Off Track—California Dreamin' of High Speed Rail

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Japan and France move over. High speed rail is coming to the Golden State if the California High Speed Rail Authority gets its way. The Authority promises Californians that if they vote for Proposition 1A authorizing $9.95 billion in bonds that they will one day enjoy trains barrelling along at speeds of 197 miles per hour linking all of California's biggest cities. And the trains will make a profit too. Too good to be true? You betcha.

My colleagues over at the Reason Foundation (the non-profit that publishes reason) painstakingly show in a due diligence study that this is all a very expensive fantasy: 

"The current high-speed rail plan is a fairy tale," said Adrian Moore, Ph.D., vice president of research at Reason Foundation and the study's project director. "The proposal suggests these high-speed trains will be the fastest ever; the most-ridden ever; the cheapest ever; and will convince millions of Californians they no longer need to drive or fly. Offering up a best-case scenario is one thing, but actually depending on all of these miracles to happen simultaneously is irresponsible public policy."

Proposition 1A would authorize $9.95 billion in bonds for a high-speed passenger train, but taxpayers should beware that this is just a fraction of the system's total price. The Rail Authority claims the first two phases of the system will cost $45 billion. But even that understates the total price. With the high costs of building in California and the history of cost overruns on rail projects, the final price tag for the complete high-speed rail system will actually be $65 to $81 billion, according to the Reason Foundation report.

And while the Rail Authority forecasts between 65 and 96 million intercity riders by 2030, the due diligence report finds these projections are dramatically inflated. After compiling numerous ridership studies previously conducted for California rail systems, the study demonstrates the state can expect 23 million to 31 million riders a year in 2030.

Any failure to meet the Rail Authority's lofty ridership projections would force ticket-price increases, further cutting ridership, or require taxpayer subsidies to cover the financial shortfall, adding to future budget deficits. The due diligence report finds "the San Francisco-Los Angeles line alone by 2030 would suffer annual financial losses of up to $4.17 billion."

Similarly troubling, the report finds that no existing high-speed rail train is currently capable of meeting the speed and safety goals set by the system's advocates. California will have to use heavier, slower trains than the world's other high-speed rail systems because it plans on using the same tracks as freight trains in some sections, instead of specialized tracks.

Whole Reason Foundation report here.  

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  1. You know, $9.95 Billion sounds like a bargain now…

  2. Well, there’s an upside to the financial crisis: there’s no way in hell this boondoggle will pass right now.

  3. As usual, the “due diligence” doesn’t track the second-order benefits of rail. Why, the increase in the California Smug Index alone is worth $4BB a year to Californians!

  4. A public program whose business plan requires stealing business from private enterprise?

    Isn’t that, I dunno, wrong?

    When Cali has to bail out the local airports, will that get charged against the P/L of the train?

  5. I am very disappointed. You really should have inserted a picture of the monorail guy in this post.

  6. Well, there’s an upside to the financial crisis: there’s no way in hell this boondoggle will pass right now.

    [cough]

  7. California is like your wacky cousin who pays alimony to two ex’s, filed bankruptcy and can’t keep a job, but still manages to find the cojones to ask you for a loan to buy a new Tesla.

  8. This is likely the first time ever that mass transit expenditures were justified by deliberately making overoptimistic projections to get the project started.

    Maybe, just maybe, it has happened once or twice before. If it has I’m certain that the officials responsible were either fired or removed by the voters.

  9. “My colleagues over at the Reason Foundation (the non-profit that publishes reason)”

    Ronald Bailey, and all the other readers,

    This “non profit” you speak of has huge contributions from oil companies, yes the same ones charging an arm and a leg for gas. So I would take this article with a grain of salt and look at the benefits this type of project will bring to the state of CA. It’s no wonder organization with contributions from big oil companies don’t want this project to happen. It would lessen this states dependence on oil!!

    As for a boondoggle, giveme a break. Read around and you will find many articles stating how much of an economic impact this would have on the whole state. Remember the depression and how we got out of it? Time for something like this to happen. Spending money on infrastructure. Something that is always left out by people trying to fight against this project.

  10. The Golden Gate Bridge was a really good idea. Read the first chapter of Jack London’s The Sea-Wolf.

  11. This “non profit” you speak of has huge contributions from oil companies…

    OK, that’s a good reason to apply extra scrutiny to their statements. It’s not a refutation of their ideas.

  12. I’d rather spend the money on a high speed rail than taking the 7 lane freeways of California and turning them into 10 lane freeways

  13. The Golden Gate Bridge was a really good idea. Read the first chapter of Jack London’s The Sea-Wolf.

    Maybe. It sure helped Marin County become one of the richest communities in the world. And in some butterfly effect way was necessary for Star Wars.

    But anyway I was mainly talking about how my bonds were floated straight into the headwinds of the Great Depression. So I think building this rail system is actually more likely. Who winds up paying for it, I grant you, may be a surprise.

  14. Who winds up paying for it, I grant you, may be a surprise.

    The California taxpayer. Unless you think the Obama administration will fund it as a demo project.

    I admit the latter is a possibility. I can safely say the riders will not even cover operating costs, much less construction. If the damned thing ever gets built. Remember, we still have to get a man to Mars.

  15. Aw, it’s not for you. It’s more of a Shelbyville idea.

  16. I’d rather spend the money on a high speed rail than taking the 7 lane freeways of California and turning them into 10 lane freeways

    What if the latter was cheaper per passenger mile and could be used for freight as well?

  17. What are the chances of California actually letting the train run at 197 MPH?

  18. How many times has congress promised that Amtrak will be self sufficient by ______?

    I’ve lost count myself.

  19. What are the chances of California actually letting the train run at 197 MPH?

    Slim and none. You all know the rest of the line.

  20. The Reason Foundation is practically a subsidiary of the oil and automobile industries.

    What a joke.

  21. I agree with their statements. They leave out a crucial piece of analysis which is the cost of upgrading the freeway and airport infrastructure to fill the void, not to mention the shared costs of environmental destruction. Regardless if you agree with the amount of oil left, oil will be more and more expensive to find and to extract in the future raising gas prices, making train travel more affordable. The costs of doing nothing justify the obscene cost of building this train.

  22. Good thing roads are free!

  23. “””Aw, it’s not for you. It’s more of a Shelbyville idea.”””

    Exactly.

  24. The costs of doing nothing justify the obscene cost of building this train.

    Maybe. I’d like to see some real analysis to back that up, though.

    oil will be more and more expensive to find and to extract in the future

    Eventually, maybe, but finding and extracting oil is a technological project, and technology has a way of driving prices down.

  25. there’s no way in hell this boondoggle will pass right now.

    I wouldn’t bet on that. Now that people are desensitized to asinine amounts of inflation like tossing out 800 billion at a time to bail out incompetent bank management, it might not be that hard to get ten billion to create a whole new incompetent transportation administration.

    -jcr

  26. Yes On High Seed Rail!!

    Remember the depression and how we got out of it?

    Are you suggesting that California start World War III?

  27. The monorail episode of the Simpsons was pretty funny and remains as one of my favorites. Of course, as Lisa Simpson points out mid-episode, there’s really no benefit to building a mass transit system in a small community with a centralized core.

    Not sure what that has to do with high speed rail proposed to be built in a massive state with a massive economy and several massive cities. But hey, I too get all my opinions on public infrastructure projects from cartoons.

  28. I can see high speed rail being useful and practical only if there is the feeder infrastructure to support it. That is to say, only if there were some mode of mass transit that would already be luring motorists out of their automobiles on enough occasions to render attractive and profitable the idea of a high-speed “backbone” train that would interconnect the local transport systems of major cities. As long as people have cars that they use routinely, and that they can afford to fuel, I suspect that they will continue to use those vehicles except for very long trips that justify air travel.

    So what form of local/regional mass transit might be a worthwhile precursor to high-speed rail? Personal Rapid Transit (PRT) is the only thing I see on the horizon that might work. Within its service area, PRT offers most of the advantages of a personal car, and addresses many of the drawbacks of the personal car as well. People would still need to have cars for places the PRT wouldn’t serve, but perhaps fewer cars, used less frequently than we do today. Once people became used to not using their cars as much, it would be natural to want to extend the convenience to inter-regional travel, via a high-speed rail line. Potentially, people could remain in the same travel pods for the entire trip from their neighborhoods to their destinations in a far-off city, if the high-speed backbone train included “carrier cars.”

    Shipping was revolutionized by the introduction of the standard container. Personal travel could similarly be transformed, and it could be done from the bottom up, as each step proved itself cost-effective, instead of the very expensive and risky, top-down, “if you build it” approach.

  29. The Reason Foundation ignores the fact that if the state doesn’t put $10bn towards a $40bn HSR system, then it will have to spend $100bn on highway and airport imporvments. Further, HSR should make a profit, while roads will require constant spending (or ‘subsidy’, as it should be known).

  30. You libertarians are such HYPOCRITES!

    So, you’re think that our 100% nationalized highway system is a good thing?

    Do highways pay for themselves? At all?
    Do toll booths even come close to paying for the costs of highways?
    NO!

    Or what about the airlines, and the billions of dollars a year in subsidies they get to fly unprofitable routes?

    I have never once heard someone here complain about that.
    It seems, that the only forms of transportation you support, coincidentally, must burn oil.

    If we held air and automobile travel to the same profitability standards as passenger rail, then passenger rail would be the primary form of intercity transportation, and it would certainly be profitable, as it was for over 100 years, until the feds decided to put it out of business.

    Our country desperately needs high speed, electrified rail corridors, and electrical rail infrastructure in general.
    They will help cushion us from fluctuations in fuel prices, and they are truly zero emissions.

    Also, who the hell said we couldn’t also run freight on them?
    I think we would just have to prevent clunking 20/mph freight trains from sharing track with trains going ten times faster, but we could still have high speed freight trains.

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