Thursday, December 30, 2010

Tuesday, December 28, 2010

Five dollar a gallon gasoline in 2012?

That's the prediction of the former head of Shell Oil

The former president of Shell Oil, John Hofmeister, says Americans could be paying $5 for a gallon of gasoline by 2012.

In an interview with Platt's Energy Week television, Hofmeister predicted gasoline prices will spike as the global demand for oil increases.

"I'm predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices," he said.

Tom Kloza, chief oil analyst with Oil Price Information Service says Americans will see gasoline prices hit the $5 a gallon mark in the next decade, but not by 2012.

"That wolf is out there and it's going to be at the door...I agree with him that we'll see those numbers at some point this decade but not yet." Kloza said.

"The demand is still sluggish enough in some of the mature economies."

Gasoline prices have been steadily rising. Last week, gas prices crossed the $3 mark for the first time since October 2008. According to AAA figures, prices are up 4% from a month ago and 16% from the $2.585 average a year ago.

A study from the Oil Price Information Service estimates drivers will spend $305 on gasoline in December. According to the study, fuel prices are up 13.6% from last December and 76% higher from December 2008.

Gas prices eased off last week's gains but still remained around the $90-a-barrel mark, settling at $91-a-barrel. Prices were down 51 cents from Thursday's close after China unexpectedly raised interest rates over the holiday weekend for the second time in two months.

Oil prices settled above $90 a barrel for the first time since October of 2008.

Until and unless we build more oil-independent mass transit, the economy is slaved to the ever increasing cost of oil. High speed rail is the most obvious and the flagship means of achieving a deal of oil independence, but it is only one part of what must need to be a cohesive whole; from busses and streetcars on the local level, to electric commuter railways, and high speed electric trains for intercity transport.

Saturday, December 25, 2010

Merry Christmas!

Today, the twenty-fifth day of December,
unknown ages from the time when God created the heavens and the earth
and then formed man and woman in his own image.

Several thousand years after the flood,
when God made the rainbow shine forth as a sign of the covenant.

Twenty-one centuries from the time of Abraham and Sarah;
thirteen centuries after Moses led the people of Israel out of Egypt.

Eleven hundred years from the time of Ruth and the Judges;
one thousand years from the anointing of David as king;
in the sixty-fifth week according to the prophecy of Daniel.

In the one hundred and ninety-fourth Olympiad;
the seven hundred and fifty-second year from the foundation of the city of Rome.

The forty-second year of the reign of Octavian Augustus;
the whole world being at peace,
Jesus Christ, eternal God and Son of the eternal Father,
desiring to sanctify the world by his most merciful coming,
being conceived by the Holy Spirit,
and nine months having passed since his conception,
was born in Bethlehem of Judea of the Virgin Mary.

Today is the nativity of our Lord Jesus Christ according to the flesh.

Tuesday, December 21, 2010

Virginia expands passenger rail service

RICHMOND- Governor Bob McDonnell announced today that the Commonwealth of Virginia and Norfolk Southern Railway Company have signed a landmark agreement that is an important step toward bringing daily intercity passenger rail service back to Norfolk for the first time since 1977. The round-trip train will link Norfolk with a single-seat ride to Richmond, Washington, D.C., and cities as far north as Boston.

Speaking about the agreement, Governor McDonnell noted, "The new service will bring direct intercity passenger rail service to one of Virginia's largest population centers. The Hampton Roads region is home to over a million Virginians, including thousands of Federal employees and military personnel, who currently have limited transportation choices for travel to Richmond, Washington, D.C., and into the Northeast. This service will provide an alternative to the heavily congested I-64 and I-95 corridors."

The agreement provides for the speedy upgrading of Norfolk Southern tracks between Norfolk and Petersburg so that they are suitable for use by passenger trains. Funded by an $87 million Rail Enhancement Fund grant, the projects include upgraded signaling, track extensions and connections, passenger train turning and servicing facilities, and a track and platform near Norfolk's Harbor Park for the passenger train. Also included is construction of a new connection between Norfolk Southern and CSXT tracks near Petersburg. These improvements will enable passenger trains to run on Norfolk Southern's busy Heartland Corridor route.

"The partnership between the Commonwealth and Norfolk Southern is a perfect example of business and government working creatively, cooperatively, and quickly to meet a challenge," said Norfolk Southern CEO Wick Moorman. "We are proud to be part of a timely and forward-looking response to a pressing public issue."

"Connecting Norfolk to the Amtrak network and the Northeast is a major step forward for the mobility of the region," said Thelma Drake, Director of the Department of Rail and Public Transportation.

Norfolk Southern will work with the Virginia Department of Rail and Public Transportation (DRPT) to complete the work outlined in the agreement. The project is already being designed, and construction will begin in 2011.

The Commonwealth continues to make progress on the necessary agreements for improvements to CSX track and with Amtrak. These agreements must be in place before new intercity passenger rail service can begin.
At least there's on Republican governor besides Arnold who gets the necessity of rail passenger service and is willing to continue investing in it. Of course, since the Washington D.C.-Lynchburg, VA route runs an operational profit, this is a very easy choice politically. At $87 million, capital costs are also far cheaper than what it would cost to expand the highways along the route. With any luck, the citizens of Virginia will vote for continued improvements to the rail route, including electrification and upgrading to Class 7 track to allow for 125mph service.

Friday, December 17, 2010

Florida HSR and the new governor

Could Rick Scott, who's all about getting people back to work, manage to kill the planned Orlando to Tampa high-speed rail line and the 24,000 jobs it would bring Florida?

The answer's yes, if, in the end, the governor-elect cares more about partisan politics than an economic opportunity that anyone with his supposed business savvy would be daft to resist.

Regrettably, Mr. Scott's sending signals that to him, politics may well be more important than doing what's clearly in the best interests of Florida. How unfortunate for the state, which needs the stimulative, potentially transformative high-speed line.

And how ironic for someone who cast himself as a political outsider in his run for governor.

Mr. Scott's continued parsing of the project — it's got to show a return on investment; it can't cost taxpayers, he says — is now imperiling it. State Department of Transportation officials who'll depend on Mr. Scott for their paychecks once he's governor have picked up on his dislike of the project and put off plans to solicit companies to prepare the Interstate-4 median for the high-speed trains.

Mr. Scott's tack resembles those of Republican governors in Wisconsin, New Jersey and Ohio, who recently leveled criticism at federally-supported rail projects destined for their states — before they ended up telling Washington they didn't want them.

But Mr. Scott surely knows Florida's in a far better position to host a new passenger-rail system than those states, unless six weeks after the election he's still ignorant about one of its biggest infrastructure and economic development projects.

Florida's $2.6 billion high-speed project would be paid for almost entirely by the feds. Washington has agreed to send Florida all but $280 million of its cost. And some companies vying to run the trains indicate they'd cover the state's share. They're willing to do that because they believe running the Orlando-Tampa route would give them a leg up on operating a second high-speed rail line from Orlando to Miami — and other fast trains outside Florida.

New Jersey Gov. Chris Christie said he feared his state would have to pay for costly rail-project overruns. But meetings last month between Florida transportation officials and companies wanting to operate the trains reportedly revealed the companies' willingness to cover any construction overages.

Wisconsin Gov.-elect Scott Walker said his state would have had to pay too much to operate and maintain its rail line. But the company that runs high-speed trains in Florida would have to operate and maintain them for 30 years. The state, Florida DOT's Kevin Thibault told us, wouldn't have to pick up the cost.

Florida would need 23,000 people to build the rail line, and to find as many as 1,000 workers to operate it. The train would stimulate businesses along the line and help turn Orlando and Tampa into a single market that attracts entrepreneurs eager to reap the benefits of the nation's most advanced transit system.

And it would offer commuters and tourists an alternative to an increasingly gridlocked I-4. It also would prove cheaper than the alternative: Building another lane of Interstate 4 — just from Tampa to Lakeland — would cost $3 billion.

Why would Rick Scott oppose such a system? Because President Obama's stimulus program, which he savages, underwrites so much of it? Because it has become a badge of honor among conservative governors to reject federally funded rail projects? Because, even though it would better connect Floridians and deliver all those jobs, Mr. Scott thinks opposition would somehow help him among his conservative constituency?

We've tried, but we can't think of another reason

This would be an extraordinarily poor move on Florida's part and proof of a merely ideological attack on the concept of passenger rail itself by members of the Republican Party. A guaranteed construction cost, with all overages handled by the companies responsible? Check. An operating franchise that does not require taxpayer subsidy? Check. Limited to no expense to the state of Florida because of hefty Federal grants? Check. What more could anyone want?

Saturday, December 11, 2010

Is flying faster and cheaper?

One of the common criticisms levied against high speed rail is that the train is slower than flying, even for the vaunted Los Angeles-San Francisco corridor that is the primary rationale of the California high speed rail system. At a first glance, they're right. After all, Southwest offers a travel time of one hour and fifteen minutes between Los Angeles International and San Francisco International while the California High Speed Rail Authority states a travel time of two hours, thirty eight minutes. The devil, however, is in the details.

To begin with, planes, as anyone who has travelled by air knows, are often late, and LAX-SFO is no exception. Continuing with Southwest for our example, they offer eleven daily flights between the two airports. With the exception of the early bird special, Flight 799 at 6am, they are often late, usually about ten to twenty minutes. That, of course, doesn't mean too much. Time spent at the airport waiting for the plane, however, does.

Southwest recommends arriving at SFO 60 minutes prior and LAX 90 minutes prior to the flight. Right away we see a problem. While the flight itself is only an hour and a half, the flight isn't the entire trip and we can already see that, of two people who arrive at the airport and train station at identical times, the train rider will arrive at his terminus first.

Of course, very few people travel for the sake of arriving at a particular airport or train station. Generally, the travel is a means to an end, located in the titular city. Here again we see an advantage to the train. Both the Transbay Transit Center and Los Angeles Union Station are in the heart of downtown, the hubs of their respective mass transit networks, and within easy walking distance of hotels and other destinations. By contrast, the airports are located twenty to thirty minutes away, not including the time taken to disembark the aircraft and wait for one's luggage.

What of the claim that air travel is cheaper than a train ticket? Well, it's true that if one happens to buy a ticket months in advance and flies on an off-peak day (Monday, Tuesday, and Saturday it would seem), a ticket can be had for only sixty dollars, including taxes and fees. Last minute travel as may often be the case for businessmen or travel on days that are more in demand results in higher rates of course, and we are not yet including parking costs.

Meanwhile, as of today, an Amtrak trip from Los Angeles to San Francisco can be had for only 56 dollars without advanced booking. It is by no means the most pleasant or fastest trip, involving a bus transfer to Bakersfield, the San Joaquin train to Emeryville, and then another bus to San Francisco itself. A direct connection that requires less employee hours per passenger and has more efficient travel will assuredly not rise above the price of an airline ticket. Furthermore, these comparisons are for travel today, when the true comparison is for travel ten years hence when the line has been built. As the price of oil continues to increase, the price of air travel, especially on shorter commutes such as Los Angeles to San Francisco which burn proportionately more per passenger-mile, will continue to rise. Meanwhile, California's electricity is mainly natural gas with increasingly larger amounts of renewables, such as solar. In fact, one of the reasons that Southwest is so cheap (and a major contributor to its profits) is that it locked in lower oil prices through hedging, but those hedges are about to expire.

So, will it be faster and cheaper to fly? Looks like that is just another myth.

Sunday, December 5, 2010

Acela continues to gain marketshare

Remember this whenever someone says people won't take trains that are slower than planes

“We’ve designed a product for the business travelers’ needs, and we’re trying to reach them at the most relevant points of their travel experience,’’ said David Lim, Amtrak’s chief marketing officer. “The underlying assumption being the airport experience has not been the best in the last couple of years.’’

Acela was launched in late 2000 with the goal of grabbing a larger share of the lucrative business travel market from short-haul air routes between Boston, New York, Philadelphia, and Washington. By most measures, it has succeeded.

Amtrak now transports 55 percent of passengers in the Boston-New York air-rail market, up from 16 percent in the mid-1990s, according to the New England Transportation Institute, a nonprofit research organization in Vermont. Acela’s ridership has risen nearly 30 percent, from 2.5 million passengers in its first full year of service to 3.2 million passengers in fiscal 2010, which ended in September. Air travel, on the other hand, has declined.

Last year, nearly 30 percent fewer people flew between Logan and the three New York-area airports than in 1999, the year before Amtrak introduced Acela, according to the Bureau of Transportation Statistics. Air passenger numbers decreased 35 percent between Boston and Philadelphia and 8 percent between Boston and Washington in the same period.

Acela isn't even that fast. Boston-South Station to New York Penn aboard the Acela takes three hours, thirty minutes, an average speed of only 65 miles per hour. By contrast, Los Angeles to San Francisco in 2 hours, 38 minutes is an average speed of 164 miles per hour. Or, take a similar length trip, Fresno to Los Angeles, 255 miles as compared to 228.7 for Boston to New York. 1 hour and 24 minutes, nearly three times the speed at 182 miles per hour. If Acela can get that marketshare at such a low average speed, then it stands to reason that the California high speed rail system will blow things out of the water.

The real cost of highway driving

How much does it really cost to maintain highways in a good state of repair? Currently, the gasoline tax in California is 53.7 cents per gallon, plus sales tax. At an average fuel economy of 22.6 miles per gallon, that comes out to 2.4 cents per mile. Is that sufficient to pay for road maintenance and construction? Hardly.

Let's take, as an example, the Pennsylvania Turnpike and a trip I made upon it earlier this year, from Pittsburgh to Philadelphia. Using their calculator, using exits 57 and 362 results in a total distance of 269.7 miles and a toll of $19.70. That's a per mile rate of 7.3 cents, three times what we might expect if California's gas tax actually sufficed. Orange County's own CA 241 toll roads are even worse. Santa Margarita Parkway to the I-5 comes to a total of $2.50 in tolls over an 11.3 mile distance. At 22 cents per mile, that's ten times the cost that we would expect if the gas tax were sufficient. What's more, the 241 and other toll roads receive additional funds from the gas tax.

The truth is, the gas tax comes nowhere near close enough to actually paying for transit. It retains some appearance of doing so, although falling short even still, because a large portion of driving is on roads that are paid for by other taxes, such as property taxes, thus subsidizing the highways. Take away that subsidy, however, and it's nothing more than a hollow shell.

Friday, December 3, 2010

GE to help build Chinese trains for California?

China’s CSR, GE May Bid on California, Florida High-Speed Rail

Dec. 3 (Bloomberg) -- CSR Corp., China’s largest maker of rail vehicles, and partner General Electric Co. may bid to build high-speed train lines in California and Florida as U.S. President Barack Obama spurs investment in railways.

The companies may also compete for a project on the east coast, CSR Chairman Zhao Xiaogang told reporters in Hong Kong today. They are yet to finalize what form their cooperation will take and will decide which of the lines to bid on over the next three years, he said.

The GE-CSR venture may face competition from trainmakers including Bombardier Inc., Alstom SA and East Japan Railway Co. as the U.S. federal government promotes rail to ease congestion and curb pollution. China has also said it may offer financing for a planned California high-speed line costing at least $40 billion to help local trainmakers break into the U.S. market.

“Bidding for such projects can help give CSR an international profile and boost its image as a global company,” said Stanley Yan, a Shanghai-based analyst at Masterlink Securities Corp. “The company is seeking new markets.”

CSR, based in Beijing, wants overseas sales to account for 20 percent of total revenue by 2015 from about 8 percent now, Shao Renqiang, the company’s secretary, told reporters. It expects total sales to climb to 150 billion yuan ($23 billion) by that year, he said.

“Overseas contracts are lucrative and we want to expand such sales,” Zhao said. “We’re actively seeking sales in the U.S., where there are seven or eight contracts in the pipeline.”

China Railways

The company is also bidding for projects in China, where the nation plans to more than double its high-speed passenger network to about 16,000 kilometer by 2020, Zhao said. China is accelerating the pace of construction to cut travel times and ease transportation bottlenecks, he said.

CSR rose 1.9 percent to HK$9.35 at the close of trading in Hong Kong. The stock has risen 64 percent this year, compared with a 6.6 percent gain in the benchmark Hang Seng Index.

CSR and GE, based in Fairfield, Connecticut, are also building a diesel-engine train factory in Changzhou, China. The two last month agreed to form a venture that will make parts for diesel trains.

GE, the world’s biggest maker of diesel trains, agreed to cooperate with China on high-speed rail as it doesn’t have its own technology. The partnership may eventually support about 3,500 jobs in U.S., with final assembly taking place in the county, GE said last year.

California Network

California, the most populous U.S. state, is planning to build a high-speed rail network that will eventually run from Sacramento and San Francisco to Los Angeles and San Diego.

China can offer a “complete package” for the project including financing, He Huawu, chief engineer of the nation’s rail ministry, said in a September interview. The same month, California Governor Arnold Schwarzenegger rode bullet trains in China, Japan and South Korea as he sought contractors and financing for the project.

The California line won $2.3 billion in federal funding in January, as part of an $8 billion stimulus package announced by President Barack Obama. The government awarded a further $2.4 billion of aid for high-speed projects nationwide in October.

One thing that absolutely has to be mandated as part of this deal if we were to take up China's bid would be a technology transfer, restoring the ability of American companies to design and produce state of the art passenger trains. That same requirement, after all, is how China got the technology in the first place and how South Korea has gotten it as well. Of course, our bargaining position is better the more domestic funding we have and the less we have to rely on the loans offered by various foreign nations such as China.