Railroads Struggle to Deliver Coal to Utilities

[Anonymous]

An AP story in today's NY Times:

"WHEATLAND, Wyo. (AP) -- In the time it takes to microwave a frozen dinner, another 120 tons of coal is dumped from a railroad car at the Laramie River Station. It's a scene that can occur 200 times a day.

"To keep electricity flowing to some 1.6 million homes, the power plant burns up to 24,000 tons of coal every day. Operating 24/7, the plant's three generating units require a dependable, steady stream of coal.

"This past year, however, the stream of coal was anything but steady, even though the plant is only about 100 miles from the largest producing coal mines in the United States -- the Powder River Basin in northeast Wyoming, home to the nation's top 10 producing coal mines.

"As the power plant's stockpile of coal, sapped by sporadic shipments, dwindled to less than a week's supply, Basin Electric Power Cooperative had to make plans for scaling back the plant's operations and power output."

http://www.nytimes.com/aponline/business/AP-Railing-on-Coal.html?

Dave

[Anonymous]

And the quote of note:

"But it {adaquate coal deliveries} will take time because of the enormous task of expanding an industry that until only a few years ago was abandoning track as its business dwindled."

So, because of Staggers, we're paying higher energy bills.

[CSSHEGEWISCH]

The last time I looked, my gas bill was going up because the price of natural gas has risen. In Illinois, the gas utility can charge a regulated rate for its service, which is constant, plus the unregulated cost of the natural gas, which is variable. Electric rates have remained constant by dint of regulation.

I don't think that Staggers has had much of an effect on natural gas prices.

[tatans]

The price of natural gas is declining at a fast rate here in Canada today and is affecting the price of shares on the stock market, time to get out and invest in coal or something.

[Anonymous]

I'm never ceased to be amazed by utilities that file multi-million dollar lawsuits againt railroads for charging "excessive rates", then turn around and sue the same railroads for not having the capital to add capacity whenever they decide to buy more Powder River Coal.

[BaltACD]

QUOTE: Originally posted by mrsheep

I'm never ceased to be amazed by utilities that file multi-million dollar lawsuits againt railroads for charging "excessive rates", then turn around and sue the same railroads for not having the capital to add capacity whenever they decide to buy more Powder River Coal.

Meanwhile raising the rates of the product they sell with impunity.

Pot calling the kettle black[:(!]

[bobwilcox]

Most of the current problems were directly caused by the BNSF's failure to propely maintain track at a choke point on a stretch of joint line in the Powder River Basin. There deficient maintance program had a sign off from the UP.

In addition the Power Companies cut their safety stock inventores from one year to one month.

Shortly the BNSF will get the track fixed and the Utilities will learn to keep more inventory on hand.

[TomDiehl]

QUOTE: Originally posted by futuremodal

And the quote of note:

"But it {adaquate coal deliveries} will take time because of the enormous task of expanding an industry that until only a few years ago was abandoning track as its business dwindled."

So, because of Staggers, we're paying higher energy bills.

The part of that quote of MORE note: "was abandoning track as its business dwindled."

Imagine that. A business cutting back the physical plant because business is going down. What were they thinking?

[rrandb]

QUOTE: Originally posted by bobwilcox

Most of the current problems were directly caused by the BNSF's failure to propely maintain track at a choke point on a stretch of joint line in the Powder River Basin. There deficient maintance program had a sign off from the UP.

Niether UP or BNSF anticipated the speed at which coal dust was contaminating the balast and causing the roadbed to turn to mush. This is an ongoing problem which may result in coal having to be moved in cars with covers to solve the problem. They have even looked at spraying the open cars with a temporary seal that can still be dumped. Water was ruled out since as soon as the dust dried it would only move the problem down the line. It's like those covers on dump trucks only the dust is too fine for cloth covers.

[Anonymous]

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

And the quote of note:

"But it {adaquate coal deliveries} will take time because of the enormous task of expanding an industry that until only a few years ago was abandoning track as its business dwindled."

So, because of Staggers, we're paying higher energy bills.

The part of that quote of MORE note: "was abandoning track as its business dwindled."

Imagine that. A business cutting back the physical plant because business is going down. What were they thinking?

What?! Railroad business went down post Staggers? 'Cause that's when the real retrenchment began, after Staggers *revived* the rail industry.

That part of the quote of MORE note is notable only in that it states an outright falsehood, because railroad business did not "dwindle" after Staggers. The only thing that dwindled was the track network and the number of Class I carriers.

Imagine that - business went up but trackage went down. Only in a monopoly situation can something like that happen.

The Laws of Economics - right every time!

[TomDiehl]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

And the quote of note:

"But it {adaquate coal deliveries} will take time because of the enormous task of expanding an industry that until only a few years ago was abandoning track as its business dwindled."

So, because of Staggers, we're paying higher energy bills.

The part of that quote of MORE note: "was abandoning track as its business dwindled."

Imagine that. A business cutting back the physical plant because business is going down. What were they thinking?

What?! Railroad business went down post Staggers? 'Cause that's when the real retrenchment began, after Staggers *revived* the rail industry.

That part of the quote of MORE note is notable only in that it states an outright falsehood, because railroad business did not "dwindle" after Staggers. The only thing that dwindled was the track network and the number of Class I carriers.

Imagine that - business went up but trackage went down. Only in a monopoly situation can something like that happen.

The Laws of Economics - right every time!

The other law of economics you're ignoring once again, the track needs to be where the freight needs to be moved. Trackage or land in Alaska won't do any good for coal moving the PRB to midwest coal fired power plants.

Also, if the track isn't used (heavily enough or at all) for several years, it becomes a candidate for abandonment. The fact that traffic MIGHT show up years down the road is a speculation that can only be held by a profitable company.

[SSW9389]

There is a nice little article in the July Railfan about BNSF delivering Powder River Coal to an Alabama power plant. Quite inneresting.

[Anonymous]

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

And the quote of note:

"But it {adaquate coal deliveries} will take time because of the enormous task of expanding an industry that until only a few years ago was abandoning track as its business dwindled."

So, because of Staggers, we're paying higher energy bills.

The part of that quote of MORE note: "was abandoning track as its business dwindled."

Imagine that. A business cutting back the physical plant because business is going down. What were they thinking?

What?! Railroad business went down post Staggers? 'Cause that's when the real retrenchment began, after Staggers *revived* the rail industry.

That part of the quote of MORE note is notable only in that it states an outright falsehood, because railroad business did not "dwindle" after Staggers. The only thing that dwindled was the track network and the number of Class I carriers.

Imagine that - business went up but trackage went down. Only in a monopoly situation can something like that happen.

The Laws of Economics - right every time!

The other law of economics you're ignoring once again, the track needs to be where the freight needs to be moved. Trackage or land in Alaska won't do any good for coal moving the PRB to midwest coal fired power plants.

Also, if the track isn't used (heavily enough or at all) for several years, it becomes a candidate for abandonment. The fact that traffic MIGHT show up years down the road is a speculation that can only be held by a profitable company.

Tom, Tom, Tom, we've been through this before. Many other industries will maintain "unused" assets for long periods of time, because they understand the cyclical nature of business. Apparently, railroads do not understand this basic business tenet.

You see, if you scrap an asset, you don't have that asset later on when you need it. Now that the nation's energy and other transportation needs are such that abandoned lines would be put into play right now, it shows a lack of foresight (or a complete lack of concern) by the shortsighted railroad industry.

Don't these guys follow economic trends? Or did they think that the US was destined for a Soviet-style command economy, so why save assets if the railroads are going to be taken over by the federales?

Tom - agree or disagree - do you think that the current railroad network is adaquate for both today's and our future economic needs?

[TomDiehl]

An asset such as a right of way needs to be where the traffic will flow. There's still lines very lightly used in my area that were heavy mainlines back in the 50's. Others in the same category in the 50's have been torn out because the traffic is no longer there. Since the railroads that owned them have gone out of business, exactly who is going to "maintain these unused assets?"

[rrandb]

The railroads were always trying to catch up to todays needs. They can never be built for tomorrows needs as no one knows what those are. It takes time, money and a well established need before you can build a railroad. Many of them will still be abandoned or go bankrupt as transportation needs change.

[petervonb]

Just for the record, and because not everyone likes to click on urls to find it, here is the text of the entire AP story, as it appeared in the St. Paul paper this morning:

Coal demand puts strain on nation's rail system
BY BOB MOEN
Associated Press
WHEATLAND, Wyo.

In the time it takes to microwave a frozen dinner, another 120 tons of coal is dumped from a railroad car at the Laramie River Station. It's a scene that can occur 200 times a day.

To keep electricity flowing to some 1.6 million homes, the power plant burns up to 24,000 tons of coal every day. Operating continuously, the plant's three generating units require a dependable, steady stream of coal.

This past year, however, the stream of coal was anything but steady, even though the plant is only about 100 miles from the largest-producing coal mines in the United States — the Powder River Basin in northeast Wyoming, home to the nation's top 10 producing coal mines.

As the power plant's stockpile of coal, sapped by sporadic shipments, dwindled to less than a week's supply, Basin Electric Power Cooperative had to make plans for scaling back the plant's operations and power output.

"The best I can characterize it is that we're operating on the ragged edge," Basin Electric spokesman Floyd Robb said.

Basin Electric is not alone. Power plants around the country have seen their coal stockpiles dwindle, mainly because of problems with shipping coal out of Wyoming and increased worldwide demand for energy.

David Wilks, president of energy supply for the Minneapolis-based Xcel Energy, testified before a Senate committee last month that power companies may be forced to buy up to $2 billion worth of natural gas to make up for a coal shortfall.

The result has been higher electric bills in some areas because power companies were forced to replace coal with more expensive natural gas to feed their plants.

"People call us the Saudi Arabia of coal. But if you don't get it to the power plants, it doesn't matter," said Mike Grisso, executive director of the Alliance for Rail Competition, a shippers' organization.

The two main shippers of U.S. coal — BNSF Railway Co. and Union Pacific Railroad — say they are investing hundreds of millions of dollars in order to ship more Wyoming coal and keep up with an ever growing demand for power.

Anthony Hatch, an independent transportation analyst in New York, said he believes railroads will meet future demands for shipping coal. But it will take time because of the enormous task of expanding an industry that until only a few years ago was abandoning track as its business dwindled.

But until the rail system can match rail capacity and demand for service, there will be periods where rail shipments can't keep up, he said.

With plentiful coal reserves and alternative fuels still too costly or years away from becoming reality, coal is seen by many as the most practical means to meet the nation's and world's growing power needs.

"The economy is still rolling along so everybody expects production and demand to keep increasing," Fred Freme, industry statistician with the U.S. Energy Department's Energy Information Administration. "It is the cheapest as far as electric generation goes."

Owned by six electric utilities, the Laramie River Station's three 605-foot-tall stacks tower above the landscape of east-central Wyoming and the nearby community of Wheatland. Each of its three generators produces enough electricity to power roughly 550,000 homes.

To generate the electricity, Laramie River will burn up to 1,125 tons of coal an hour at full throttle.

The coal arrives by rail from mines north of Wheatland. Each BNSF train tugs about 135 open-top rail cars loaded to the brim with chunks of gleaming black coal.

The coal cars are pulled through a long, narrow building where a layer of coal dust covers the floors, railings and steps up to a half-inch deep. Each 20-ton car is grabbed by four clamps and turned upside down. Its cargo of 120 tons of coal pours into a chute and is funneled to a conveyor belt, and then to holding bins.

It takes about 2½ minutes to dump each rail car.

Richard Bower, engineering assistant at the plant, said ideally the plant would have 700,000 to 800,000 tons of coal on hand. But this winter, the plant's coal supply dwindled as low as 150,000 tons, less than a week's supply, prompting Basin Electric to consider curtailing power production.

"It's not increased generations causing the stockpile to go down," Basin Electric spokesman Robb said. "It's lack of coal deliveries."

Other power companies are having similar supply problems. Entergy Arkansas said its coal shipments declined up to 20 percent last year, forcing it to reduce operations at two power plants in Arkansas and to buy power on the open market. Wisconsin utilities incurred nearly $50 million in extra costs last year because of interruptions in coal shipments.

Entergy Arkansas has sued Union Pacific Railroad, claiming the railroad schemed to hold back deliveries of Wyoming coal in an effort to make more money. UP denied the claim, saying it actually turned down new contracts to ship coal in order to catch up with delayed shipments to existing customers.

Power generating companies are not expecting any improvement this year.

It used to be that people would set their clocks by the train coming into town. But the business of running the nation's train traffic is much more complicated these days.

Today's railroads use a rail system that has not added track and other infrastructure for decades. In fact, before 2003, railroads had been abandoning miles of unprofitable and underused lines.

Just in the area of coal, "the rails have to keep up with 20 (million) to 30 million tons of increased shipments each year," David Khani, an industry analyst with of Friedman Billings Ramsey in Arlington, Va., said.

At the same time, increasing imports of goods from China and elsewhere are competing for space and time on the nation's rail system, he said.

With little margin between coal supply and demand, any disruption in train traffic, especially in the movement of coal out of Wyoming, will influence coal prices around the country, he said. That's what happened a year ago when derailments in Wyoming stopped traffic briefly and slowed shipments for months.

BNSF and Union Pacific jointly share a rail line coming out of the southern end of the Powder River Basin. With an average of about 61 coal trains a day traveling on the joint line, some 325 million tons of coal — about one-third of the nation's total coal production — was carried over the line last year. The same line handled just 19 million tons of coal in 1985.

BNSF and UP are investing about $200 million in a project that will eventually expand what had been a two-track line into three tracks for the entire 75-mile length. A 15-mile stretch will get a fourth set of tracks, BNSF spokesman Pat Hiatte said.

As a result of the expansion, the two railroads expect to be able to ship more than 400 million tons of coal a year over the joint line.

In addition, a new staging yard is being built and conductors, mechanics and other rail workers are being hired, said Gus Melonas, spokesman for BNSF Railway Co.

Over the first four months of this year, BNSF hauled out about 6 percent more Wyoming coal than during the same period last year.

And the first major rail expansion in the United States in about a century is in the works. The South Dakota-based Dakota, Minnesota & Eastern Railroad is seeking $2.5 billion in federal loans to extend and rebuild rail lines so it can haul Wyoming coal to the Midwest and Great Lakes regions. Its loan application is pending before the Federal Railroad Administration.

"What we're seeing here is a rail renaissance," Hatch said.

[Murphy Siding]

QUOTE: Originally posted by futuremodal
Many other industries will maintain "unused" assets for long periods of time, because they understand the cyclical nature of business. Apparently, railroads do not understand this basic business tenet.

You see, if you scrap an asset, you don't have that asset later on when you need it. Now that the nation's energy and other transportation needs are such that abandoned lines would be put into play right now, it shows a lack of foresight (or a complete lack of concern) by the shortsighted railroad industry.

Don't these guys follow economic trends? Or did they think that the US was destined for a Soviet-style command economy, so why save assets if the railroads are going to be taken over by the federales?

Hey Dave- any chance you could make a quick list of the under-utilized or dormant rail lines that will be really busy 10 years from now? 20 years from now? That way, the railroads would have an easier time planning some of this stuff?[;)][:-,]

[MP173]

Great idea Murph....lets do everyone a favor, so in our older years, we wont be cold.

Dave, how will these dormat or underused lines be financed? Cross subsidies from the captives shippers? Oops, cant do that now can we?

Doesnt look like you can get it both ways. Econ 101
ed

[MichaelSol]

I think the point is that railroads used to be viewed as irreplaceable resources; once they're gone, that's it. Another analogy might be long term resource, such as tree farms. No, you don't turn the assets into profit all at once by a sell-off. You leave most of the assets alone, just biding time to when they will be most useful.

A different management philosophy in either case than the standard Business School/MBA approach that looks only to short term ROI and ROA as a measure of management competence.

"Real" railroaders fell out fashion for quite a while in top management at railroads. Airline presidents, all sorts of business types took over. "Get rid of redundancy" was based on a manufacturing model, not a resource enhancement model, of management.

I have yet to see an adequate study showing that the actual costs of consolidation -- which were substantial -- exceeded the cost savings of abandonments, and particularly where the ton-mile growth rate since 1960 predicted -- predicted with just about utter certainty -- that there would be a capacity price to pay, just about now, and that price must now be considered in addition to the costs of consolidation as the ultimate cost of industry rail policy since 1980.

[n012944]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

And the quote of note:

"But it {adaquate coal deliveries} will take time because of the enormous task of expanding an industry that until only a few years ago was abandoning track as its business dwindled."

So, because of Staggers, we're paying higher energy bills.

The part of that quote of MORE note: "was abandoning track as its business dwindled."

Imagine that. A business cutting back the physical plant because business is going down. What were they thinking?

What?! Railroad business went down post Staggers? 'Cause that's when the real retrenchment began, after Staggers *revived* the rail industry.

That part of the quote of MORE note is notable only in that it states an outright falsehood, because railroad business did not "dwindle" after Staggers. The only thing that dwindled was the track network and the number of Class I carriers.

Imagine that - business went up but trackage went down. Only in a monopoly situation can something like that happen.

The Laws of Economics - right every time!

The other law of economics you're ignoring once again, the track needs to be where the freight needs to be moved. Trackage or land in Alaska won't do any good for coal moving the PRB to midwest coal fired power plants.

Also, if the track isn't used (heavily enough or at all) for several years, it becomes a candidate for abandonment. The fact that traffic MIGHT show up years down the road is a speculation that can only be held by a profitable company.

Tom, Tom, Tom, we've been through this before. Many other industries will maintain "unused" assets for long periods of time, because they understand the cyclical nature of business. Apparently, railroads do not understand this basic business tenet.

You see, if you scrap an asset, you don't have that asset later on when you need it. Now that the nation's energy and other transportation needs are such that abandoned lines would be put into play right now, it shows a lack of foresight (or a complete lack of concern) by the shortsighted railroad industry.

Don't these guys follow economic trends? Or did they think that the US was destined for a Soviet-style command economy, so why save assets if the railroads are going to be taken over by the federales?

Tom - agree or disagree - do you think that the current railroad network is adaquate for both today's and our future economic needs?

Dave, first you say that the railroads were abandoning track because they are a monopoly and can get away with it. Then you are saying that the railroads were abandoning track because they were shortsighted and not following trends. Which is it? If you were right about the monopoly(which your not) then the railroads were not being shortsighted, there were playing their hand wonderfully. Pick a side, just one, thats all I ask.


Bert

[MichaelSol]

QUOTE: Originally posted by n012944
Dave, first you say that the railroads were abandoning track because they are a monopoly and can get away with it. Then you are saying that the railroads were abandoning track because they were shortsighted and not following trends. Which is it? If you were right about the monopoly(which your not) then the railroads were not being shortsighted, there were playing their hand wonderfully. Pick a side, just one, thats all I ask.

You say that Dave said essentially this:

"Railroads were abandoning track because they were shortsighted and not following trends, and -- because they were monopolies -- they could get away with it."

How are there two "sides" to that statement? Without agreeing or disagreeing with the substance, the two thoughts appear consistent. I'm not certain you could say one without saying the other.

[mudchicken]

Once again, the "baloney meter" is pegged off the scale. I think FM & Co. disconnected the wires and just left it there. The concept of real world marketplace pressure in a freemarket economy is ignored. [V][V][V]

PS- Michael Sol: Grenville Dodge, Ted Judah, AA Robinson, Bill Palmer & company had it right. When the construction engineers and the real railroaders lost control of the railroads to the operating management clowns (MBA's, Business Administration grads and the related Wall Street Trash/ Fa$t Buck Artist$), they rolled over in their graves. They've gotta be wondering how far an engineering enterprise can be dragged off course before it recovers. (Should have shot Durant on the spot to get the point accross when they had the chance)

[rrandb]

Maybe this will help DME get past it's Mayo roadblock. But wait we need the clinic more than PRB coal to have another line. NOT. Power companies might help relocate either DME or MAYO but I'm not holding my breath.

[Anonymous]

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by futuremodal
Many other industries will maintain "unused" assets for long periods of time, because they understand the cyclical nature of business. Apparently, railroads do not understand this basic business tenet.

You see, if you scrap an asset, you don't have that asset later on when you need it. Now that the nation's energy and other transportation needs are such that abandoned lines would be put into play right now, it shows a lack of foresight (or a complete lack of concern) by the shortsighted railroad industry.

Don't these guys follow economic trends? Or did they think that the US was destined for a Soviet-style command economy, so why save assets if the railroads are going to be taken over by the federales?

Hey Dave- any chance you could make a quick list of the under-utilized or dormant rail lines that will be really busy 10 years from now? 20 years from now? That way, the railroads would have an easier time planning some of this stuff?[;)][:-,]

So your asking me to predict what rail management will stumble into 10 or 20 years from now? We don't even know what the outcome of pending legislation in Congress will be. Where will new coal fired plants be located? Or will anti-coal politicians sweep into office in the next few elections?

And most of such lines are already condos and bike paths, aka most of the lopping took placel in the last two decades. Is there anything left to cut?

But since you asked, I'll give it a start. Keep in mind these are lines that should be saved, and I'm not predicting that they will saved (in fact, the good money is on further retrenchment). Sticking with the PNW -

UP Pocatello to Silver Bow and BNSF Great Falls to Helena -

Once part of the vital I-15 rail corridor, traffic on the UP was relegated to Butte locals when BN mothballed the Great Falls to Helena line. Before Staggers, there were quite a few run through pota***rains from Canada to SoCal over this corridor. Then Staggers was passed, and BN mothballed the GF-Helena line. UP/CP shifted Cal-bound pota***o the I-5 rail corridor, now a very clogged line. Think of what would be moving over this line post NAFTA (assuming BNSF didn't try to bottleneck rate the viability out of existence)!

Furthermore, at one time MRL made a bid for the UP line and possibly the GF line, but BN nixed the deal. The likelyhood is eventual abandonment if not shortline sale (to anyone but MRL). Also, BNSF owns the connecting line between Silver Bow on the UP and Garrison on MRL.

Yet another example of shortsighted railroad politics. There is nothing to be gained by either UP or BNSF by playing "spin the bottleneck" with each other, yet there it is, a major North American transportation corridor without border to border US rail service. In this case, it would be prudent for the federales to step in and b***h slap both BNSF and UP for causing a major market skewing that hurts the US economy. I guess a little mileage based rate regulation is in order.

UP and the Modoc Line -

Here is a more blatant example of internal idiocy. The Modoc Line used to serve as an alternative line between Salt Lake City and the PNW, an alternate to the Shasta Line in SP's case, and an alternative to UP's Blue Mountain (ex Oregon Short Line) division when UP took over SP. UP did use it briefly but then decided that the Blue Mountain line would suffice, and abandoned a major portion of the Modoc, selling the rest of it to a shortline operator. Keep in mind this all happened in the last decade.

Now that traffic levels through the Blue Mountains have reached a critical threshhold, UP could really use a viable alternate. But, well............

Because we are focused on pre vs post Staggers, I'll keep the PCE off the list, even though I see the PCE as the first victim of Staggers. The PCE was torn out in 1980, Staggers was passed in 1980, so assuming the legislation went through a normal crafting period, the contents of Staggers was known prior to the final court ordered PCE retrenchment, and it had to effect the players involved. It was good ol' BN which testified that the PCE was nothing but excess capacity, the remaining BN lines would suffice for the rest of eternity, so let's rip 'er out. And after all we've learned about the inner poltical doings of the entities involved, you can bet BN officials had their fingers crossed, hoping the reality of the PCE's value as a viable rail transportation corridor would not leak out. Of course, all BN wanted was to eliminate any competition so they could begin implementation of monopolistic tactics.

The rest of the 10 will probably reside in the Midwest and East Coast, as that's where a majority of the rail trackage was taken out. Much of the trackage of Conrail predeccessors would be in play today from what I have read on threads related to Conrail, et al.

Of course, we should also probably include double track that was single tracked as lost capacity. Such wasn't related to Staggers, but is part of the greater problem of capacity shortages.

Again, I will ask you this: Can you name any other industry besides the rail industry that has engaged in such a canabalistic attitude toward it's hard assets?

[n012944]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by futuremodal
Many other industries will maintain "unused" assets for long periods of time, because they understand the cyclical nature of business. Apparently, railroads do not understand this basic business tenet.

You see, if you scrap an asset, you don't have that asset later on when you need it. Now that the nation's energy and other transportation needs are such that abandoned lines would be put into play right now, it shows a lack of foresight (or a complete lack of concern) by the shortsighted railroad industry.

Don't these guys follow economic trends? Or did they think that the US was destined for a Soviet-style command economy, so why save assets if the railroads are going to be taken over by the federales?

Hey Dave- any chance you could make a quick list of the under-utilized or dormant rail lines that will be really busy 10 years from now? 20 years from now? That way, the railroads would have an easier time planning some of this stuff?[;)][:-,]

Again, I will ask you this: Can you name any other industry besides the rail industry that has engaged in such a canabalistic attitude toward it's hard assets?

The auto industry.

[n012944]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by n012944
Dave, first you say that the railroads were abandoning track because they are a monopoly and can get away with it. Then you are saying that the railroads were abandoning track because they were shortsighted and not following trends. Which is it? If you were right about the monopoly(which your not) then the railroads were not being shortsighted, there were playing their hand wonderfully. Pick a side, just one, thats all I ask.

You say that Dave said essentially this:

"Railroads were abandoning track because they were shortsighted and not following trends, and -- because they were monopolies -- they could get away with it."

How are there two "sides" to that statement? Without agreeing or disagreeing with the substance, the two thoughts appear consistent. I'm not certain you could say one without saying the other.

Yes you can. If the railroads knew that they were monopolies, and abandoning track would make them a stonger monopoly, then they were not being shortsided, but brilliant. That is what my point was. Do I think they were shortsided, yes. However it is very easy to sit back 20 years later and tell people how stupid there actions were.


Bert

[Anonymous]

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by futuremodal
Many other industries will maintain "unused" assets for long periods of time, because they understand the cyclical nature of business. Apparently, railroads do not understand this basic business tenet.

You see, if you scrap an asset, you don't have that asset later on when you need it. Now that the nation's energy and other transportation needs are such that abandoned lines would be put into play right now, it shows a lack of foresight (or a complete lack of concern) by the shortsighted railroad industry.

Don't these guys follow economic trends? Or did they think that the US was destined for a Soviet-style command economy, so why save assets if the railroads are going to be taken over by the federales?

Hey Dave- any chance you could make a quick list of the under-utilized or dormant rail lines that will be really busy 10 years from now? 20 years from now? That way, the railroads would have an easier time planning some of this stuff?[;)][:-,]

Again, I will ask you this: Can you name any other industry besides the rail industry that has engaged in such a canabalistic attitude toward it's hard assets?

The auto industry.

Nope, you're thinking of a few specific companies like GM or Ford, but not the aggregate industry as a whole, which continues to add assets.

GM and Ford aren't shutting those plants to extract more pricing power, they're rather on the losing end of the intra-industry competitive battle, e.g. losing market share to other auto makers, subsequently closing their plants while others open new ones. Toyota, Nissan, Lexus, et al are not lopping off assets, are they?

[Anonymous]

Mudchicken - what was your college degree? Or did you have one?

Stick to what you know - rotten ties, rusty spikes, and weedy ballast. Leave the economics to those who have the degree.

[MichaelSol]

QUOTE: Originally posted by n012944

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by n012944
Dave, first you say that the railroads were abandoning track because they are a monopoly and can get away with it. Then you are saying that the railroads were abandoning track because they were shortsighted and not following trends. Which is it? If you were right about the monopoly(which your not) then the railroads were not being shortsighted, there were playing their hand wonderfully. Pick a side, just one, thats all I ask.

You say that Dave said essentially this:

"Railroads were abandoning track because they were shortsighted and not following trends, and -- because they were monopolies -- they could get away with it."

How are there two "sides" to that statement? Without agreeing or disagreeing with the substance, the two thoughts appear consistent. I'm not certain you could say one without saying the other.

Yes you can. If the railroads knew that they were monopolies, and abandoning track would make them a stonger monopoly, then they were not being shortsided, but brilliant. That is what my point was. Do I think they were shortsided, yes. However it is very easy to sit back 20 years later and tell people how stupid there actions were.

You've got an interesting logic. The proposition was that it was shortsighted. They got away with it because they were monopolies -- which can get away with short-sighted actions because there is no alternative. You may disagree that it was shortsighted, but the logic of the statement is consistent. Your question was not.

[bobwilcox]

QUOTE: Originally posted by n012944

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by n012944
Dave, first you say that the railroads were abandoning track because they are a monopoly and can get away with it. Then you are saying that the railroads were abandoning track because they were shortsighted and not following trends. Which is it? If you were right about the monopoly(which your not) then the railroads were not being shortsighted, there were playing their hand wonderfully. Pick a side, just one, thats all I ask.

You say that Dave said essentially this:

"Railroads were abandoning track because they were shortsighted and not following trends, and -- because they were monopolies -- they could get away with it."

How are there two "sides" to that statement? Without agreeing or disagreeing with the substance, the two thoughts appear consistent. I'm not certain you could say one without saying the other.

Yes you can. If the railroads knew that they were monopolies, and abandoning track would make them a stonger monopoly, then they were not being shortsided, but brilliant. That is what my point was. Do I think they were shortsided, yes. However it is very easy to sit back 20 years later and tell people how stupid there actions were.


Bert

Railroads take in about 15 cents of every dollar spent on inter-city freight transportation dollar spent on the U. S. That is a long way from a monoply except for a Beltway Bandit selling his cause to Congress.