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[quote]QUOTE: Originally posted by greyhounds [quote]QUOTE: Originally posted by MichaelSol [quote]QUOTE: Originally posted by greyhounds 1) The grain rates are lower, much lower, today than they were 30 years ago with the Milwuakee in place. [/quote] Wheat rates Great Falls to Portland in 1980, the last year the Milwaukee was in place, were about $1600 per carload. On a price per ton-mile basis, farm products in general have declined by 43.3% (adjusted for inflation) through 1997, which happens to be last date used in the paper I am referring to, Jerry Elig, "Railroad Deregulation and Consumer Welfare," Journal of Regulatory Economics, 21:2, pp. 143-167 (2002). If the price charged to move wheat was "much, much" lower today than in 1980, it would have followed the pattern of the industry, and a 100 ton covered hopper carload of wheat could be transported from Great Falls to Portland for an inflation adjusted price of $1,616 (1997). Instead, that carload cost about $2,700 to ship in 1997. Today, it costs $3,300. The cost to the railroad to provide the service is "much, much lower" than it was in 1980, but in this instance the price charged to the shipper is not. Prices charged to shippers in general declined by 46.4%, for coal, 55.7%, and declined for intermodal, 48.1%. For the grain shipper in Great Falls, the cost to ship by rail has decreased by only 5%, or compared to the general decline in rates which presumably reflects production efficiencies obtained by the railroads during the period of time, increased by 52% compared to rail rates in general. Succinctly, if the rates charged today to the Great Falls wheat shipper reflected the inflation adjusted productivity index of rates, then that shipper would be paying $1871, today, to ship a carload of wheat. That rate would reflect the fact that the Milwaukee Road served Great Falls. The fact is, the Milwaukee does not serve Great Falls and that shipper pays, instead, $3300. [/quote] Well this is just a real fine example of a lawer throwing out a bunch of meaningless numbers in an attempt to confuse people. But this is what Michael Sol said on May 25, 2006 --- [quote]QUOTE: Originally posted by MichaelSol [quote][i] In 1974, Montana wheat growers had the natural advantages of a superior product and location to market. At $4.50 a bushel, a carload would bring $15,750, with a shipping cost to Seattle of $1,550 [1974 dollars]. Just about 10% of the gross revenue went to transportation. Yes, that is $6500 in 2005 dollars, [/quote] He's saying that a 1974 dollar is worth 4.19 2005 dollars. ($6,500/$1,550), and that to keep up with inflation the railroad would have to be charging $6,500 per car today. I mean that's what he said five days ago. But the BNSF not charging $6,500, it's charging only $3,300 in 2005 dollars. (again, these are Sol's own numbers.) If we take the $3,300 rate back to 1974 dollars, which we have to do to compare the rates, the railroad is only charging $788/car in terms of constant 1974 dollars ($3,300/4.19). And remember that 4.19 inflation figure came directly from Sol. In terms of real, constant 1974 dollars, the BNSF has reduced its per carload charge to the farmers from $1,550 to $788, a reduction of $762 per carload. This is a 49% reductjion from the $1,550 rate. This is entirely consistant with the reductions cited by Sol on other commodities and ag production shipped in general. No discrimination against Montana shippers. Now anyone being honest would agree that a 49% price reductiion was a significant reduction. Sol's not agreeing. Draw your own conclusion. How'd the BNSF do such a wonderful thing? It's simple, they got more efficient. They naturally kept some of the efficiency gain, as they should have. But they did cut their rates significantly. That doesn't fit Sol's political agenda or his ideology - so he seeks to deny his own numbers. I think Sol is off with that 4.19 figure, but for the sake of argument, I'll just use it. After all, he provided it. He can try to twist the numbers all around - but the absolute fact is that in constant dollar terms the rates paid by the Montana wheat farmers to the BNSF went down by almost half. The farmers' problem is not the railroad rates, they went down big time - it's the fact that the value of their crop on the world market has declined to dirt cheap levels. Nobody really needs Montana wheat anymore. I don't see that turning around, and just because they've grown wheat there for 100+ years, doesn't mean they should keep growing it there. The farmers simply have to find something else to grow or some other way to earn a living. What they're doing is no longer viable and is of negative value to the US economy. Ken Strawbridge [/quote] Ken, Do you ever get tired of being an idiot, or has this become a life's ambition for you?
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