Sunday, July 27, 2008

No. 2 - Regulation

We shall reach back a little further in time for the second item on our list of things we, the United States, should have done to foster a vital Passenger Rail system over time.

Regulation of the rail transportation system, in general, should have ended after the Robber Baron era. We are sure that the public of the late nineteenth century saw abuses by the railroads. The system of regulation that continued without mercy into the third quarter of the twentieth century abused the so-called private-sector railroads far more.

In today's economy, we are having a healthy discussion about the relative merits of free markets v. regulation. Movements are afoot to re-regulate rail and big oil and big drug and big any other business that is seen as making a buck off the Little Guy. But every dollar made in this country originates with the Little Guy.

By regulating the health out of the railroads, Government deprived the Little Guy of a vital form of transportation. The Little Guy no longer had the choice of taking a passenger train from Point A to Point B. Indirectly, Little Guy and Girl were deprived of truck-free highways good for a Sunday afternoon spin. We were deprived of the clean environment that trains foster and trucks do not. We were deprived of all of the potential advancements in rail service that many other parts of the world have or will have. Because even while regulating rail, and with the exception of national emergency (read World War), Government refused to run the trains. Via ridiculous yearly Congressional debates over funding Amtrak, Government still refuses to run the very corporate entity it set up to be the trains.

Would we have done better without regulation? You bet. First, the railroads that ran the passenger trains would have had a fairer chance to remain solvent. Though solvency in railroad terms is an interesting accounting theory probably served more by a whole book than by this blog, suffice it to say that a fully solvent corporation, one making money for its investors, is less likely to have to cut off marginal parts of the business.

Did we say marginal? Yes, because although Passenger Rail does not make money on a fully allocated cost basis, there was a time when it did make money on an avoidable cost basis. Basically that means that, if freight is solvent and paying all fixed and avoidable costs (trains, track and infrastructure), then Passenger Rail has only to pay avoidable costs to make money. What once was an accounting ploy by the railroads to show regulators how badly they needed to raise the rates became common practice and had everybody convinced that passengers were dragging freight down. (They were - but only because freight rates were regulated too heavily to make a profit from the combination of both freight and passenger service.)

Without regulation, passenger rates would also have risen with the economy. The railroad that wanted to lure pasengers from airlines and automobiles would have been free to hold the bargain-basement sale (at the expense of freight, which would have been paying its way in any case). Without regulation, freight would have been able to maintain its competitive edge with truck and barge, and been able to "do a deal" on rates where needed to snag the business. (As opposed to going to the government hat in hand to ask mother-may-I when a rate change seemed appropriate.)

In its own way, and with the help of the NIMBYs and environmentalists, Government still regulates the rails. Freight has been free to flow at market rates for decades, but building more infrastructure is a daunting task. So you won't see new rail routes blazed out of virgin territory any sooner than you will see new oil refineries in cities that never had them, or new oil rigs off the coast of California.

We are a nation of contortionists, my friends. Because we have been screwing ourselves for years.

©2008 - C. A. Turek -

Sunday, July 13, 2008

What We Should Have Done - No. 1

The decline of the passenger train in the United States did not come as a shock to anyone.

Just as it should be obvious to anyone today that the passenger airliner is on the ropes, so it was clear in the early 1950s that Passenger Rail would not survive the private passenger auto. The precipitous drop in rail travel numbers after World War II should have engendered a national transportation policy that included saving the trains.

The National Defense Highway system, subsequently the Interstate Highway system, was first and foremost supposed to be a device to enhance national security. Yes, troops and equipment could move fast by rail, and had moved faster by rail during the war than they had ever before. But our Government foresaw that war materiel could move faster on a system of limited-access highways.

Instead, what our Government should have done was establish a national defense transportation policy - a policy whereby private citizens, commerce and industry, and Government and the military could be assured that, no matter what the disaster, all would have access to the transportation necessary to their needs.

While establishing a route system for the highways, the Government should have been identifying essential passenger routes for all modes of transport and weighing the cost benefits against what would happen if one or more of those modes became undesirable or unuseable for reason of some national emergency.

Instead our money went into a distinctly inferior system of highways that ultimately saddled us with spiraling maintenance costs and accelerating depreciation precisely BECAUSE we did not establish balanced and well-considered policy towards other modes of transport. And it did this while using public money to effectively cut many communities off from both motor commerce and passenger rail. (Count the number of communities that any Interstate bypasses by looping around them, and see how many of these still have Amtrak service.)

The unheeded and nonetheless inevitable decline in the railroads' passenger service during the next 15 years certainly was not headed off. And Amtrak, instead of being well-considered policy, was instead a political stopgap. What happened with the creation of Amtrak - saving a few routes for political and popular expediency - was nothing like what should have been done a decade or two before. It was an emergency measure that did ALL modes of passenger transport a disservice. To say nothing of what it did to We The People.

Next time, No. 2.

© 2008 - C. A. Turek -

Sunday, July 06, 2008

Bleak Future

Don Phillips is an internationally recognized authority on transportation. He writes a monthly piece in Trains Magazine, and he has a doozy in the current (August 2008) issue.

Whether or not he is right in blaming President Bush for the transportation policies of the past 8 years - and Congress is at least as responsible - you have to listen to the truths he tells.

Truth No. 1 - U.S. transportation policy is a mess. We would go one step further and say we have none, but we guess that maintaining the status quo with a minimum of funding and no new taxes is policy. Unfortunately, the status quo just won't cut it. Highways are just about at the breaking point, the air traffic system is as archaic as the California Zephyr was when the first jet passenger aircraft were in diapers, and we need all the intercity rail routes we have just to move freight. In fact, there are some parts of the country where starting up Commuter Rail to take cars off the roads will just put trucks on the roads in their places. It is just that bad.

Truth No. 2 - The public is in the dark as to transportation policy and transportation options. We are not talking about deciding whether to fly or drive - we are talking about whether we will have the option of getting there at all. The public sees rail transportation as an anachronism. We can see that in some of the responses we get to our blog. The public is not disturbed by the lack of options until the public is stuck in truck traffic on the way to an important meeting. The public sensitivity is so dulled by the continual squandering of tax money that it doesn't give a fig any more.

Truth No. 3 - Our leaders, the President, Congress, and state governments, would just as soon keep it that way. That's because if the public knew of the options and opportunities for a first-class transportation system that have been passed by - by elected officials more concerned about their re-elections than about the Re-public - then we, the people, would probably throw the whole lot of 'em out and start over.

Truth No. 4 - Nothing will get better if we ignore it. The way Mister Trains sees it: Fuel prices will level out or continue to rise, but they won't fall significantly and will never again drop to as low a percentage of costs for goods and services as they once were. We are beyond the break point, and some transportation companies, particularly those with no hedge on energy costs and with customers who cannot withstand any significant increase in fuel surcharges, will have to merge or quit business. That is true across the board, and we have already seen the bankruptcies in the air transport business. Any failure in one mode will put more pressure on another, and hence more costs through excess loading, wear-and-tear, and penalties on missed deliveries.

The cascade of chaos is awesome to contemplate. Eventually, we can see a few truck lines carrying on over highways to which we cannot devote any money because use taxes have dropped. We can see trains parked in sidings for days or weeks waiting for capacity. If that happens, you will see empty shelves in all retail establishments, even Walmart. We can see air traffic cut to a half or a third of what it is today. We can see Amtrak unable to get a train from one city to another because of the congestion. And we can see idle commuter trains in idle terminals, because half the work force that needed them won't have jobs. This one could make the Great Depression look like a cakewalk.

Our Enemies - and they are Legion - are licking their chops.

Bleak? Yes! Possible to turn around? Maybe. Don Phillips doesn't think so, and he has a lot more credentials than Mister Trains.

The scariest part of all is this: Not one average Joe or Jill who reads this has a clue what opportunities have been missed - what could or should have prevented this Bleak Future.

Down the road, we will attempt to tell you, if the First Amendment holds out that long.

©2008 - C. A. Turek -