The article by Robert Samuelson, which is linked below, ought to stir a bit of controversy. Samuelson is a respected economics and business columnist for Newsweek and the Washington Post.
http://www.newsweek.com/2010/10/29/why-high-speed-trains-don-t-make-sense.html
Global pronouncements are pretty much worthless, although he raises points that we all know need to be considered.
The case for HSR exists when the alternatives are less attractive. This clearly has to be done case by case (duh!)
I am not so sure that Amtrak's NEC load dumped on I-95 would go unnoticed. My back of the envelope calculations led me to think Amtrak was worth 1/2 to one whole lane of interstate at peak times. Needed some 5th grade math for that one. That would put the road over capacity more hours of the day and more days of the year.
Providing rail vs building highway and air capacity in already crowded lanes might just be the best alternative. But, you have to do the math, case by case.
Samuelson didn't do that math...
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
But again the dollars and cents isn't the only costs to be considered. Pollution, land use or even the avaliablity of land, how many cars can you fit on Manhatten Island or in Hudson County, NJ ...there is so much more than just money to be taken into account to rely on Samuleson, CPA's, investrment bankers, and other bottom liners. If you relied only on all or any of them to give an ok on anything we'd still be using oats for fuel and shovels or high boots in the roadways.
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1. Robert Samuelson is a fine columnist who writes about a variety of topics. He is not an economist - that would be Paul Samuelson. Robert didn't even major in econ at Harvard (Government).
2. He mentions an 800 mile HSR line from Anaheim to San Francisco. Perhaps that was a typo, but it suggests a pretty hastily-written column.
C&NW, CA&E, MILW, CGW and IC fan
I am not an economist either. But I completed more than 40 hours of economic at the undergraduate and graduate level. I know a bit about it. One does not need a Phd in economics to understand the basics and how to apply the knowledge in a practical sense.
Eight hundred miles of track is not far off the mark. The current route profile for the California High Speed Rail Project is 378 miles from Anaheim to San Francisco. Ultimately, the line will be extended to San Diego and Sacramento. This does not add up to approximately 800 route miles, but it will be close to 800 track miles. The line will be double tracked.
And I wasn't commenting on you. But even adding on SD and SAC is only 200 more miles. The route is measured in miles between points, no matter how many tracks. It just seems like a sloppy article.
Clearly, the case for each high speed rail project needs to be examined on its own. Moreover, the definition of high speed rail needs to be agreed. Whether one means a 220 mph train or a 125 mph train is important. The costs are dramatically different.
The GAO's findings tend to support Samuelson's universal views. That is to say, they came to similar conclusions regarding the projects that they reviewed, i.e. most of them overstated the benefits whilst understating the costs.
The projected cost of the California High Speed Rail Project (CHSRP), including weighted average financing charges, is approximately $206 million per mile. This is the average construction cost per mile. Clearly, construction costs in the metro areas to be served would be much greater than in the country. These numbers assume the project comes in on time and within budget. If it does, it will be a rare happening.
The cost to construct Texas 130, which is limited access four lane toll road, was approximately $31 million per mile. It goes around Austin, so it is not a fair comparison of what it would cost to expand highway capacities in the LA or SF areas, but I would be surprised if expanding them would cost anything like $206 million per mile. Texas 130 was built from scratch, whereas expanding many of the nation’s highways would mean adding a lane or two. Or in the extreme double decking the highway, which is what was done in Austin. In either case, I doubt that it would take $206 million a mile to get the job done.
The projected cost to implement NextGen, which is the planned satellite air traffic control network, is approximately $22 billion. In other words, the FAA will be able to greatly expand the nation’s air traffic control system capabilities, with realistically projected benefits, for about half of what will be required to build the CHSRP.
Moderate speed passenger rail (110 to 125 mph or even 150 mph) makes sense where the cost of constructing alternative transport systems, i.e. airways and highways, is cost prohibitive. Building high speed passenger rail so that we can say that we are in the game does not make good economic sense. But I admit that it is good politics.
Sam1,
I think you are forgetting to factor in operating and maintenance costs after wards. Not to mention which mode is going to be more easily adaptable to increase in ridership. Adding another lane or another train/coupling multiple sets together.
One should also consider how much that the California system is going to tie into the mass transit and light/heavy rail systems. It may actually become more appealing for travelers to use a fine tuned system over driving, and may be willing to pay the extra cost.
One of the things I keep harping on is to stop thinking running trains but rather providing a service. Service is the bigger picture of operations and results than the nuts and bolts of one track or one train. After you get by that, then you can understand the economics of a railroad service versus a highway service for instance.
Sam1 The projected cost of the California High Speed Rail Project (CHSRP), including weighted average financing charges, is approximately $206 million per mile. This is the average construction cost per mile. would cost anything like $206 million per mile.
The projected cost of the California High Speed Rail Project (CHSRP), including weighted average financing charges, is approximately $206 million per mile. This is the average construction cost per mile. would cost anything like $206 million per mile.
The figure published in several reports on the California project has been between $30 to 60 mil. per mile. Even that seems high, but where does a figure several times that come from?
I found the 800 mile figure refers to the whole system with a bunch of eventual branches beyond the core.
As ever....one man's pork is another man's dinner.
Never too old to have a happy childhood!
schlimm Sam1: The projected cost of the California High Speed Rail Project (CHSRP), including weighted average financing charges, is approximately $206 million per mile. This is the average construction cost per mile. would cost anything like $206 million per mile. The figure published in several reports on the California project has been between $30 to 60 mil. per mile. Even that seems high, but where does a figure several times that come from? I found the 800 mile figure refers to the whole system with a bunch of eventual branches beyond the core.
Sam1: The projected cost of the California High Speed Rail Project (CHSRP), including weighted average financing charges, is approximately $206 million per mile. This is the average construction cost per mile. would cost anything like $206 million per mile.
From what I understand, it is the price of the land in the city areas that is really jacking up the price.
BT CPSO 266 schlimm: Sam1: The projected cost of the California High Speed Rail Project (CHSRP), including weighted average financing charges, is approximately $206 million per mile. This is the average construction cost per mile. would cost anything like $206 million per mile. The figure published in several reports on the California project has been between $30 to 60 mil. per mile. Even that seems high, but where does a figure several times that come from? I found the 800 mile figure refers to the whole system with a bunch of eventual branches beyond the core. From what I understand, it is the price of the land in the city areas that is really jacking up the price.
schlimm: Sam1: The projected cost of the California High Speed Rail Project (CHSRP), including weighted average financing charges, is approximately $206 million per mile. This is the average construction cost per mile. would cost anything like $206 million per mile. The figure published in several reports on the California project has been between $30 to 60 mil. per mile. Even that seems high, but where does a figure several times that come from? I found the 800 mile figure refers to the whole system with a bunch of eventual branches beyond the core.
The cost projections for the CHSRP, which are published by its proponents, only consider construction costs. They don't include the financing costs.
The cost of servicing the debt (financing costs) will be capitalized to the project in accordance with Generally Accepted Accounting Principles. As a rough rule of thumb, the cost of financing a project over 30 years, which is the likely debt terms for the project, would nearly double the cost. Of course, it depends on the terms of the financing, i.e. interest rates, bond terms, etc.
The latest estimated cost of the project is $42.6 billion. I assumed that the project managers could borrow the funds at the current California municipal bond rate (4.53 per cent) for 30 year debt. The rate is higher than the rates for many other states because of California’s heavy debt burden. The state is a financial basket case. Some of the project will be funded by the federal government, which can borrow money for less than the California municipal rate, at least for now, although it will probably eventually cost the feds more to borrow money than California, if historical patterns remerge, which they will in time. The private partners may have to pay more than the California rate to borrow money for the project, since its financial viability is in question, although it depends on their credit rating and where they borrow the money. Accordingly, I think using the California municipal bond rate is a reasonable estimate of what it will cost to fund the project.
For simplicity purposes I assumed the project managers would borrow all the money on day one and would pay it back in 30 years. Moreover, I assumed that it would make monthly payments on the debt, either to the bond holders or to a sinking fund. Accordingly, the monthly payment on $42.6 billion would be approximately $215.8 million. Multiplying this by 360 months (30 years) shows a cost of $77.7 billion. And dividing this by 378 miles, which is the estimated project distance from Anaheim to San Francisco, shows an average cost of approximately $205.5 million per mile or rounded up to $206 million per mile. Again, these are relatively rough estimates, but there is a key point in them. Financing a project like the CHSRP is costly and when the financing costs are charged to the project, the cost of the project jumps dramatically. It is just like buying a house or a car. The cost of your house or car is the sticker price plus the financing costs unless you pay cash for them.
My analysis is overly simplistic. For example, if I were preparing the cost estimates for a power plant or other large project, I would run separate calculations for each tranche of debt. Moreover, I would know exactly how much the debt was like to cost, when it would be issued, and how it would be paid back. But to keep the estimates manageable, in light of the fact that I don’t know how much of the project will be funded by various players or their weighted average cost of debt, I simply used the California tax free rate, which is a reasonable estimate of the weighted average cost of the project debt. In fact, depending on how much money private investors put into the project, as well as their weighted average cost of debt, as well as what happens to fed borrowing rates, the California rate could be a bit low.
I think this is probably a pretty conservative estimate. Of course, until the project is completed, no one will know for sure how much it will cost. Most of these projects are notorious for coming in late and over budget. Given the likely variances, as well as financing probabilities, the cost of construction could vary by as much as 25 per cent from my calculations. Nevertheless, when the financing charges are added to the project, the project cost, not just the construction costs, over time will be considerably more than the project proponents have stated.
Sam1 The cost projections for the CHSRP, which are published by its proponents, only consider construction costs. They don't include the financing costs. The cost of servicing the debt (financing costs) will be capitalized to the project in accordance with Generally Accepted Accounting Principles. As a rough rule of thumb, the cost of financing a project over 30 years, which is the likely debt terms for the project, would nearly double the cost. Of course, it depends on the terms of the financing, i.e. interest rates, bond terms, etc. The latest estimated cost of the project is $42.6 billion. I assumed that the project managers could borrow the funds at the current California municipal bond rate (4.53 per cent) for 30 year debt. The rate is higher than the rates for many other states because of California’s heavy debt burden. The state is a financial basket case. Some of the project will be funded by the federal government, which can borrow money for less than the California municipal rate, at least for now, although it will probably eventually cost the feds more to borrow money than California, if historical patterns remerge, which they will in time. The private partners may have to pay more than the California rate to borrow money for the project, since its financial viability is in question, although it depends on their credit rating and where they borrow the money. Accordingly, I think using the California municipal bond rate is a reasonable estimate of what it will cost to fund the project. For simplicity purposes I assumed the project managers would borrow all the money on day one and would pay it back in 30 years. Moreover, I assumed that it would make monthly payments on the debt, either to the bond holders or to a sinking fund. Accordingly, the monthly payment on $42.6 billion would be approximately $215.8 million. Multiplying this by 360 months (30 years) shows a cost of $77.7 billion. And dividing this by 378 miles, which is the estimated project distance from Anaheim to San Francisco, shows an average cost of approximately $205.5 million per mile or rounded up to $206 million per mile. Again, these are relatively rough estimates, but there is a key point in them. Financing a project like the CHSRP is costly and when the financing costs are charged to the project, the cost of the project jumps dramatically. It is just like buying a house or a car. The cost of your house or car is the sticker price plus the financing costs unless you pay cash for them. My analysis is overly simplistic. For example, if I were preparing the cost estimates for a power plant or other large project, I would run separate calculations for each tranche of debt. Moreover, I would know exactly how much the debt was like to cost, when it would be issued, and how it would be paid back. But to keep the estimates manageable, in light of the fact that I don’t know how much of the project will be funded by various players or their weighted average cost of debt, I simply used the California tax free rate, which is a reasonable estimate of the weighted average cost of the project debt. In fact, depending on how much money private investors put into the project, as well as their weighted average cost of debt, as well as what happens to fed borrowing rates, the California rate could be a bit low. I think this is probably a pretty conservative estimate. Of course, until the project is completed, no one will know for sure how much it will cost. Most of these projects are notorious for coming in late and over budget. Given the likely variances, as well as financing probabilities, the cost of construction could vary by as much as 25 per cent from my calculations. Nevertheless, when the financing charges are added to the project, the project cost, not just the construction costs, over time will be considerably more than the project proponents have stated.
As much as I appreciate your skepticism regarding HSR as a counterpoise to the rah-rah the Green Bay Packers Are Going to the Super Bowl wing of train advocacy (they are not), I think there is a case not to overplay the skeptic's case, much as the advocate's case needs to be realistic.
One of the things mentioned is 22 billion for Next Gen (new air traffic control system). There are probably train advocates going, "Oh, the Humanity! Air travel is so terrible and they are going to spend 22 billion for what? We need that money for high-speed rail!!" -- they are saying this without considering that the air traffic control system is carrying 100 times the passenger miles as Amtrak, and one needs to balance the 22 billion against the work product. But then since Next Gen is mentioned, is that the up-front cost, or does that take the finance charges of paying for the thing over time into account? Apples with apples.
For example, were one to purchase a house for $200,000, one enters into a sales contract transfering $200,000, whether one gets the money from your rich uncle who passed on or from a mortgage lender. And yes, the "real cost" of the house is some multiplier of $200,000 if you are financing it with a 30-year mortgage, but if it weren't for the crisis in the economy, you could turn around and sell that house for about $200,000 a year later and recoup your stake, more or less. And if you are paying, over time, much more than $200,000 for the house because of mortgage interest, 30 years from now, some but not all of will live that long, you could sell that house for much more than $200,000 on account of general inflation, presuming one has kept up with the maintenance and presuming your neighbors have done the same to theirs and that drug dealers haven't moved into your neighborhood.
In the power utility industry, famously nuclear plants have large, open-ended cost increases related to finance charges. What is going on there is not that someone is saying, oh, the interest charges over the 30-year life of the nuclear plant should be tacked on up front as the real purchase price of the power plant. Once a power plant is in production, the interest charges are payed for out of electric rates. So we say that for a natural gas plant with a construction cost of 1 billion compared with a nuclear plant with a construction cost of 5 billion has 20% the interest and amortization expense, but it has a higher (and highly variable) fuel cost and so on. We don't take the 30-year interest expense on the 1 billion for the natural gas plant (I am making up some number here) and say the effective construction cost of the natural gas plant is really 3 billion. No, Sam1, you have told us about your experience with the utility industry, but in making apples-to-apples comparisons, we don't.
Where the nuclear plant gets into trouble with interest expense is that back in the days when the power companies were still building these things, there was a long and highly variable time getting these things built, licensed, and operating because of all of the Ralph Nader wanna bees acting in what they understood to be the public interest. Freeman Dyson, if we are in the business of argument by authority, a very smart man and would have shared a Nobel Prize if the stamp on his diploma had said Physics instead of Mathematics, a man who has thought long and hard about nuclear issues, in physics research, in atomic weapons, in the Orion "nuclear pulse" spaceship project, and yes, even in electric power, commented on how natural gas fired turbines have bested nuclear power because the gas-fired turbines, based on airplane jet engine designs, are "quick" in his words and nuclear is not. What he means is that nuclear is this fragile technology that requires the most careful treatment not to have a radiation accident except with the most remote probability, and the way our society has handled this is that building a nuclear plant is no longer "quick", with its economic and social planning consequences.
So a reasonable assignment of finance cost is from the time you have to turn over money to the time the thing is carrying paying customers. Now the HSR will charge fares that may never pay back the cost of the tracks, but we can consign the interest and amortization not recovered from the fare box as paying for some kind of nebulous social goodness of trains, dunno, that the HSR is electric and does us in from coal-particulate asthma instead from sending our young people overseas to be shot at to guarantee access to oil or some such narrative.
Now HSR as well as highways as well as Next Gen can run into the effect that you start funding construction and all kinds of well-meaning and well-intention Ralph Nader PIRGs hold the fine thing up, running up finance charges, well before the first passenger passes the turnstyle. But lets put these three things on a level playing field of comparison, of the dollar cost of construction plus accrued finance charges taking us to the time the thing goes into operation. And let us not overstate the case for skepticism, just as let us not overstate the case for the inherent goodness of trains.
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
Questions and problems arise on these issues because the US has no firm universal transportation policy. Although we have come to accept government(s) building and maintaining roads, airports and policing airways, and maintaining and operating waterways along with commuter rail and transit systems, we cannot wrap our minds around a way to work with railroads because they have always been private enterprise and many think they should continue to be 100% so or die (I'm not saying the shouldn't be, I am just saying it is so). We don't look at transportation as a public need in order to maintain commerce, i.e. move people to an from jobs; create living areas and work areas; create private and public sector jobs; create private sector business opportunities; move products to and from sources and end user; in short, create a climate that encourages and helps develop enterprise that yields livelihoods for the population and profits for business. We keep fighiting private vs public, parochialism vs parochialism, self interest vs. self interest, etc. without seeing what will be the best overall interest of the USA. HSR, regular rail, airports, highways, water resources, fuel resources, even pollution control so the population can breathe and be able to work, all hve to be controlled and operated somehow. It just can't happen by posturing idealogical arguements and stonewalling.
I was attempting to show that the total construction cost of the CHSRP will be considerably more than the costs projected by its proponents, and raising a point as to whether the cost of expanding the airways and highways would be more costly. I was not presenting a total cost model.
Clearly, there are other variables (quantative and qualitative) to consider in any comparison. Operating costs, maintenance costs, salvage values, environmental impacts, etc. would be factored into a complete analysis. This was not my objective nor, for that matter, could it be since I don't have access to the necessary data.
The estimated cost of NextGen, according to the FAA, is $22 billion. I presume this does not include the financing costs. The government will fund the project with U.S. Treasury issues. Using the current weighted average interest rate for the U.S. Treasury (2.56%), the estimated cost of the project at this point, using the 10 year Note as the benchmark security, would be approximately $31.5 billion, which is considerably less than the project cost of the CHSRP.
I don't believe that the CHSRP proponents plan to sell the project, especially given the fact that no one would buy it, as suggested by the fact that to date no private investors, other than the manufacturers of the rolling stock or infrastructure, have thrown their hat into the financing ring. They could hardly be described as arms length investors.
For rate making purposes the total costs of a power plant, including the financing costs, are recovered over the expected life of the plant. Under the regulated environment in Texas, whilst the plant was under construction, the sponsoring utility could begin to recover the financing costs through a process call Allowance for Funds Used During Construction. But for costs analysis as well as rate making purposes, the total cost of the financing or debt service is being recovered over the estimated life of the plant.
I never met an investment banker, comptroller, cost accountant, etc. who did not consider the cost of the financing when determining the total cost of a capital project. After all a viable business has to recover the cost of the financing as well as the other costs of a capital project if it wants to stay in business. Of course, the government is a different animal, so maybe government accountants have a different system. It would not surprise me.
It used to be in railroading that a branch line or local train would be maintained as part of the service. It was deemed important in the scheme of things even if it didn't pay its own way; it did add to the overall service, though. Other business, like broadcasting, used to deem it necessary to have newscasts as part of the program or live announcers to handle not just the on the air program, but to be there in case there was an emergency which had to be broadcast.; it was local, too. Today, often, everything is either controlled and fed from a remote location to multi locations or are pre recorded and autmatically presented even days later. The owner has saved money but the listener and advertiser has lost a lot. Other businesses have done the same. Investment business since the Reagan years has reduced the quality of products and services cheating the population out of what they used to have while the investor reaps huge rewards and does not often put back into the business or the community. We have to change our laws, get rid of the Reagan tax and business plans. Make it worth while for American business to invest in American business by building factories and hiring Americans. They also should not be able to send their profits out of the country to hide from American taxes. This bean counter mentality has killed off American business, slowed internal (inside the US) investments, and put the country in jeopard. The whiplash to all this is going to be similar to the labor unrest of the late 1800s.
Re: sam1's postings on this thread and on the Russian HSR thread.
Your post 10/29/2010: “For example, the backers of the California High Speed Rail Project estimate the project will cost between $40 and $45 billion. However, when the financial costs are factored into the cost structure, the cost of the project is likely to be in the neighborhood of $73.2 billion to $82.3 billion.”
Your quote from Samuelson 11/3/2010: “California wants about $19 billion for an 800-mile track from Anaheim to San Francisco. Constructing all 13 corridors could easily approach $200 billion.” [In fact, the total mileage for all 13 corridors is more than 800 miles]
Your post 11/4/2010: “The projected cost of the California High Speed Rail Project (CHSRP), including weighted average financing charges, is approximately $206 million per mile. This is the average construction cost per mile. Clearly, construction costs in the metro areas to be served would be much greater than in the country. These numbers assume the project comes in on time and within budget. If it does, it will be a rare happening.”
Your post 11/5/2010: "For simplicity purposes I assumed the project managers would borrow all the money on day one and would pay it back in 30 years. Moreover, I assumed that it would make monthly payments on the debt, either to the bond holders or to a sinking fund. Accordingly, the monthly payment on $42.6 billion would be approximately $215.8 million. Multiplying this by 360 months (30 years) shows a cost of $77.7 billion. And dividing this by 378 miles, which is the estimated project distance from Anaheim to San Francisco, shows an average cost of approximately $205.5 million per mile or rounded up to $206 million per mile."
These posts are confusing and even contradictory, in terms of the figures and how they are calculated.
schlimm -
You have identified the technique used by the anti's for any project....
Throw enough apple, orange, pear, cherry and kumquat 'facts & figures' that can't be verified and each measuring something different within the scope of the proposed project....Once you throw enough smokey figures and 'facts' into the proposed project you have totally obscured the ability of anyone to bring all the garbage together and make any meaningful understanding of the project and/or it's Pros & Cons and anything approaching a true cost//benefit analysis.
Oh lets just have another cup of Tea and let them jabber some more.
I just got a copy of the Newsweek magazine and read the Samuleson article. It is a Pop Ed piece with very little substance and a lot of rhetoric. He throw around many numbers without qualifying references and a lot of opinions without any substantial back up meat. Pop Ed not even Op Ed. Therefore I can't take what he says too seriously. Except that since he said it in Newsweek thousand will all nod their heads in agreement not knowing what they are agreeing to!
BaltACD You have identified the technique used by the anti's for any project....
And the technique used by the "pros" for any project -- present a list of unquantifiable social goodness about any project, and call the opposition ignorant or uninformed for not agreeing to this list.
Now take the LEED program . . . please! You see since cost or price cannot be taken into account in evaluating environmental benefits (and detriments), you have to come up with some manner of non-cost non-price scoring of "green" buildings. Oh, this building is made of wood, and wood is a renewable resource, only the wood in this building came from South America where workers are exploited because when they get splinters in their hands from working with the wood, they get jungle rot and die . . .
The best scoring for something being "green" is . . . green! (Yes, money). That is, if something is parsimonious with resources, it will cost less than the alternative. A building with the proper insulation will cost less money than paying out more for fuel. If you add more insulation than this proper amount, you are not being "green" because the insulation itself consumes resources, and the workers hired to add the additional insulation have lifestyles that consume resources.
I have yet to see someone on this forum say, "Yes, the CHSR costs X dollars, but freeway lanes carrying the same number of passengers will cost Y dollars where X < Y." No, I don't see any of that from the "pros", just complaints that the anti's won't simply believe in the unquantifiable social goodness of trains.
Well Paul, the purpose of my post was much like yours: to question the accuracy of the numbers being thrown around, since some appeared contradictory and /or derived incorrectly. I share your desire to see some hard numbers that are truly comparable.
schlimm Re: sam1's postings on this thread and on the Russian HSR thread. Your post 10/29/2010: “For example, the backers of the California High Speed Rail Project estimate the project will cost between $40 and $45 billion. However, when the financial costs are factored into the cost structure, the cost of the project is likely to be in the neighborhood of $73.2 billion to $82.3 billion.” Your quote from Samuelson 11/3/2010: “California wants about $19 billion for an 800-mile track from Anaheim to San Francisco. Constructing all 13 corridors could easily approach $200 billion.” [In fact, the total mileage for all 13 corridors is more than 800 miles] Your post 11/4/2010: “The projected cost of the California High Speed Rail Project (CHSRP), including weighted average financing charges, is approximately $206 million per mile. This is the average construction cost per mile. Clearly, construction costs in the metro areas to be served would be much greater than in the country. These numbers assume the project comes in on time and within budget. If it does, it will be a rare happening.” Your post 11/5/2010: "For simplicity purposes I assumed the project managers would borrow all the money on day one and would pay it back in 30 years. Moreover, I assumed that it would make monthly payments on the debt, either to the bond holders or to a sinking fund. Accordingly, the monthly payment on $42.6 billion would be approximately $215.8 million. Multiplying this by 360 months (30 years) shows a cost of $77.7 billion. And dividing this by 378 miles, which is the estimated project distance from Anaheim to San Francisco, shows an average cost of approximately $205.5 million per mile or rounded up to $206 million per mile." These posts are confusing and even contradictory, in terms of the figures and how they are calculated.
You have mixed Samuelson's comments with mine. I was not attesting to the validity of Samuelson's argument; I simply posted it to generate discussion. Obviously, it has. Frankly, I love to stir the pot.
Embedding the financing costs into the estimated cost of a capital project is a straight forward financial calculation. There is nothing magical about it if one understands the methodology.
My point is straight forward. The estimated cost of the project, based on the assumptions that I rolled into the calculations, is approximately $77.7 billion, which is considerably more than the CHSRP Authority’s estimate of $42.6 billion. As I stated, the outcomes of the calculations could be off by as much as 25 per cent, given that the estimates require certain assumptions that may or may not hold true.
Samuelson and I agree on one point. The cost of high speed rail is very high, especially if it has to be built from scratch. Moreover, as I said, I don’t know how much it would cost to expand the highway capacity in California, but I did offer comparative numbers for Texas. And I offered supportable numbers for NextGen. Frankly, there is nothing confusing about these numbers.
The question is how many miles of line get built for the $78 Bil.? It is more than just the 378 miles. According to Samuelson, it is 800 miles. So at that rate, the fully-funded cost per mile is less than half of your figure. BTW, the figures generally cited for adding one lane to any highway do not include financing. FHWA’s Highway Economic Requirements System (HERS) inputs costs that depend upon highway functional class and terrain type. So for one lane each direction, a rural Interstate would cost about $6.1 mil. per mile.
schlimm Well Paul, the purpose of my post was much like yours: to question the accuracy of the numbers being thrown around, since some appeared contradictory and /or derived incorrectly. I share your desire to see some hard numbers that are truly comparable.
There are some hard numbers to be had. The Federal expenditure on the FAA is 10-fold the Federal expenditure on Amtrak. The airline transportation system carries 100 times the passenger miles as the Amtrak network. The disparity is such that much of the FAA budget can be recovered by the taxes on aviation fuel and the tax on airline tickets, but the Federal contribution to Amtrak cannot be recovered in this manner, that is, unless the tax on Amtrak tickets would amount to between 100 to 200 percent of the current fare.
One point made by the outgoing president of our local advocacy group was something to the effect that the air transportation system was saturated -- that at least the short-distance portion of our common-carrier transportation system needs to be shifted to regional networks of high-speed rail corridors. If this is true, a build-out of such regional networks, including everything from the Madison-Milwaukee train that the Governor Elect is trying to cancel to the CHSR becomes an absolute necessity. They are necessary, even if they don't pay over a 20-30 year horizon because they are going to be essential as rain in the 50-year horizon, and you need to build these things now before the land corridors become tied up.
But is the air transportation system at the saturation point? No, I don't mean the belly-ache criticism of airline security, because if regional HSR ever reaches airline levels of traffic, you are going to see the same kind of security concerns there too. What I am asking, is air transport at the point that it cannot accomodate growth? Next Gen says no. There is a technological solution to continued growth in domestic air travel.
Next Gen has a 22 billion price tag plus finance charges, CHSR has, what, a 20-40 billion price tag plus finance charges. In other words, in what I call rough round numbers, CHSR and Next Gen cost about the same amount. And no, we don't need to quibble about the authenticity of numbers, because the exact number in comparing these two projects is within what we engineers call "an order of magnitude." Amtrak and the national air traffic control system, however, differ by a full order of magnitude in the work product in relation to the money spent.
Two project costing roughly the same amoun, Next Gen will "solve" the capacity problem nationwide; CHSR will solve the capacity problem along one intercity corridor.
The problem isn't numbers. The problem is that the pro-HSR faction does not want to deal in numbers but wants to pay for the project in the coin of the inherent social goodness of trains.
But the question always begged and always unanswered is what if the proper amount of money was poured into Amtrak/passenger rail to make it a viable system was poured into it, what would the results be? Airlines 10 times the money, 100 times the passengers: what if Amtrak/passenger rail got the same amount of money, how many passengers could it serve? More or fewer than airlines? Same equation applied against highways...what would the results be? We don't know because everyone dismisses rail out of hand by comparing it to the status quo of air and highway.
henry6 But the question always begged and always unanswered is what if the proper amount of money was poured into Amtrak/passenger rail to make it a viable system was poured into it, what would the results be? Airlines 10 times the money, 100 times the passengers: what if Amtrak/passenger rail got the same amount of money, how many passengers could it serve? More or fewer than airlines? Same equation applied against highways...what would the results be? We don't know because everyone dismisses rail out of hand by comparing it to the status quo of air and highway.
The problem is, nearly all of Amtrak's costs are proportional to ridership. What specific types of gov't spending on Amtrak could change this by an order of magnitude? I can't think of any.
By increasing speed and frequency on corridors, you might get some additional equipment and crew productivity, but that's nibbling at the edges. I think if you were very lucky, a 10 fold increase in spending might get you a 20 fold increase in ridership - that's my WAG, anyway...
The equipment is too expensive, the ROW improvements are too expensive, the lead times from planning to implementation are too long, etc. If there is a cheaper way, we need to find it! (maybe we should import equipment from China, for example - it's less than half what we're paying...nearly $2M for a passenger car is outrageous!)
There, no doubt, are places where investing in intercity rail is a good idea, but those are going to be niches where the alternatives for adding capacity are less attractive.
The question does have one answer -- the Vision Report, which advocates spending half a trillion dollars over time to achieve traffic levels that are 10 times Amtrak but 1/10th current airline traffic. Where the Vision Report gets its numbers -- see the Appendices -- is from the European experience, where trains do get much higher levels of funding.
If you, as a passenger-train advocate, believe that there is an economy of scale to be had, that if Amtrak could serve 100 times the passengers with 10 times the current money, then you have to look at things like the Vision Report, which is pretty much business-as-usual with some HSR thrown in, you need to look at such things more critically rather than unquestioning, "Yay, it is about time we spent more money on trains!"
If there are to be economies of scale, making trains more competitive with other modes, it is not just a question of funding, it is a question of what to do with the money. Maybe Governor-Elect Walker chasing the trains out of Wisconsin and putting them in Virginia will be an outcome that will help the cause of trains, not just in Virginia but everywhere, that is if Virginia can make more cost effective use of them.
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