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National Defense, Parallel Non Oil Transport=Electrifcation RR's

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Posted by WilliamKiesel on Sunday, January 23, 2011 10:16 AM

Platitudes and open ended questions are on way to communicate.

What is meant by "red herrings in abundance?"

What does "follow the money" mean?

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Posted by henry6 on Sunday, January 23, 2011 10:18 AM

schlimm

2.  I ask myself, why are some folks so opposed to moving to a less oil dependent economy, through electrification, more alternative energy sources and energy conservation?  Follow the money.

3.  Isn't it just a bit odd that almost everywhere else in the world there has been a gradual shift to electrification of heavily used mainlines.  Wonder why and why not here?  Follow the money.

Oh, yeah, the military-industrial-petroleum complex feels threatened  by anything that does not promote or ensure their comfortable future.

Electrification in the rest of the world has not been a gradual shift but a constant application since the 1930's or before.  We started the same way here in the US at the time but had a gradual shift away from electrification because of 1) our up to then dedication to coal and the coal industry; 2) the onslaught of the Great Depression; 3) the increasing devotion and adherenced to petroleum products.  The diesel locomotive was the Godsend for all as it was cheaper to operate in many ways (labor, continual usage, maintenence, etc.), actually produced electricity for a motor to move the unit and didn't need wire to be electric.  American railroads (governement, public, manufacturers) became more and more complacent with that philosophy.

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Posted by schlimm on Sunday, January 23, 2011 11:02 AM

Sorry if my brevity appeared to be platitudes.  I was posing real questions about the underlying motivations of the anti-electrification, anti-alternatives to oil, anti-change crowd, not your post.  "Follow the money" refers to looking there for the real motivations of that group.  Every President beginning with with Nixon, has mentioned "reducing/eliminating dependence on foreign oil" in S of the U addresses, yet our dependence has only increased.  Why?  Foreign oil is cheaper to extract, hence greater profit margins for the international petroleum giants.  I wonder who are the largest donors to the TP, AEI and the Heritage Foundation?  For that matter, to both major political parties?

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Posted by WilliamKiesel on Sunday, January 23, 2011 2:21 PM

It is not important as to why poor decisions are made and followed. It is important to identify them and change them.

It has been frustrating to recognize the oft stated problem of foreign oil dependence over the decades without a logical, consistent response.

What the cited studies do is to identify an elegantly logical solution to reliance upon an oil based transport system.

 

 

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Posted by schlimm on Sunday, January 23, 2011 2:55 PM

One can have a multiplicity of elegant solutions to problems to no avail if we aren't aware of the continued impediment to implementation, which has become part of the problem.  Failure to recognize this is what has led to 40+ years of inaction, not the lack of solutions to the technical part of the problem.  Big oil has had and continues to have an overwhelming influence, probably far greater than the dangers Ike warned us of with the military-industrial complex (originally he called it the military-industrial-congressional complex).

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Posted by Anonymous on Sunday, January 23, 2011 4:00 PM

This general proposal about electrifying freight railroads in order to create non-oil transportation is being put forth by several think tanks.  It entails the following:

 

1)      Electrification of all freight railroads.

2)      Moving 80% of long-haul truck freight off of the highways and onto rail.

3)      Obtaining all of the electricity from wind and solar sources.

4)      Building a new smart grid and adding new power lines to carry the power from the generally western wind farms eastward. 

5)      Routing the new power lines on railroad corridors.

6)      Adding HSR and high-speed freight trains.

 

It is an ambitious plan.  And I assume that this is being proposed as being executed entirely by the public sector.  In fact, I personally believe that this is being proposed in order to give the public sector more to do.

 

 

Here is a link to this train of thought:

http://www.theoildrum.com/node/4301

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Posted by schlimm on Sunday, January 23, 2011 4:31 PM

Once again we see a quasi-straw man argument.  (In this case, half-truths.) The proposal you link (from 2008) is hardly representative of all electrification ideas.  Some rely on coal or nuclear generation, while recently natural gas is in favor.

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Posted by creepycrank on Sunday, January 23, 2011 4:37 PM

Its interesting about the wind farm business. There was a news item about 6 month's ago where Wartisila was awarded a contract to build a power plant using about 18 of their 10 megawatt gas fuel generators (converted from diesels) to cover the largest wind farm in west Texas when the wind isn't passing.

"I like passing wind." - Benny Hill

Revision 1: Adds this new piece Revision 2: Improves it Revision 3: Makes it just right Revision 4: Removes it.
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Posted by Anonymous on Sunday, January 23, 2011 4:50 PM

schlimm

Once again we see a quasi-straw man argument.  (In this case, half-truths.) The proposal you link (from 2008) is hardly representative of all electrification ideas.  Some rely on coal or nuclear generation, while recently natural gas is in favor.

It is not a straw man.  Yes, the article I linked does not represent all thinking about the electrification of railroads.  But it certainly is aligned with the article that the original poster mentioned as the basis of his opening thoughts.  Trains recently ran an article by Scott Lothas.  I will have to check that last name.  Anyway, it all connects back the non-oil transportation system with the objectives I listed.  No straw man.  In many ways, the FRA is on the same page as evidenced by some of there statements.

 

And this particular group of thinkers is not about to use coal or nuclear to generate the electricity.

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Posted by PNWRMNM on Sunday, January 23, 2011 5:03 PM

Bucyrus

 schlimm:

Once again we see a quasi-straw man argument.  (In this case, half-truths.) The proposal you link (from 2008) is hardly representative of all electrification ideas.  Some rely on coal or nuclear generation, while recently natural gas is in favor.

 

It is not a straw man.  Yes, the article I linked does not represent all thinking about the electrification of railroads.  But it certainly is aligned with the article that the original poster mentioned as the basis of his opening thoughts.  Trains recently ran an article by Scott Lothas.  I will have to check that last name.  Anyway, it all connects back the non-oil transportation system with the objectives I listed.  No straw man.  In many ways, the FRA is on the same page as evidenced by some of there statements.
 

And this particular group of thinkers is not about to use coal or nuclear to generate the electricity.

The article Bucyrus cites is about 90% identical to the one the OP cited.  Bucyrus's has a bit more detail.  If you read it closely you find no great improvement in thermal effeciency as between modern diesel locomotives and a modern coal plant after transmission losses, which the author discusses and then hand waves away.  The real question is not thermal effeciency but the full cost of power including capital and maintenance cost.

If I can spot huge leaps of faith, assuming facts not in evidence, and flat errors, I have a hard time supporting something, non oil dependent railroads,  that has its attractions.  The question is what is it worth to the country and to the carriers.  So far it is not worth the cost to the carriers.  The real price of oil will begin to rise at some point, but the oil sellers need us almost as much as we need them.  For the record I would prefer not to have to buy any oil from outside the US.  I also beleive it will never happen for a whole host of reasons.

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Posted by blue streak 1 on Sunday, January 23, 2011 7:54 PM

1. Freight RRs ROWs are not usable for HSR passenger trains in mountainous areas. The freights need a reasonable ( .5 - 1 - 2% ) grade whereas HSR needs an essentially very low curvature tracks but can operate on steeper slopes than freight.

2. A fact looked over so far is that there is about a 30% recovery back into the electric grid (using regenerative braking) when going down hill or slowing for whatever reason.

3. There has been very large deposits of natural gas discovered in the NE that can now be recovered by using fracting.

4. Some one here can give the actual BTU conversion of present day Locomotives but I believe that it is in the 25 -35% range.

5. Present day Natural gas electrical turbine generators  have a BTU recovery around 35%. If a recuperative after heat system is used the BTU recovery goes up to 55 - 60%. Gas turbines also have a quick start up cycle that can be used for the peaking needs of RRs however the recuperative cycle takes longer to get to peak efficiency. Certainly would not have to wait for more convential electic generating plants to be built.  

6. The energy savings from the required conversion to power saving light bulbs is estimated to be 3 -4 % which is what has been quoted here-in as what RRs will require. Could be a wash?   

7. Start electrifying on severe grades to cut fuel consumption especially fuel required to run traction cooling fans when using dynamic braking going downhill.

8. Some route locations might be able to use dual mode locos.

9. Present US passenger electric 4 axel motors already have a proven output of 8000 HP. That is too much tractive effort for low speed (relative) freights. A 6 axel electric motor with the power output of 8000Hp might be mated to an old (SD-40, C40, GP-30, etc) locomotive that is not even teir 0 compliant (new use for a road slug). This is a good use for the older frames whose prime mover is past its prime.

10. Electric motors should have a higher reliability due to no prime mover. That might translate into about 5% less HP needed for any level of operation??

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Posted by erikem on Monday, January 24, 2011 1:12 AM

blue streak 1

4. Some one here can give the actual BTU conversion of present day Locomotives but I believe that it is in the 25 -35% range.

Sounds about right for late second generation diesels, but I suspect the newest locomotives will exceed 35% efficiency.

5. Present day Natural gas electrical turbine generators  have a BTU recovery around 35%. If a recuperative after heat system is used the BTU recovery goes up to 55 - 60%. Gas turbines also have a quick start up cycle that can be used for the peaking needs of RRs however the recuperative cycle takes longer to get to peak efficiency. Certainly would not have to wait for more convential electic generating plants to be built.  

Sounds right for the installed base of natural gas fueled combustion turbines. GE is claiming 46% efficiency for their H series turbines at full output, and 40% efficiency when running at half rated output. These do not use any form of recuperation as far as I know. GE is claiming 60% efficiency for combined cycle plants, i.e. where the exhaust heat from the turbine is used for a steam bottoming cycle. Large (as in several thousand HP per cylinder) diesel engines are capable of a bit over 50% efficiency, but I have no idea if that would be still true if the engines were run on natural gas.

The technology exists to run locomotives on natural gas, but the relative thermal efficiencies in my previous paragraph don't tell the whole story. The most practical means of supplying the locomotive is to liquefy the gas first and there is significant energy consumption involved in the process.

- Erik

P.S. Looks like the US will be self-sufficient in natural gas for a while and the Europeans as also looking into the matter. If that's not enough, there is an enormous amount of methane clathrates under the sea floors.

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Posted by tdmidget on Monday, January 24, 2011 6:38 AM

1. Freight RRs ROWs are not usable for HSR passenger trains in mountainous areas. The freights need a reasonable ( .5 - 1 - 2% ) grade whereas HSR needs an essentially very low curvature tracks but can operate on steeper slopes than freight.

There ya go. The roadways are NOT totally compatible.

2. A fact looked over so far is that there is about a 30% recovery back into the electric grid (using regenerative braking) when going down hill or slowing for whatever reason.

The amount of time in dynamic braking is negligible for purposes of regeneration. It means , in the case of an AC system, which it will have to be, that you must now carry the equipment to convert back to the original AC voltage and phase. It is simply not worth toting this equipment 100% of the time for the small recovery.

3. There has been very large deposits of natural gas discovered in the NE that can now be recovered by using fracting.

So the new buzz word is fracking. Not that most who use it even know what it means. Natural gas has a very low energy density. It is much more difficult to transport and handle. And you ain't heard nothing yet when the anti hazmat crowd jumps on this

4. Some one here can give the actual BTU conversion of present day Locomotives but I believe that it is in the 25 -35% range.

Why would a different fuel improve the efficiency of a process? As I have previously stated the energy density is LOW. to get the same out put will require a larger prime mover and a tender for the fuel. All of which take a LOT of energy to build and haul around.

5. Present day Natural gas electrical turbine generators  have a BTU recovery around 35%. If a recuperative after heat system is used the BTU recovery goes up to 55 - 60%. Gas turbines also have a quick start up cycle that can be used for the peaking needs of RRs however the recuperative cycle takes longer to get to peak efficiency. Certainly would not have to wait for more convential electic generating plants to be built.  

A turbine is only that efficient at full load. It drops dramatically as the load falls off. The quick starts take a toll in maintainance. These are not lawnmower engines. They take, even in a small gas turbine, 6-8 hrs to stabilize at operating temperature. Conventional generating plants? You need to get out more. Combined cycle is about all that has been built for the last 20 years.

6. The energy savings from the required conversion to power saving light bulbs is estimated to be 3 -4 % which is what has been quoted here-in as what RRs will require. Could be a wash?   

3-4% of residential lighting is negligible, merely a feel good thing.

7. Start electrifying on severe grades to cut fuel consumption especially fuel required to run traction cooling fans when using dynamic braking going downhill.

Obviously don't know what you are talking about. DC machines run those fans from the Dynamic brake current. No fuel consumed.

8. Some route locations might be able to use dual mode locos.

Why? Nothing gained by that except the energy loss from carrying extra equipment around.

9. Present US passenger electric 4 axel motors already have a proven output of 8000 HP. That is too much tractive effort for low speed (relative) freights. A 6 axel electric motor with the power output of 8000Hp might be mated to an old (SD-40, C40, GP-30, etc) locomotive that is not even teir 0 compliant (new use for a road slug). This is a good use for the older frames whose prime mover is past its prime.

Been done. You are 40 years late. Of course then the flexibility of that unit is lost as it has to stay with that slug.

10. Electric motors should have a higher reliability due to no prime mover. That might translate into about 5% less HP needed for any level of operation??

Rediculous. Electric motors do not know where their electricity comes from. It will use the same regardless of on board generation , batteries, or catenary.

There must be some thing about this electrification thing that affects the brain. It makes it's proponents recite the same unsupported BS platitudes over and over.

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Posted by WilliamKiesel on Monday, January 24, 2011 9:03 AM

The last 40 years has seen 6 additional Megaregions develop in the US beside the Northeast. Now the country has a logistics challenge of transport between and within the Megaregions. In 40 years the country's population nearly doubled. It is projected that in another 40 years, the country will have another 100 million for 400 million people.

A non oil based transport system will be a tool to defend the nation in a constrained oil future as well as be the strategic economic tool to assure growth with the population growth.

Recognition on the part of legislators that a parallel non oil based transport system is the future.

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Posted by WilliamKiesel on Monday, January 24, 2011 9:20 AM

The link given goes to information provided by Alan Drake, one of the authors of the Millennium Institute's study subject of the original post.

The post is looking at the concept from the potential to fund by private sector earnings. When the last 4 years of the freight railroads' before tax earnings are computed, the back of the envelope computation is that sheltering railroad earnings from taxation will likely fund all or a substantial portion of the funding.

This writer advocates for private funding with the Federal government creating the guidelines for the public interest. That public interest is the creation of a non oil based transport system. So, the method of sheltering income and then applying  the windfall to the project must be defined. The incentive for the railroad companies is having a motive power method that lessens their costs. With lessened costs they likely will have greater capacity and greater speed capability. Those variables mean more traffic. AS the project has been funded from dollars that would have otherwise gone into the general treasury but used for the public interest, there is no cost of capital for longterm funding. Yes, it is a government subsidy. But the method of subsidy is direct and does not involve cumbersome government oversight that USDOT now represents.

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Posted by WilliamKiesel on Monday, January 24, 2011 9:25 AM

The study makes the argument that additional generation capacity makes a reasonable argument for renewable generation technology to be able to provide for the future generation capacity needs. It is presented as an alternative to conventional generation methods.

To ignore the potential in renewable generation methods, that would have been a basis to criticize the study as well.

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Posted by WilliamKiesel on Monday, January 24, 2011 9:39 AM

The original posting had as its basis the Scott Lothas article. Lothas made a passing comment regarding the work of Alan  Drake. The internet allowed for prompt access to the study, "Evaluating the Creation of a Parallel Non-Oil Transportatioon System in an Oil Constrained Future."

It is likely that added future generation capacity will be a combination of renewable and conventional generation methods.

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Posted by WilliamKiesel on Monday, January 24, 2011 9:46 AM

As noted, the article cited by Bucyrus was written by the author of the article first cited in the original post.

Until earnings are sheltered from taxation, there is no incentive to private railroad companies to do this project.

Assuming that projections for traffic quagmires by 2035 are reasonable, then it is in their interest to plan for the future. Freight not delivered is traffic that has not earned income.

While there may be no net advantage in thermal efficiency as noted, there would be the creation of a non-oil based transportation system,

 

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Posted by Anonymous on Monday, January 24, 2011 9:50 AM

Clarification:

 

There are two distinctly different trains of thought on railroad electrification. 

 

1)      The private business economic proposal.

2)      The government environmental proposal.

 

The first has been around since electrification first was tried.  That is the economic debate as to whether it would make economic sense for the freight railroads to electrify as a private sector business decision.  If the answer to this perennial question were “yes,” then the railroads would electrify.  So the answer is somewhat self-evident. 

 

The second train of thought on electrification is a proposal by government activists to have government step in and electrify the freight railroads as a public sector endeavor to be paid for with public money.  The rationale for this proposal is not based on seeking less costly operation, as is the case with the first train of thought.  Instead, the rationale for this public sector proposal is based on the following two objectives:

 

1)      To prevent climate change.

2)      To create an oil-free society.

 

This proposal has nothing to do with creating less costly rail transportation.

 

The subject of the article that the original poster linked to this thread is clearly related to this public sector environmental objective and not to the private sector business objective of lower cost rail transportation 

 

 

 

Here is a link to the PDF of the article appearing in Trains November 2009, called “WIRED UP” by Scott Lothes. 

 

http://www.railsolution.org/uploads/PDF/TRAINSarticle11-09.pdf

 

This advocates for electrification as the public sector, environmental proposal, as does the article linked by the original poster in the first post of this thread.

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Posted by WilliamKiesel on Monday, January 24, 2011 9:59 AM

The proposed non oil based transport system based upon railroad electrification foresees speed capability of freight operations increased so that conventional passenger speed could then be supported.

Electrifying without enhancements to increase speed capacity would not be rational. There will be opportunities to increase line speed from 79 to 90 and in some cases 110. This is not HSR. It could better characterized as semi-speed rail.

The study addresses ONLY semi-speed rail.

HSR requires new construction and is integrated into the conventional railroad system to access terminals and stations

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Posted by WilliamKiesel on Monday, January 24, 2011 10:04 AM

The purpose of electrifying the freight railroad system is to achieve a non oil based transport system parallel to the oil based transport system. Whether or not the mechanical engineering efficiencies noted might or not be achieved is not nearly as important as to national defense in an oil constrained future.

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Posted by Paul_D_North_Jr on Monday, January 24, 2011 10:04 AM

This subject was thoroughly discussed in several threads here after the late 2008 Trains issue then on electrification, so I'm not going to rehash much of that. 

But as far as the route map and gross cost estimate, as with many things a 'blanket' or 'universal' "let's-do-it-all' approach is not going to be cost-effective, let alone optimum.  Instead, I suggest using the Amtrak route map as a surrogate, proxy, or starting point  for the routes that ought to be electrified - not that Amtrak needs or deserves wires, or the country wants Amtrak to have electrification, but that just saves typing a detailed list about 25 - 30 line segments -  and then intelligently add and subtract important freight railroad segments.  For example, add in the NS CNO&TP route; and subtract the Raton Pass portion of the Southwest Chief's route.   

When we're done, I believe the total will be about 25,000 - 30,000 route miles - roughly, 5 cross-country E-W routes @ 3,000 miles each, 5 N-S routes @ 1,000 miles each, and 10 - 20 other / misc. routes and connections in the 500-mile range.  I can believe the $6 Million per route-mile estimate for speeds up to 125 MPH - Amtrak's late 1990's New Haven - Boston electrification was about $2 Million per route-mile for 2 high-speed electrified tracks all the way, plus a little more at certain places.  So that would approximate the total project at 30,000 route-miles x $6 Million per route mile = $180 to $200 Billion or so.  Now that's more than my pocket change, and dwarfs the aggregate capital spending of the rail industry today - roughly $1 - 2 Billion for each Class I, which includes renewals as well as upgrades, and totals maybe $15 Billion or so annually in the aggregate; even adding in the annual fuel expenditures won't get us there.  But that's a more realistic, believable, 'saleable' proposition than $900 Billion, which will never 'get traction' (excuse the pun), and so wold be more likely to be achievable by whatever funding means we decide to accomplish it with, whether private, public, a combination, or some other way, etc. 

More to the point, that much electrification would drastically reduce use of diesel fuel by the US railroads and enable them to use other power sources, and could attract and/ or handle anyway enough long-distance freight traffic off the highways to make a big dent in that portion of the fuel use.  By reducing those two aggregate demands, less imported oil will be needed, the entire demand-price curve will shift, and everyone will benefit from the lower prices and more availability of petroleum fuel for those uses and applications that can't go by rail or under electrification, and that will go a long ways towards reducing foreign oil dependency. 

- Paul North. 

"This Fascinating Railroad Business" (title of 1943 book by Robert Selph Henry of the AAR)
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Posted by WilliamKiesel on Monday, January 24, 2011 10:19 AM

Sheltering railroad income from taxation substantially creates the funding stream to electrify. Therein lies the means to enable a economically logical basis to proceed. Doing so lessens government involvement.

Electrifying the railroad system by direct government involvement would be fraught with problems and impediments.

Electrifying the freight railroads will create a parallel non oil based transportation system basis to national defense in an oil constrained future.

Here is a national defense tool that will likely have likely environmental benefits.

The Reconnecting America organization has become involved with the conservative Free Congress Foundation in advocacy for an electrified urban transport system.See the original post for the citation.

 

 

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Posted by schlimm on Monday, January 24, 2011 10:28 AM

Paul:  Your response puts it in a realistic perspective of what can be done.  An incremental approach would seem most sensible, focusing on the most heavily (freight) used lines + potentially heavily used short distance passenger corridors.

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Posted by Paul_D_North_Jr on Monday, January 24, 2011 1:11 PM

schlimm - Thanks; you 'get it'.  The "finding the funding" challenge is unavoidable, and probably so is the private vs. public debate, but I don't see where I can add a lot to the latter.  Instead, I'd rather first cut it down to size and then start  figuring out ways to do what can be done on reasonable terms. 

Electrification is not a panacea, but there's lots of applications/ situations/ places where it is 50 to 70 years overdue, and a decent if not compelling 'business case' can be made for it.  We owe it to ourselves, our nation, and our children to get going on this, and not let the extremist views or wacko agendas - of any viewpoint* - delay it much longer. 

(*I can accept that the economics don't work, $ not available, or another rational basis.  But I don't much care where the electric power or the money comes from nas long as it's more or less voluntary or part of the political-social contract that is the framework of the nation.  That somebody someplace might have an oddball view on some aspect of this should not contaminate or make objectionable the broader and more important goals.) 

An analogy can be drawn with centralized water and sewer systems, and maybe the electric utilities, too - they're not for everybody nor every situation or location (such as in rural areas), some are privately-owned/ operated, and some are publicly-owned/ operated - but we can't seriously argue that we could live without them entirely, especially in the more built-up or urban areas.  Electrified railroads are of like kind, it seems to me - an essential technological infrastructure.  [See what you get, Professor, when I feel compelled to respond to something nice you said about me ?  Smile, Wink & Grin  ]   

- Paul North. 

"This Fascinating Railroad Business" (title of 1943 book by Robert Selph Henry of the AAR)
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Posted by WilliamKiesel on Monday, January 24, 2011 1:12 PM

Your estimate of $180 to 200 billion for the cost.

Last four years of taxed earnings average $15 billion per year.

Assume 5 to 7 years for project completion.

Sheltering railroad earnings from taxation will mean about 12 or 14 years of sheltered earnings to pay for the project.

It is within the realm of probability.

The nation needs this transport tool.

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Posted by Murphy Siding on Monday, January 24, 2011 1:28 PM

WilliamKiesel

Your estimate of $180 to 200 billion for the cost.

Last four years of taxed earnings average $15 billion per year.

Assume 5 to 7 years for project completion.

Sheltering railroad earnings from taxation will mean about 12 or 14 years of sheltered earnings to pay for the project.

It is within the realm of probability.

The nation needs this transport tool.

     I'm not sure I agree with your math.  The taxed EARNINGS average $15 billion per year,  not the TAXES PAID.  Your line of thought suggests that if the railroads got to shelter the % of earnings paid in taxes, that they would spend 100% of their earnings on this proposal.  I'm guessing that to be highly unlikely.

     Tell me where you think I might be doing my math wrong please-

     Suppose the investment we're talking about is $200 billion.  Suppose we *shelter* the income taxes paid by the railroads, if they reinvest in the required infrastructure.  (In essence this is no different than Uncle Sam writing a check for $200 billion as I see it.)

     I don't know what the tax rate paid by the railroads is......If it were 20%,  that would be 20% of $15 billion = $3Billion per year *sheltered* into the $200 billion price tag.  At that rate,  we'll have thi paid off in 66.66 years.  If the rate is 30%- 44.44 years.

     Why don't we just get painfully realistic and say that Uncle Sam will give $ for every ton of freight/miles the railroad gets off the interstate, and let the railroads, who are a little bit more fine tuned to the idea of efficiency give it their best shot?

Thanks to Chris / CopCarSS for my avatar.

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Posted by schlimm on Monday, January 24, 2011 1:43 PM

Mr. Kiesel: I think it is a great idea that surely needs to be done, but using  sheltered earnings to pay for the cost of $180 bil.  doesn't add up.  You seem to be assuming that the tax credit would be equal to net income?  But one also needs to look at how much corporate income tax the railroads typically pay per year.  For example the UP in 2009 paid income taxes of $1.089 bil. on operating income (pre-tax) of  $3.392 bil. an effective rate of 36,5%.  This includes state taxes.   [see page 34 of the link to the 10k] 

http://www.up.com/investors/attachments/secfiling/2010/upc10k_021710.pdf

Murphy Siding said much the same thing while I was getting the UPRR numbers.  It doesn't add up.

C&NW, CA&E, MILW, CGW and IC fan

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Posted by PNWRMNM on Monday, January 24, 2011 1:51 PM

WilliamKiesel

Your estimate of $180 to 200 billion for the cost.

Last four years of taxed earnings average $15 billion per year.

Assume 5 to 7 years for project completion.

Sheltering railroad earnings from taxation will mean about 12 or 14 years of sheltered earnings to pay for the project.

It is within the realm of probability.

The nation needs this transport tool.

Lets look at some real numbers.  I hate to quote Wikipedia, but since the AAR site is slow today will use Wikipedia's 140,500 route miles of class I ownership as of 2006 for starters. 

From Union Pacific 2009 Analyst Fact book UP has:

32,094 route miles

22,144 important enough to be dispatched by CTC

Burned just under 1 Billion gallons of diesel fuel

Had $2.5 Billion Capital Expenditure, of which 1.8 was maintenance, balance capacity expansion.

Federal Income tax paid $1.089 Billion

On route mile basis UP is about 22% of the industry.  I think UP density is probably a bit higher than average so that they are more likely 25% of industry output.  UP is middle of the pack in terms of profitablity.  So UP paid something between 20 and 25 percent of the federal income taxes paid by the entire industry.  That means total taxes paid are in the range of $4 to $5 billion.

The article first cited by the OP figured $500 Billion in capacity enhancements including electrification.  Sheltering the entire earnings of the industry from taxation is worth about $5 Billion per year.  At that rate electrification of the 30,000 miles or so being bandied about would take 100 years.

If the greens are serious about getting truck freight off the highway and reducing greenhouse gasses, they should support a 10 year program of income tax forgiveness for the railroads so long as the taxes retained go to projects that enhance freight capacity, including electrification.  I would be willing to bet dollars to doughnuts that the carriers could find economically good freight capacity enhancement projects, and that no electrification would be undertaken in that time period.

If this is a national defense imperitive, use Amtrak's plan for true high speed rail in the NEC as a demonstration project for the wonders of electrified HSR.  Note that ATK plans to build a lot of new miles not on its existing right of way.

Obviously at some oil price point electrification will be cost effective.  No one has offered any data, credible or not, as to what that price point is.  That is the big question.

Electrification in and of itself does not increase capacity!   No one has demonstrated that the Pareto Principal, also know as the 80/20 rule applies to rail freight traffic density.

Mac

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Posted by henry6 on Monday, January 24, 2011 2:21 PM

HIgher speeds equal higher capacity.  Is this just a theory or is it true but only in commuter and mass transit situations.  It would seem to me that it could also apply to freight situations because if you can move three trains in the same time you used to take for two, then you've increased capacity.

But, more importantly.  Today investors seem to want much quicker  and higher returns on investment than a five to ten year development and construction project gives.  That leaves governement the only machinism available to tackle such a project.   Even if a company were to procure a ROW (probably an existing ROW if not an entirely exising railroad line) then devlope and construct a high speed electrified railroad what would they do with it?  Would they have to also operate it?  Or would they have to supervise operation to private haulers (i.e. say it was built Chicago to Denver, would the builder run it as a railroad business as we know it today or would they just operate the railroad by allowing UP or BNSF operate thier trains over it with electric engines or would they provide the electric engines and crews and haul trains for other railroads or shippers?  There really are so many opportunities to make it work.

However, I don't see present day railroads under present day investment and operating philosophies tackle such a project.  Nor do I see government stepping this far into the fray either as no one thinks that way.  One would think that if there was a railroad track that handled maybe even 10 trains daily would find selling the unused space for other services, such as passenger trains, to help cover fixed costs, that it would happen.  But it doesn't.

 

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