunk, and the decisions are not going to be reversed.  Second, your analytics don't appear to consider what most people want. Engineers, accountants, economists, financiers, etc., tend to over focus on their models and analytics.  Frequently they fail to see that their analytics are meaningless unless set in a realistic political context.  And third you reference variables that have noting to do with today's passenger rail environment, i.e. how much the freight railroads pay in property taxes is immaterial because they cannot pass the taxes on to Amtrak.   Most Americans don't want to ride on a train or a bus or public transit. They don't want to sit beside someone who is shouting into a cell phone, hasn't had a bath for a week, or is hung over. Given an alternative most middle class Americans, that's 85 per cent of us. don't want public transport of any sort. Americans opted for the convenience of the car decades ago. They are not going to change. We can afford cars; we are going to have them. They are a vastly superior option to taking a bus, train, etc. Oh, we'll fly if the distance is too great for auto travel. And we will use commuter rail in highly congested areas where driving is unduly frustrating. But there is a reason why 88 per cent of intercity travel in the U.S. is by car. That is what the people in this democratic republic want!  And as they have demonstrated, they can pay for it even if it costs more than hopping on a train. I lived in Australia for five years. I have also lived in Canada. Before moving to those countries, I thought the preference for the car was an American thing.  No so!  People in Australia loves cars. They want them as much as Americans. And once they get them they want a better one, then two, then one for everyone in the family. As a result passenger trains in Australia, with the exception of commuter operations, have gone in the tank. Most shippers in Texas find it more economical to ship by truck. If a shipper in El Paso has a load for San Antonio, a trucker can pick it up at dockside, run it to San Antonio overnight, and deliver it to the customer's dockside in the morning.  By comparison shipping it by train would require in most instances picking it up by truck, taking it to a loading station, putting it on a train, running it to San Antonio, off loading it to a truck, and delivering it to the customer. This is why trucks haul most of the intercity freight in the United States.   You could require the truckers to pay for the full cost of their wear and tear on the highways, and they would still come out a winner.  They should pay the full cost, but they have a technological advantage that railroads cannot match in most markets. Subsidies and cross subsidies distort the optimization of transport decisions. But at the end of the day Americans pay for their highways, airways, etc. The monies are not coming from the tooth fairy. Some of them, it can be argued, are coming from overseas investors, although the amount has been overstated, but one should not lose sight of the fact that Americans pay for what they use. One way or the other!
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