July TRAINS takes on the captive shipper debate - Best Issue Ever?

[MichaelSol]

The original law, and the original ICC interpretation (which is supposed to be given deference by the federal courts, and wasn't) was the enacted solution, and would be perfectly viable today if enforced according to its original intent.

[MichaelSol]

QUOTE: Originally posted by n012944
Oh, thats right we forgot about your and Sol's "conspriracy theory" that the world is out to make the northwest captive to two railroads. The reason all the railroads were abandoned was economics, you can say all the things you want, but the bottom line is that if the lines made money, which includes covering the maintance of the line, the lines would still be here and operating.

"The bottom line," ...

Sometimes referred to as a "roll up" strategy, it is a well known business strategy of buying up perfectly profitable, sometimes even more profitable, businesses and shutting them down in favor of the acquiring company to obtain market share and pricing power.

Sometimes this is part of a cost-cutting strategy as well. Doesn't mean any particular facility is unprofitable, simply that a bean counter somewhere decided that cost efficiencies could be obtained by consolidation, which invokes the old saw about "cuttng your way to prosperity" a recognizably risky strategy in any business as it often leads to production constraints that then entail new and more expensive facilities, incurring unecessary debt, to meet capacity needs.

However, to assume that either of these strategies is ipso facto proof that the something was unprofitable is simply too much of a stretch, since either strategy makes more sense if the facility/business is inherently profitable, rather than not.

[rrandb]

The act needs to be updated to todays enviroment. If railroad "A" rebuces rates to "C" (captive ) shippers it wil have to raise rates to "NC" (non-shippers) as there is no excess funds to offset the loses. Fair enough. If railroad "B" (whom it competes with)does not have as many C shippers it wil not have to raise its rates as much for NC shippers and will begin to increase its NC business formerly served by A with the resulting economic decline of A. Capital improvement, maintenance deffered and eventuall decline. Staggers was a result of a previouse rate system problem. While the principle is still sound by your own addmission it does not work as interpritted.`Do you think the courts should update it or the legislature. It is obviouse the industry can not. [2c]

[Anonymous]

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by rrandb

Some rates were artificialy low. Most were not. What is obvoius was the number of miles of track that disappeared when the railroads no longer had to provide service to customers that were unable to afford these services based on the actual cost of rail service. How do you get permission to adandon a line if its making too much money? You can not. Can you abandon a line because it doesn't make enough money to operate it. YES The remarks were about grainger lines that after de-regulation became dirt paths. Was this because the railroads were making too much money NO

"How do you get permission to abandon a line if it's making too much money?" The "too much money" statement aside (e.g how much is "too much"?), a line that was profitable pre-Staggers can end up in the scrap heap for any number of reasons. Mergers can make a profitable line redundant, and we all know what happened to the redundant lines post-Staggers, don't we? The seemingly sole purpose of mergers was to allow railroads to lop off assets to *reduce* costs, totally irrespective of whether those assets made money or not. The whole purpose of dereg seems to be to consolidate as much trackage as possible into the fewest corridors possible, to allow maximization of pricing power. Thus, it is probable that most of those lines being scrapped were profitable, but the proliferation of them repressed pricing maximization. Of course, the railroads turned around then and, instead of maximizing all profits on the few remaining lines, used captive rates to maximize profits on only captive US rail shippers, then cross subsidized the rates for non-captive shippers, including all overseas importers.

Thus, minus imported oil and in spite of a relatively weak dollar, we still have a growing trade deficit, thanks in part to the market skewing activities of US railroads.

Economic theory predicts such, and WHOOOMP there it is.

The area of the country I reside in is full of abandoned ROW's that made money for their owners - The Milwaukee PCE, the ex-NP nee BN Palouse and Lewiston line, the SP&S from Spokane to Pasco, the 2nd and 4th subdivisions of the ex-Camas Prairie, the UP Yakima Valley line, et al. It's quixotic and bizzare, yet instead of returning some of those profits to the line in question for maintenance and/or upgrade, the Class I's siphoned off all those profits for other projects, possibly for the cross-subsidies given to the importers of Asian made products![V]

Oh, thats right we forgot about your and Sol's "conspriracy theory" that the world is out to make the northwest captive to two railroads. The reason all the railroads were abandoned was economics, you can say all the things you want, but the bottom line is that if the lines made money, which includes covering the maintance of the line, the lines would still be here and operating.


Bert

Your ignorance of basic economic fundamentals is astonishing. Do you not yet understand the hows and whys of which monopoly activities skew the market away from your simplistic "if it makes money, it would still be here" mindset.

Under a true competitive market environment, the participants make their money via volume, thus a competitive railroad environment would result in the saving of all lines with even minute profit potential. To scrap these lines would result in a smaller consumer base, thus would threaten such an entity with being squeezed out by those who are constantly expanding their customer base.

Under monopoly environments, the few participants make their money via consolidating their business avenues into a few, which allows them to extract maximum profitability via maximized pricing power. Thus, lines that are either marginally profitable e.g. earning at least 180% R/VC for that line, or those normally profitable lines that have become redundant to newly merged lines, end up on the scrap heap.

This is exactly what the railroads have quasi-engaged in post Staggers. However, because there are some areas in which more than one or two railroads are in play (such as the overseas import markets), the railroads have engaged in below cost pricing (under the STB's 180% R/VC formula) to win the market share of those areas, and they then must make up for it by charging their captive markets (e.g. domestic rail shippers)excessive rates (up to 400% R/VC). Thus, the railroad market is severely skewed, skewed in favor of imports to the detriment of US production, and it shows up via the US trade deficit, abandoned factories across the USA, and the lack of new heavy manufacturing and production in the USA.


Yes, Bert, that's how it happens. Look outside your window, you can percieve it for yourself. No, it isn't a conspiracy, it is just the result of shortsighted legislation and subsequent lack of caveat enforcement.

[Anonymous]

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by MichaelSol

National Petrochemical and Refiners Association:

Now if you are going on about price gouging in an industry, why on earth would you use oil companies as an example??? I get it, its the railroads fault that I paid $3.05 a gallon to fill up my car today. 1st it was Katrina, then Rita, then tensions in Iran, and now the railroads. Give me a break.

Bert

Bert,

The reference to the petroleum industry was in the context of it being subjected to captive rates, aka roughly 50% of the industry is captive to one Class I railroad. Whether the oil industry itself also engages in captive pricing or not was not the issue.

However, if you know of ANY locale that only has one oil company offering, please let us know. I know that there are scads of small towns (under 1000 population) that have only one local source of fuel, but of course they are not that far (10 to 15 miles) from larger towns that have several fuel sources. Unless you are walking down to the fuel pumps to fill your gas cans for your lawn mower, most small town residents have no problem filling their tanks at any number of fuel stations.

Considering oil and most of its by products very easily shipped by either pipeline or truck(oh yea I forgot railroads don't compete with trucks) they have many options. If they do not like the price that the railroads give use something else. Also as you pointed out there are many places with only one fueling station in the area. If the next fuel source is only 10-15 miles away, is it worth using a gallon of gas round trip to save $0.10 a gallon? The oil companies know this, and as a result have many people "captive."

Bert

Most petrochemicals are specialized products not fit for transportation by pipeline, thus rail is usually the only option.

[Anonymous]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by MichaelSol


The State of Montana spent $3.2 million on the litigation. However, high priced railroad lawyers, an unlimited litigation budget, and 14 years of constant litigation and appeals, replaced the original ICC implementation with an unwieldy, nearly impossible litigation standard, an impossibly vague standard of proof, and essentially rendered the original provision, as interpreted correctly by the ICC, unenforceable.

It sounds like Montana had its day in court and lost. Get over it.

Except there have been hundreds of such cases brought before the STB. The problem is the bizarre set up that favors the few Class I oligarchs over the collection of rail shippers. Which is why some form of railroad re-regulation willl surely make it't way into law as a result of these cases.

It looks like the railroads have finally lost in their quest to further skew markets. Get over it.

[MichaelSol]

Shippers and even the STB itself have asked Congress to provide clarification, as the federal courts have plainly left the evidentiary requirements a mess; the railroads have been strenuously resisting the effort. [STB's request for clarification in "Testimony of Roger Nober, Chairman of the Surface Transportation Board, House Committee on Transportation and Infrastructure Subcommittee on Railroads, Hearing on the Status of Railroad Economic Regulation, March 31, 2004, p. 9.]

Congress, you may note, has a lobbying problem with cash flush industries having a strong influence on legislation ... or the lack of it.

The Shippers are not asking for anything unreasonable; but the railroads simply want to preserve the status quo where they can hire the fanciest lawyers and outspend any shipper in litigation and on expert witnesses.

Here's exactly what the shippers say.

Joint Written Testimony of the American Chemistry Council, American Farm Bureau Federation, American Soybean Association, Colorado Wheat Administrative Committee, The Fertilizer Institute, Idaho Barley Commission, Idaho Wheat Commission, Kansas Wheat Commission, Montana Wheat & Barley Committee, National Association of Wheat Growers, National Barley Growers Association, National Council of Farmer Cooperatives, National Farmers Union, National Grain and Feed Association, National Grain Sorghum Producers, The National Industrial Transportation League, North Dakota Grain Dealers Association, North Dakota Public Service Commission, the North Dakota Wheat Commission, South Dakota Wheat Commission, Texas Wheat Producers Board, Washington Barley Commission, Washington Wheat Commission, Alliance for Rail Competition, Consumers United for Rail Equity.

Ex Parte No. 646, Rail Rate Challenges in Small Rate Cases, Before the Surface Transportation Board, July 24, 2004.

"Simplicity is crucial. Complexity and undue uncertainty drive up the cost of any litigation, including litigation before the Board, and given the smaller amounts at stake by definition in a “small rate case,” complexity and cost will terminally chill the exercise of the statutory right to reasonable rates for the very large majority of captive users of rail services. In this regard, the Board’s experience in Stand-Alone Cost cases is an object lesson in what should not happen in small rate case proceedings.

"Since the Interstate Commerce Commission decided the first Stand-Alone Cost case eighteen years ago, the complexity, size and cost of a SAC case before the agency has increased astronomically. But instead of guarding against complexity in small rate cases, the Board’s current small rate case rules invite complexity at the very outset: they define little, rule nothing out, and identify virtually no standards for decision.

"While this gives the Board maximum flexibility and discretion, it makes it impossible for potential complainants to know whether small rate case procedures will be used; what evidence will be considered; how long the case will take; and what the case will cost. These problems, formidable in the best of cases, become insurmountable when combined with defendants’ litigation incentives to make small rate cases long, complex and expensive in order to discourage future complaints. The issue was summed up by Chairman Nober in recent Congressional testimony: the uncertainty of the small rate case procedures “appears to be a major reason why no cases have been brought using the small-case process.”

"Clarity is similarly important. If parties are going to avail themselves of the rate complaint process, they need the assurance of a system featuring relatively straightforward eligibility and substantive standards, so that they can predict to some reasonable degree what cases qualify for small rate case procedures and which rates are likely to be found unreasonable.

"This does not mean that the outcome of small rate case litigation must be perfectly and entirely predictable. It does mean that the eligibility for small rate cases should be clearer and that processes for determining eligibility should be defined. It also means that the substantive inquiry should be sufficiently transparent to allow exercise of reasonable, though necessarily imperfect, judgment.

"Most importantly, clarity and predictability will enhance the potential of private settlements, since both parties will be able to make more accurate assessment of their risks. Where there is good reason to conclude that rates are reasonable, neither side has an incentive to litigate. Where rates appear unreasonable, regulatory uncertainty should not protect the status quo. And where cases fall between these points, clarity promotes negotiated solutions. In short, if the small rate case process becomes clearer, it is even more likely that customers and suppliers will conduct balanced negotiations leading to private resolutions rather than Board-ordered relief.

"Finally, it is most important for the Board’s rules on small rate cases to establish a process under which a complainant can be assured of expeditious action. Unlike coal movements that generally continue for years and even decades, small rate cases are likely to involve movements that may last for only a few years. The need to spend two years litigating rates for a movement that may last only three to five years would discourage most if not all potential complainants. Moreover, increased litigation time usually means increased litigation cost.

"The Board’s current small rate case standards do not appropriately balance the rights of shippers and carriers. The complexity, uncertainty and cost that are inherent in the current small case procedures and standards, combined with the astronomical cost, time and uncertainty of a Stand-Alone Cost case, make it virtually impossible for any captive shippers, other than the largest coal shippers, to exercise their right to a reasonable rate under the ICC Termination Act.

"As Chairman Nober testified before Subcommittee on Railroads of the House Committee on Transportation and Infrastructure on May 20, 2003, “shippers who feel they have been charged an unreasonable rate have a right to have that complaint heard by the Board in a fair, impartial, expeditious and economical manner. That is part of our fundamental charge from the Congress. That is not the case now ....” Nober Testimony, May 20, 2003, p. 9.
...
"As Chairman Nober testified on May 20, 2003 to the Railroad Subcommittee of the House Committee on Transportation and Infrastructure, railroads have been known to spend $5 million on each rate case, while a shipper’s spending on the same case is more likely to be only $2-3 million. Nober Testimony, p. 7."

[bobwilcox]

QUOTE: Originally posted by futuremodal

Most petrochemicals are specialized products not fit for transportation by pipeline, thus rail is usually the only option.

Suggest you research further. Basic petrochemicals like Ethylene go virtually 100% by pipeline. On the other hand commodity plastics from TX and LA will have rail market shares of 75-95%. In the middle products such as styrene will move 75% water, 15% rail and 10% by truck. Benzene moves 85% water and 15% rail.

These commodities move in hudge volumes by water, truck, pipeline and rail.

[rrandb]

QUOTE: Originally posted by futuremodal
Thus, the railroad market is severely skewed, skewed in favor of imports to the detriment of US production, and it shows up via the US trade deficit, abandoned factories across the USA, and the lack of new heavy manufacturing and production in the USA.

So it's the railroads fault for all that. They killed the very cash cows that used to keep them alive in favor of lower margined import traffic. How do they sleep at night. And the courts, STB and legislature have been part and parcel of it. They must have the papers and magazines on there payroll as well. There influnence is greater than anyone could have suspected.

[rrandb]

So the short answer to my court or legislative question would be the Congress? [?]

[bobwilcox]

QUOTE: Originally posted by rrandb

So the short answer to my court or legislative question would be the Congress? [?]

Yes, but they do not show the least desire to bring the Dow/Dupont Loot the Railroads[V] bill to a committe vote let alone bringing it to the floor of the House or Senate for a vote. .

[MichaelSol]

Money talks in this Congress. Some folks think that high priced lawyer tactics and high priced lobbyists are justified if it supports their predetermined conclusions and agendas.

[bobwilcox]

It would be nice if the STB would get back to the original capitive intent in Staggers-a lack of competition from other railroads, transportation companies, sources or products. The shippers made a major tactical error when they did not nail down an efficient way to determine profit margins.

[edblysard]

Wow, Dave,
You might want to call Shell, British Petroleum, Phillips, Solvay, Lubrizol, Exxon Mobil, Valero, and Fina and tell them that...those silly companies seem to have thousands and thousands of miles of pipeline they are not using...

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by MichaelSol

National Petrochemical and Refiners Association:

Now if you are going on about price gouging in an industry, why on earth would you use oil companies as an example??? I get it, its the railroads fault that I paid $3.05 a gallon to fill up my car today. 1st it was Katrina, then Rita, then tensions in Iran, and now the railroads. Give me a break.

Bert

Bert,

The reference to the petroleum industry was in the context of it being subjected to captive rates, aka roughly 50% of the industry is captive to one Class I railroad. Whether the oil industry itself also engages in captive pricing or not was not the issue.

However, if you know of ANY locale that only has one oil company offering, please let us know. I know that there are scads of small towns (under 1000 population) that have only one local source of fuel, but of course they are not that far (10 to 15 miles) from larger towns that have several fuel sources. Unless you are walking down to the fuel pumps to fill your gas cans for your lawn mower, most small town residents have no problem filling their tanks at any number of fuel stations.

Considering oil and most of its by products very easily shipped by either pipeline or truck(oh yea I forgot railroads don't compete with trucks) they have many options. If they do not like the price that the railroads give use something else. Also as you pointed out there are many places with only one fueling station in the area. If the next fuel source is only 10-15 miles away, is it worth using a gallon of gas round trip to save $0.10 a gallon? The oil companies know this, and as a result have many people "captive."

Bert

Most petrochemicals are specialized products not fit for transportation by pipeline, thus rail is usually the only option.

[bobwilcox]

QUOTE: Originally posted by edblysard

Wow, Dave,
You might want to call Shell, British Petroleum, Phillips, Solvay, Lubrizol, Exxon Mobil, Valero, and Fina and tell them that...those silly companies seem to have thousands and thousands of miles of pipeline they are not using...

Dave lives in a very small world. Maybe he should sign up for the Port's Ship Channel tour follwed by the PTRA tour.

[edblysard]

Oh, and I forgot to mention ICT, Intercontinental Terminals in the above list...

http://www.iterm.com/profile.html

If you read the first paragraph of their company profie...well, dedicated pipelines, barge and ship loading, blending and storage are mentioned long before rail.

Ha ha ha, thats funny Bob....dont have any Bethgons handy right now!

No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins...
So far, he has chickened out every time.
Go figure.[:D]
Ed

[rrandb]

QUOTE: Originally posted by MichaelSol

Money talks in this Congress. Some folks think that high priced lawyer tactics and high priced lobbyists are justified if it supports their predetermined conclusions and agendas.

Are you infering the railroads have deeper pockets than the oil industry, ag industry and all other captive shippers combined? [?] Check your math. They must be in cahoots with the chinease who we owe half the country too. Its the importers who got us in this mess. Ask futuremodal.

[MichaelSol]

QUOTE: Originally posted by rrandb

QUOTE: Originally posted by MichaelSol

Money talks in this Congress. Some folks think that high priced lawyer tactics and high priced lobbyists are justified if it supports their predetermined conclusions and agendas.

Are you infering the railroads have deeper pockets than the oil industry, ag industry and all other captive shippers combined? [?] Check your math. They must be in cahoots with the chinease who we owe half the country too. Its the importers who got us in this mess. Ask futuremodal.

Is this something that really interests you, or are you just kind of passing the time? I think you are arguing for arguing's sake. Do I think railroads have more at stake in captive rail rates and are willing to spend more to preserve them?

Yes.

How do you think a rate complaint is brought? Rate by rate. Not industry by industry.

Check the math on that.

[n012944]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by edblysard

Wow, Dave,
You might want to call Shell, British Petroleum, Phillips, Solvay, Lubrizol, Exxon Mobil, Valero, and Fina and tell them that...those silly companies seem to have thousands and thousands of miles of pipeline they are not using...

Dave lives in a very small world. Maybe he should sign up for the Port's Ship Channel tour follwed by the PTRA tour.

That is they way that certain people act on this board, they make things up to support their point when others poke holes in their argument. If you do not agree with them they then resort to name calling, or better yet, they Google your name to see if they can find any dirt on you.[}:)]


Bert

[MichaelSol]

Don't think you guys want to get into a pipeline discussion, and why they might be preferred over railroads, too far.

"Introducing open access to interstate pipelines and their unbundling from gas sales has allowed end users to participate in the efficiency gains in upstream markets. All this has contributed to declining retail prices for all major consumer categories."

Andrej Juris, "Development of Natural Gas and Pipeline Capacity Markets in the United States," World Bank, March, 1998.

[MichaelSol]

QUOTE: Originally posted by n012944
If you do not agree with them they then resort to name calling, or better yet, they Google your name to see if they can find any dirt on you.[}:)]

Bert

Sure enough, "Bert is evil."

http://www.bertisevil.tv/index2.htm

[rrandb]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by rrandb

QUOTE: Originally posted by MichaelSol

Money talks in this Congress. Some folks think that high priced lawyer tactics and high priced lobbyists are justified if it supports their predetermined conclusions and agendas.

Are you infering the railroads have deeper pockets than the oil industry, ag industry and all other captive shippers combined? [?] Check your math. They must be in cahoots with the chinease who we owe half the country too. Its the importers who got us in this mess. Ask futuremodal.

Is this something that really interests you, or are you just kind of passing the time? I think you are arguing for arguing's sake. Do I think railroads have more at stake in captive rail rates and are willing to spend more to preserve them?

Yes.

How do you think a rate complaint is brought? Rate by rate. Not industry by industry.

Check the math on that.

Your reference was to congress and implied RR's have enough assets/ votes to prevent change. In the STB so far they are winning. The solution is congress where there is a more level playing field. That way they can spend head to head. In D.C. there is no free lunch (unless your eating with a lobbiest). In court there only prayer is a class action suit. The STB is not the route to go historically speaking. While I may take the role of Devil's advocateit's no more than that which will be faced by anyone who wants to change the rules. It takes fresh and compelling ideas to change the status quo. Most of what I've said are common misconceptions. And if it will make you feel any better in my own case you are preaching to the choir.

[ChuckHawkins]

Mr. Sol - I am somewhat confused by your position on captive shippers and Market Theory. Obviously, captive shippers could move their product by trucks via a publicly funded, highway system. I'm sure there is sufficient economic reasons for them not to do that. Instead, they are faced with a single RR alternative, as their sole, viable economic alternative. Thus, I cannot perceive that the resulting situation is due to lack of a Market. If Market Theory pricing requires an alternative RR that provides appropriate competition, in order to achieve "correct" pricing, why isn't one being built? I accept that there must be excess profit that could be "competed" away that would provide some return on investment?

[MichaelSol]

Congress, probably correctly so, understood that the days of railroad building in America were, with some exceptions, over. With that constraint, over a broad spectrum of captive shippers located in essence all over the place, providing physical competition at all such points was an unlikely endeavor -- simply impractical.

It was more feasible for sure, and more advantageous to both the railroads and the captive shippers, to permit the railroads some ability to engage in differential pricing, yet protect the captive shippers from "too much of it." Rather than impose high system costs of redundant facilities, Congress opted to impose economic constraints -- utlimately a cheaper solution for both the rail industry and the shippers. It was a legislative solution to the absence of market power of rate regulation otherwise.

It was a "deal" and in return for those economic constraints designed to protect key shippers, railroads were permitted to be free of regulation of rates otherwise.

The railroads, in return for great benefits, simply did not uphold their end of the "bargain."

And that is the dispute since 1981, and to this day.

[TomDiehl]

QUOTE: Originally posted by n012944

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by edblysard

Wow, Dave,
You might want to call Shell, British Petroleum, Phillips, Solvay, Lubrizol, Exxon Mobil, Valero, and Fina and tell them that...those silly companies seem to have thousands and thousands of miles of pipeline they are not using...

Dave lives in a very small world. Maybe he should sign up for the Port's Ship Channel tour follwed by the PTRA tour.

That is they way that certain people act on this board, they make things up to support their point when others poke holes in their argument. If you do not agree with them they then resort to name calling, or better yet, they Google your name to see if they can find any dirt on you.[}:)]


Bert

Well Bert, I guess I wasn't the ONLY one to notice this. [:D]

[Murphy Siding]

Ye-gods! I'm going to explain something MichaelSol is trying to say. Que up the Twilight Zone music.......
This now makes sense to me, but first, you have to look at the situation *backwards*. Forget about captive shippers for moment. We'll come back to them. Suppose two or more railroads are both fighting for the same business. They will be competitive with each other to get the business. At this point some aspects of railroad traffic are so competitive that the railroads keep cutting prices. Other posts refered to it as "the race to the bottom". Coal and intermodal both come to mind. They can keep undercutting each other until none are making enough money on the business. I work in the building materials/homebuilding business. We call it "buying the business". Eventually, one,or both of the competitors will have to stop cutting prices to keep from going broke. This same scenario seems to be playing out in the rail industry.
Railroads "not earning their cost of capital" in layman's terms, to me at least, means they're not earning enough profit for the hassle of what they're doing. So, why aren't they going broke, if this is true? The Class 1's seem to be pretty healthy, even though some think they're not making *enough* money. The answer is, they must be making up that money somewhere else. Which brings us back to the captive shippers.
A boring sales seminar I was forced to attend one time had a theme that somehow reminds me of this issue. "You make 110% of your profit from your main, core group of customers. The balance of your profit comes from cross-subsidizing the rest." So, for better or worse, it does appear that the railroads are cross-subsidizing some segments of their business by making *extra* on other parts, wherever possible. I don't feel anybody purposely planned it that way, that's just how it worked out.
While every captive shipper, I'm sure, feels he is bearing the total financial burden of the railroad on his back, we'd probably all be surprised if someone could figure out just what is cross-subsidized, and to what extent.
That's my explanation, you may turn off the Twilight Zone music now.
As far as Staggers, and possible *re-regulation* (or just plain enforcement of existing regs,depending on how you look at it), I'm not really sure what to think. In a weird sort of way,it might actually help the railroads to have a cap of some sort of put on captive business. It would force them to try to make money on other segments of the business that currently aren't pulling their fair share.

[rrandb]

Okay murph I'll give you all of that. So how do you get RR "A" with 55% captive shippers to be able to compete fairly with RR "B" who has only 40% captive shippers. One has lost more income than the other. "A" must raise its other rates more than "B" in markets where they compete directly. "A" will lose market share to "B" who intially will have problems meeting the increased demands. As the cheapest way to go what's another day? The additional income will facilitate more capacity and the traffic will be hard to get back by "A". The solution requires a level playing field for all. Captive, non-captive and railroads.

[Anonymous]

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by n012944

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by edblysard

Wow, Dave,
You might want to call Shell, British Petroleum, Phillips, Solvay, Lubrizol, Exxon Mobil, Valero, and Fina and tell them that...those silly companies seem to have thousands and thousands of miles of pipeline they are not using...

Dave lives in a very small world. Maybe he should sign up for the Port's Ship Channel tour follwed by the PTRA tour.

That is they way that certain people act on this board, they make things up to support their point when others poke holes in their argument. If you do not agree with them they then resort to name calling, or better yet, they Google your name to see if they can find any dirt on you.[}:)]


Bert

Well Bert, I guess I wasn't the ONLY one to notice this. [:D]

Wow! It must be a brain virus going around. "Petrochemicals" usually refers to the byproducts of refining, not the distilates. Not all petroleum products can move by pipeline, not all the country is accessed by pipeline, and not all pipelines are heading in the direction of the consumption markets. Distribution of propane to the end users is usually done by railcar.

As for the rest of Bert's post, nothing but pure pedanticism.

[Anonymous]

QUOTE: Originally posted by edblysard
No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins...
So far, he has chickened out every time.
Go figure.[:D]Ed

Oh, now it's an open invitation, is it? And for what? To watch a sorryass operation manned by folks like Ed? On my own dime?! No offer of paying my appearance fee, no per diem?

And you call that "chickening out"?. I call it a waste of my valuable time and resources.

And I would have thought someone down there in oil country would have a better grasp on which petro products go by which mode to which consumer market a majority of the time.

[jeaton]

QUOTE: Originally posted by futuremodal


Wow! It must be a brain virus going around. Distribution of propane to the end users is usually done by railcar.

Speaking of brain virus.

http://www.propanecouncil.org/trade/manufHousing/general_benefits/general_benefits.Htm

"The primary mode of transporting propane within the United States is by approximately 70,000 miles of interstate pipelines."

But they wouldn't build a pipeline to my tank on the farm, so I had to build a rail line myself to get supplies delivered.