Monthly Archives

January 2014

eNewsletter

eNewsletter for January 27, 2014

Amtrak was in trouble because of growing deficits by 1978 which had grown to $578 million dollars. Based on the then RPS accounting, to save money Amtrak cut 4 long distance trains in 1979. Instead of saving money and reducing the deficit which RPS predicted, Amtrak’s deficit rose to $729 million by 1981. It was shortly after this time that Mr. Claytor took over at Amtrak. To keep the Reagan Administration from eliminating Amtrak , Claytor had to make major progress in reducing its deficit. To do this Claytor ignored RPS and expanded Amtrak’s Long Distance service. Mr. Claytor was quoted about how he was reducing Amtrak’s deficit. “That is one of the ways we hope to reach it and to get additional equipment in order to increase our revenues faster than our costs. That spread is what counts…  We have more people wanting to go than we can carry, because we do not have the capacity . The first priority is to get more capacity on the routes we serve. The second priority will be to start new routes that we think have a good possibility of working.” – Interview with Graham Claytor, Trains magazine, June 1991

January 27, 2014

The above copy of this enewletter is on a PDF file and you will not be able to click on to the links in blue. If you would like to subscribe to this enewsletter write to nbraymer@railpac.org

Commentary

Neil Bjornsen, 1945 – 2014

Neil Bjornsen photo with Dyson
Photo from about 2010 with RailPAC Director Neil Bjornsen on the left with then Chairman of SCRRA (Metrolink) Keith Mullhouse of Moorpark at center and at right RailPAC President Paul Dyson.

The passenger rail advocacy community, the Los Angeles Count Metropolitan Transportation Agency (“Metro”) and the Citizens’ Advisory Council (CAC) are dealt a great loss with the recent passing of Neil Bjornsen, the chair of the CAC.

With the advisory council since 1977, Neil gave invaluable leadership and direction in forming the CAC into an important group providing community feedback on Metro’s transportation services. Neil and the CAC helped update the agency’s maintenance computers and with the switchover to Compressed Natural Gas and fueling stations, and also conducted field surveys while riding the routes and tabulating boarding counts.

Neil was in the forefront of promoting excellence in maintenance practices. He championed investments in deferred maintenance and proposed improvements in bus and rail system safety in addition to highlighting performance metrics for more informed decision-making.

Tireless and dedicated to Metro and the CAC, Neil convened meetings twice a month to both keep abreast of the agency’s transit activities and welcome the public to offer suggestions and feedback. Often Neil would take other CAC members on tours and visits of the bus divisions to observe practices and offer suggestions on how Metro can improve procedures.

A Navy veteran, Neil worked in maintenance at the Southern California Rapid Transit District and was a general manager of a transit system in Shreveport, LA. He retired from the LA County Public Works.

Neil was president of the Pacific Railway Society, a Board member of the Rail Passenger Association of California and Nevada, purser of the Lane Victory in San Pedro, and affiliated with many other organizations including the National Association of Railroad Passengers, Orange Empire Railway Museum, Foothill Transit, and City of Duarte Traffic Safety Commission. Neil was an enthusiastic volunteer and and gave freely of his time to help the organizations that he joined.

A native Southern Californian, Neil went to San Marino High School and held a bachelor’s degree in transportation. He was 68.

RailPAC joins Metro, the CAC, and the transit industry in honoring Neil for his 51 years in mass transportation which includes all aspects of public transit, both rail and motor coach, traffic streets, roadways, congestion management and railroads.

A memorial will be held at the Metro HQ, One Gateway Plaza, Los Angeles, at 9.30 am, Friday February 7th.

Editorials

LOSSAN”s Top Priority

By Noel T. Braymer

Increasing ridership and passenger revenues on the LOSSAN Corridor, particularly on the Surfliners should be the priority for LOSSAN. The question is how to do this? What is needed to get passenger growth is a combination of faster running times for trains with better on-time performance for better connections by train more often to more places.

In terms of running times, the Surfliner Trains today are slower than the San Diegans almost 40 years ago. On time performance today is nothing to be proud of either. Oddly on time performance is better on the LOSSAN Corridor north of Los Angeles than it is south of Los Angeles. Yet there is more double tracking and other major track improvements south of Los Angeles. Double tracking is valuable for smooth rail operations. But so is reliable equipment that is less prone to breakdowns. Also needed are cars that are quick to load and unload at stations.

A major problem providing punctual service on the LOSSAN Corridor is a shortage of Surfliner cars. There is also a shortage of F-59 locomotives, which are designed for faster acceleration needed on a corridor service like LOSSAN. To keep the Surfliner’s running Amtrak often substitutes long distance train locomotives which accelerate more slowly which is fine for long distances between stations. Slower acceleration means it takes longer for these locomotives to travel between stations with many stops than with the F-59’s.

There is one trainset used now only between Los Angeles and San Diego which uses a long distance train locomotive and the older low-level Amfleet/Horizon cars. It takes longer to load and unload on these cars since there are fewer available doors, the doors are narrower and there are more steps to the door on these trains. It is well known among regular riders on the LOSSAN Corridor that this equipment has the worse on-time performance between Los Angeles and San Diego. Often when a train is late, which often happens with this equipment, it also makes other trains late while waiting for this train to pass at a siding.

Additional double tracking is desirable in the future. But many of the current on-time problems can be solved now with modest improvements with the equipment on the Surfliners. In Switzerland, they often run more trains on single track railroads than this country does on a double track railroad. They can do this because they run their trains on time. They have to since almost every passenger train has dozens of connections to other trains as well as to buses and ferries. When a train is late in Switzerland, it makes the front page of the local papers.

Critical to running trains on time is proper maintenance of equipment and track. The Capitol Corridor in Northern California has the best on time performance of any Amtrak train. Critical to this performance has been attention to and funding for maintenance of equipment and tracks. Being able to run on time and reduce running times will give more flexibility in scheduling, which will make it easier to have reliable connections to other trains such as Metrolink and Coaster. It will also make for more reliable connections to rail and bus transit at all transportation centers.

Just as important is the kind of equipment used on a corridor such as LOSSAN. One solution to this problem would be to buy more new Surfliner equipment. This will take years to get delivery. While some new equipment is on order for California, it won’t be enough for current demand. Another solution would be to use surplus Metrolink bi-level cars. These could be upgraded and or mixed with the low level equipment. These Metrolink cars are designed for fast loading and unloading. They can be used with low-level equipment to speed up loading of these trains and are easier to use for passengers with limited mobility. These cars also have plenty of room for storing luggage, wheel chair, strollers and bicycles.

With improved punctuality, reductions in running times will be possible on the Surfliners. The Surfliner equipment is meant to spend no more than 2 minutes stopped at most stations .Because of the use of one old trainset the schedule still has station stops in the range of 4-5 minutes which is needed for this older equipment. Saving 2 minutes stopping at each station between Los Angeles and San Diego with 7 intermediate stops is a saving of 14 minutes. Between Los Angeles and Santa Barbara with 10 intermediate stops is a savings of 20 minutes.

With better punctuality, recovery time in the schedule could also be reduced for more time savings. The current running times on the Surfliners between San Diego and Santa Barbara is around 6 hours. With a tighter schedule, with no increase in speeds, 35-40 minutes could be taken out of the current schedule. Such reductions in running time  will increase the productivity and ridership of the Surfliners. At the current running time the average speed between San Diego and Santa Barbara is less than 39 miles per hour. Running at 5 hours and 15 minutes is better at 44 miles per hour.

Between Los Angeles and San Diego with current running times ( when on time) of 2 hours and 40 minutes we have an average speed of 49 miles per hour. If we cut that down to 2 hours and 20 minutes that is an average speed of just over 55 miles per hour which is more competitive with freeway travel. To get travel times at an average speed of 60 miles per hour would require running time of 2 hours and 7 minutes. In the near term that might be possible with an extended express train from San Diego to San Luis Obispo using tilt train equipment. To successfully run express trains would need connections with all stop trains at major hub stations.

eNewsletter

eNewsletter for January 21, 2014

There is talk that Amtrak is planning to soon eliminate the Pacific Parlour Cars on the Coast Starlight. The rational behind this is to save money by eliminating one attendant on board. That attendant sells alcohol. How Amtrak is able to lose money selling alcohol is a mystery to me. Also on the Coast Starlight the fares for the Sleeping Cars remain high. But at least on some dates this winter there have been vacant sleepers. It seems odd that Amtrak doesn’t lower prices before departure time to insure more of the sleeper space is sold.  As if things couldn’t get worse for the Empire Builder: they are. Seems Amtrak is giving up keeping connections for the Builder in the face of current poor on-time performance. This includes eliminating connecting buses for the passengers on the Builder to make connections when the Builder is late. NB

January 21, 2014

The above copy of this enewletter is on a PDF file and you will not be able to click on to the links in blue. If you would like to subscribe to this enewsletter write to nbraymer@railpac.org

CA Rail Statistics

Capitol Corridor Statistics for December, 2013

by David B. Kutrosky, Managing Director
Capitol Corridor Joint Powers Authority

Ridership on Capitol Corridor in December 2013 was 111,722, an increase of
three percent over December 2012. This was the first time in FY2014 that for a given month was higher than the ridership of its prior year
month. As a result, revenues for December 2013 were 3.5% above those of December 2012. This ridership boost is attributed to (1) the Thanksgiving
travel week extended into Sunday, December 1, and (2) strong weekend ridership [+4.9% compared to December 2012], especially during the last two
weekends of the holiday season.

On-time performance (OTP) for December 2013 was an extraordinary 98% thanks in large part to excellent dispatching by Union Pacific Railroad (UPRR) and Caltrain, plus a steady and significant drop in Amtrak mechanical delay minutes. The year-to-date system operating ratio is 50%, below the 53%
standard due to decreased ridership/revenues.

pic00041

As follow up from earlier reports, the analyses on the ridership declines indicate that there have been continued customer losses at the Placer
County, Sacramento and Davis stations, as well as on the midday trains. Weekend ridership also remains flat. To stimulate ridership at these
stations and during off-peak time periods, we have reinstituted the Senior 50% mid-week and 50% weekend travel discounts. Both discount promotions
will be monitored to determine their effectiveness. Early analysis shows that the 50% weekend discount seems to have helped boost ridership in the
second half of December 2013. Discussions are now underway with the communities of Davis and Sacramento and Placer County to address the
ridership declines in these markets.

In a parallel effort, CCJPA and Amtrak staffs are evaluating changes to the weekday and weekend operating plans to determine if cost efficiencies
and/or ridership gains can be achieved. Any changes to the operating plans 0and train schedules that are achievable and can improve service performance (ridership, revenues and cost efficiencies) will be implemented no earlier than late summer/early fall 2014.

Restated FY2013 Financial Results

In earlier monthly performance reports, it was reported that monthly fuel invoices from Amtrak were coming in up to 44% under budget. Initially
these financials were attributed to the 480-volt plug-in cabinets at the new Sacramento Valley station platforms (allowing trains to power up
without using fuel during multi-hour layovers) and the repowered, more fuel-efficient engines in the California locomotives. This, however,
proved too good to be true. After inquiries from CCJPA staff to Amtrak requesting a review of these monthly invoices, specifically to examine the
significant drop in gallons of fuel invoiced at Sacramento, Amtrak reported that the fuel pumped from the new underground fuel tank had not been
properly accounted for between January and September 2013. Amtrak submitted a restated annual invoice for FY2013 that corrected the monthly
fuel consumption and corresponding costs to Capitol Corridor. This restated invoice changes the reported financials, resulting in a reduced
system operating ratio of 49%, compared to the initial report of 52%. Going into FY2014, Amtrak has committed to frequent, regularly scheduled
meetings (no less than quarterly) to review monthly invoices and service performance results. We anticipate that these meetings will result in more informed and timely decisions for any adjustments to service to meet the contractual budget.

On a positive note, the fuel invoices from Amtrak did indicate that fuel consumption for FY2013 dropped by 111,000 gallons compared to FY2012 due to
the 480-volt power cabinets in Sacramento and the repowered California 00locomotive engines.

Funding Outlook

State/California
– Draft FY2014-15 State Budget: On January 9, 2014, the Governor
released his draft State Budget for FY2014-15, which includes $108.9
million to support the operation of the three California intercity
passenger rail (IPR) services (San Joaquin, Capitol Corridor and
Pacific Surfliner). This IPR operating budget conforms with Passenger
Rail Improvement and Investment Act (PRIIA) Section 209 Policy for
the pricing of Amtrak-operated, state-supported IPR services.

The Governor’s draft budget identifies $300 million in proceeds from
Cap and Trade Auction revenues for the Rail Modernization Program:
$250 million to support the development of the Initial Operating
Segment (IOS) of the California High Speed Train (HST) system between
the San Fernando Valley and Merced and $50 million for projects that
connect public rail transit services with the HST system. Details of
the Rail Modernization Program and the allocation and appropriation
of the Cap and Trade Revenues are expected to be fully vetted during
this year’s legislative session.

– Select Committee on Passenger Rail (Senate and Assembly): Progress
continues in the Senate under the leadership of State Senator
Hannah-Beth Jackson’s office to develop a Select Committee on
Passenger Rail. Similar efforts are underway in the Assembly to
develop a similar select committee. The purpose of these select
committees is to garner support within the legislature to increase
investment in the state’s passenger rail system.

Federal Surface Transportation Reauthorization

It is unclear how Congress will address the expiration and subsequent reauthorization of the federal Passenger Rail Improvement and Investment
Act of 2008, which expired on October 16, 2013. This act covers Amtrak authorization and the current railroad safety programs, including Positive
Train Control (PTC). APTA has recently adopted a program for the federal investment in a national intercity passenger rail network that includes
state-sponsored IPR routes, the Amtrak system and planned high/higher speed train services. This program presents principles that will then be
referenced into APTA’s documents supporting the upcoming surface transportation authorization efforts of MAP-21, thereby helping to establish a federally-funded Rail Title. CCJPA staff continues to work with AASHTO and other interested agencies to prepare and advance principles similar to those adopted by APTA.

Customer Service Program Upgrades
• Bicycle Access Plan: A launch of the on-board element of the Plan is set
for Spring 2014 now that all the cab cars have been modified for added bike
storage and the remaining five modified cab cars are going through PTC
equipment installation. Capitol Corridor has been able to double bicycle
capacity on select trains with heavy bike use by adding a second car with
expanded bike storage (a baggage/bike car). This enhanced storage has been
made possible through the collaboration of the CCJPA and Caltrans, whereby
Capitol Corridor receives one baggage/bike car from the San Joaquin fleet
in exchange for one regular coach car from the Capitol Corridor fleet.

At-station elements of the Plan are proceeding with a deployment during 2014 of at-station facilities (eLockers and/or folding bicycle rental
programs).

Safety Initiatives

• On-board installation of Positive Train Control (PTC) Equipment:
Installation of the PTC equipment on the state-owned equipment is
proceeding. All California owned locomotives have been equipped (final
commissioning to begin once all radio antennas are received and installed)
and installation on cab cars is underway (~70% complete).

• Safety Fences: With the recent allocation of nearly $1 million by the
CCJPA Board in fall 2013, UPRR is proceeding with an expedited program of
safety fence installations along sections of the route in 2014 where
incidents of unauthorized trespassing and vandalism have been reported
(West Sacramento, Davis, Solano County).

• Employee/Passenger Injuries: The Capitol Corridor had a very safe first
quarter of FY2014 with only one reported Amtrak employee injury and two
passenger injuries, which were relatively similar to the first quarter of
FY2013. Unfortunately, during this same period, there were four trespasser
fatalities, compared to three in the prior year quarter.

Marketing Updates
• The CCJPA has taken immediate action to address ridership declines with
the launch of the 50% online fare discount for weekend travel and the
popular Senior 50% discount for mid-week travel. Future promotions may be
developed and released pending the results of actions to address other
underperforming markets: Placer County and the Davis and Sacramento
stations.

Outlook: The end of the first quarter in FY2014 shows some good tidings on the Capitol Corridor. Positive ridership and revenue results for December 2013 helped keep the loss in year-to-date ridership and revenues to -3% each. The Capitol Corridor is still the third busiest service in the Amtrak system, as well as the most reliable with a 96% OTP. This strong 0erformance has helped us maintain high customer satisfaction scores and retain a solid ridership base. Concurrently, we continue to work with our operating and funding partners to complete pre-development work for the service expansion projects (involving San Jose/Salinas, Placer County), and to develop advocacy strategies to secure capital grant funds to construct these service expansion projects.

Editorials

People Want More Rail Passenger Service

By Noel T. Braymer

A quick check of news stories finds many about local efforts to expand rail passenger service across America. These efforts are not just in the major urban areas on the West or East Coasts either. These include local groups calling for returning service on the Sunset east of New Orleans back to Florida. There are efforts to create a section of the Crescent from Meridian, Mississippi through Shreveport, Louisiana out to Dallas and Fort Worth, Texas. There are proposals to extend the Heartland Flyer past Oklahoma City to Kansas City. There are also efforts to extend the Heartland Flyer to Tulsa, Oklahoma.There are efforts to save and improve service on the Southwest Chief between New Mexico and Kansas. There are also High Speed Rail proposals in places such as Texas, Colorado, throughout the Midwest and Oregon.

So where is all the money and expertise going to come from to build all of these projects? Many of these projects will likely go nowhere at least for some time or will be modified in order to succeed. There is a need and demand across this country to expand Rail Passenger Service. Successful projects are needed for others to copy and to stimulate support for more projects.

So who are these people who are proposing new rail passenger services or new station stops to existing rail lines around the Country? Are they a bunch of tree hugging, socialist environmentalist hippies? Maybe some are. But often local politicians and local chambers of commerce are behind efforts to get or get more rail passenger service in their communities. Why? It is because rail passenger service stimulates local economies and economic growth in their communities.

So who thinks rail passenger service is good for the economy and business? Well how about Florida East Coast Industries or FECI. So what is FECI? This is how their website describes it ” (FECI) is one of Florida’s oldest and largest full-service commercial real estate, transportation and infrastructure companies”. In other words it is in the real estate business and also owns a railroad. The railroad is a Florida short line between Jacksonville and Miami along the Atlantic Coast. The railroad was built originally to develop Florida real estate back in 1892.

So what is FECI up to now? They are building a new 235 mile passenger rail service between Miami and Orlando. They are using 195 miles of their existing railroad and building an additional 40 miles to connect to Orlando. This will carry people in the busiest travel corridor of Florida, end to end in 3 hours. That’s faster than you can drive without getting a ticket.So why are they doing this? They will likely make some money operating the trains. But here are some of the benefits FECI see in what they call All Abroad Florida:

All Aboard Florida can also help increase the value of properties along the route, potentially delivering as much as a 25-percent increase in funding that can be used to improve local schools, parks and other public programs supported by real estate tax revenues.

A transportation offering of this kind is also a selling point to visiting tourists. In fact, studies suggest tourists may consider longer stays and spend more dollars in Florida if they have convenient travel options.”

If the State of Florida can see increased property values, no doubt FECI also expects increased value for their property as well.

Construction is planned to start this year on this billion dollar plus project which is scheduled to begin service late in 2015. It will have a top speed of 125 miles per hour with service running hourly at 79 to 110 miles per hours in many places. All Abroad Florida will connect with commuter rail services in Miami and Orlando as well as the major airports in both cities. Ridership is expected to be 26 percent business travel and 74 percent leisure travel from both tourists and Florida residents.

So where is Congress on all of this? Most news stories on Passenger Rail Service are based on negative attacks that they are hopelessly expensive and “boondoggles”. Yet FECI doesn’t think so and plans to make money with rail passenger service. Most States unlike Florida don’t have a property development company owning a railroad. But operating a passenger railroad doesn’t have to lose money. But more importantly good passenger rail service boosts the the economy.

The issue of future Rail Passenger Service is about the future of Amtrak. Amtrak is a major property owner. It owns most of the railroad and stations between Washington and Boston as well as Chicago Union Station and its Beech Grove maintenance facility near Indianapolis. After over 40 years and much talk, Amtrak hasn’t done much to develop their property to earn income. Yet areas at and around stations are excellent places for shopping, housing and office buildings. In many places in the world, train stations have commercial development to help cover the high costs of owning and operating them. The same is increasingly true of airports with shops and services being expanded at terminals. The cost of owning this property is a major expense for Amtrak and a major factor for it losing money. These overhead costs get charged as overhead to the entire Amtrak system.

Many of the projects being proposed for new rail passenger service are fairly short distance with few stations. These often don’t produce much money even with large populations in the cities they serve. The trains that do the best to attract ridership and revenues are longer distance trains which serve the most markets with the most stations and connections to other services. For example the Surflners with the best ridership are the ones from San Diego that are extended past the rail hub at Los Angeles to Santa Barbara with some to San Luis Obispo. On a rail corridor service you need distance, population, frequency and good connections for a successful service that comes close to breaking even or makes a small profit.

For many smaller towns around this Country, short haul service is not practical, nor are frequencies of more than 1 or 2 trains a day. But Long Distance Trains do very well in many smaller towns which connect to large cities across America. Running long distance trains that connect to other long distance trains as well as to connecting buses, means that small towns around America could have connections to travel almost anywhere in the country or even most of the world.

But Long Distance Rail service under Amtrak is falling apart. Long Distance Trains have been the scapegoat for Amtrak’s problems and used as a pawn to get funding from Congress. The facts are the Long Distance trains are the most economically productive trains Amtrak has as well as the most crowded. These trains are often sold out through out the year despite some very high fares . Expanding Long Distance service would greatly improve Amtrak’s bottom line. When Amtrak has cut back Long Distance Trains it didn’t save money. Costs staid the same but Amtrak’s deficient increased because of reduced income. The most productive passenger trains around the world are the long distance ones.

For Amtrak to change, it is up to Congress to force it. Amtrak is a political creation and only responds to political pressure. This pressure will have to come from local communities to Congress. It is critical that we have an independent audit of Amtrak’s expenses. Amtrak now assigns costs which often hides  real costs centers as well as the revenue producers. A major reorganization is needed in how Intercity Rail Passenger service is done in this Country for it to grow and be self supporting.

Some money is needed to pay the railroads to get some rail lines fixed for decent speeds for passenger service. Also additional double tracking and sidings at some places will be needed to prevent conflicts between freight and passenger trains. Most importantly we need more passenger cars and locomotives to expand service an carry enough passengers and revenues for the trains to break even or make a small profit. Most important we need greater local control of rail passenger service as well as cooperation between regions to see rail passenger service thrive.

 

eNewsletter

eNewsletter for January 13, 2014

Despite the often misleading headlines about the court’s rulings, it doesn’t shut down the  (CA-HSR) project or ask for a funding plan for the entire project. Current construction in the San Joaquin Valley is about 6 billion dollars. To build a new right of way between Bakersfield and Palmdale is estimated to cost 10 billion dollars. Four billion of that is expected to come from Prop 1A bonds. With Prop 1A and Federal funding that’s 13 billion dollars that should be available now for High Speed Rail. To finish the entire 300 miles between Merced and Burbank to run electrified HSR will require an additional 18 billion for a total of 31 billion dollars. With the State’s Budget in the black with over 100 billion dollars of spending annually, spreading $18 Billion dollars of additional funding to complete High Rail over 10 years or more is feasible. Once the 300 miles of HSR (some of it “blended” with existing railroads) is built, the CHSRA is on its own according to Prop 1A to finance the rest of the project from its own revenues. NB

January 13, 2014

The above copy of this enewletter is on a PDF file and you will not be able to click on to the links in blue. If you would like to subscribe to this enewsletter write to nbraymer@railpac.org

Commentary

What Do The Long Haul Trains Really Cost?

By Andrew Selden, President, Minnesota Rail Passenger Association

The great Amtrak myth is that long distance trains cost a ton of money (one recent report we saw, which loaded them up with shares of every cost imaginable, including NEC costs and all the non-cash ones like depreciation of fully-depreciated Superliners, alleged a net loss last year of more than $600 million).

But this persistent myth has a few issues. First, all of Amtrak’s claims are unsupported. No objective, independent, review has ever been made of Amtrak’s phony route-specific numbers. Worse, these internal profit and loss claims are NOT part of the audited annual financial statements, so they are intrinsically unreliable. Third, the costs are drawn from Amtrak’s deeply-flawed internal cost accounting system, which cannot and does not measure the costs of discrete activities but instead allocates costs out to particular activities using formulas made up by management. And, Amtrak constantly changes the accounts and the allocation rules, so the claims are not consistent or comparable from one year to another.

Independent analysis by the US DoT about ten years ago pegged the annual cash cost to the government of all of the long distance trains at about $100 million (about 10% of that year’s subsidy). Recent study by URPA pegs the current cash cost at about $200-250 million, which is consistent with the DoT analysis.

Recently, we discovered that even Amtrak doesn’t believe its own internal numbers. In a letter to a US Senator dated 8/15/11, a senior officer of Amtrak, answering a question about the financial burden of the long hauls, said: “… [T]he final net reduction in operating costs [if all the long haul trains disappeared, and after labor protection ended] would be modest due to the fact that many of the costs associated with long-distance services are shared with other parts of the national network and would remain in the absence of the long-distance services.”

“…[W]ould be modest…” is not $600 million or any other made-up big number. “Modest” suggests a cost close to our assessment that the long hauls as a group make up about 12-15% of the annual subsidy, and that the vast majority of the subsidy is used instead to prop up the NEC and some of the regional short corridors.

NOTE: This report is from the January, 2014 MinnARP News

Editorials

Is Shipping Oil by Rail a Good Idea?

By Noel T. Braymer

In the last 6 months of 2013 there were 4 explosive accidents with fires in the US and Canada of unit oil trains carrying unconventional oil made from shale or tar sands. The latest accident in North Dakota on December 30th involved an 104 car train of oil tanker cars. While in this case no one was killed, the nearby town of Casselton was evacuated because of toxic smoke. The heat from the fire was so intense that after almost half of the train was pulled away the fire was left to burn itself out.

This brings up the issue of what happens if a similar accident were to happen in a populated area? This happened back in July 6th of 2013 at the Quebec town of Lac-Megantic. The resulting explosion and fire left 47 dead and over 30 buildings destroyed. The oil carried by the 74 car train came originally from North Dakota . Investigation of shale oil from North Dakota finds that it is lighter and more flammable than conventional crude oil as well as more corrosive and volatile.

Besides the recent fires in North Dakota and Quebec, in October of 2013 there was a Liquid Petroleum/ Tar Sand crude oil spill and fire in Alberta, Canada. Alberta is the location of Tar Sand mining and refining and is not a conventional crude oil. In November of 2013 there was also a derailment and fire in Alabama of a train carrying shale oil from North Dakota.

There is a boom of drilling of unconventional oil in Alberta, North Dakota and Texas. With this there is a dramatic increase in rail transport of these unconventional oils to refineries from both Canada and the upper Mid-West . This has affected service for other users of rail service. The Empire Builder passenger train which runs from Chicago to the Pacific Northwest through North Dakota has seen an increase of ridership from workers headed to the oil fields of North Dakota. But also in large part because of increased oil train traffic the on-time performance of the Empire Builder in recent months has gone to near zero. During December of 2013 several Empire Builder trains were cancelled because traffic congestion on its route. This was before the fire at the end of December which created further delays for the Empire Builder.

The development of unconventional oils has generated a great deal of excitement in the oil industry as a way to guarantee future supplies of oil. The history of booms such as we see now with unconventional oils is sooner usually than later they go bust. The problem the oil industry has is conventional oil production peaked in 2005. Since then despite the industry’s best efforts production continues to decline. There are still plenty of oil reserves out there. But the cost of pumping oil in old fields increases as they are depleted. As this happens it becomes uneconomical to continue pumping old wells so they are abandoned.

The reason there is so much interest in unconventional oil now is the price of oil is high enough to make it viable to refine such oils which cost much more to produce than conventional oil.This includes shipping it by rail which is more expensive than using pipelines which now often don’t exist at the sites of these new wells . There has been a dramatic increase in drilling of “fracking” oil and gas wells in shale deposits in this country. Despite all of this activity almost all of the shale oil produced in this country comes from a few “sweet spots” in North Dakota and Texas. This has increased oil production in this country. Assumed reserves of shale oil for the nation is 24 billion barrels of oil. At the current annual rate of consumption of 7 billion barrels, this reserve will only provide a little over 3 years of American consumption.

But that assumes that it will be viable to drill for all 24 billion barrels. The problem with shale oil is the wells dry up very quickly. Just to sustain production in North Dakota and Texas requires constant drilling of new wells to make up declining production in older wells. North Dakota and Texas each are assumed to have around 3.5 billion barrel of shale oil reserves. The largest potential shale oil reserve is in California with over 15 billion barrels. The problem with this is California’s shale oil is not as easy to drill and produce as in North Dakota and Texas. Since what is economical to produce is less than assumed oil reserves it is unlikely that shale oil production will be able to keep up with current conventional oil depletion.

The problem the oil industry has is producing oil will continue to become more expensive. Alternative energy costs on the other hand continues to decline. While oil still has a cost advantage it is slipping and soon alternative energy and greater efficiency will take away the dominance and high profits of the oil industry. This situation could be compared to what has happened in the photo industry in the last 20 years.  Now it is almost impossible to buy film with most photos taken with digital cameras.

Despite all the hype about the current boom in oil production, the long term reality is not so rosy. The problems with booms are they go bust. Because of the excitement of the boom , otherwise level headed people get carried away thinking the good time won’t end soon. One thing all businesses are worried about are legal liabilities. The explosive and volatile nature of shale oil in particular makes it a very dangerous product to ship. These accidents and fires are very expensive to the railroads as well to the clients using the railroads when accidents and fires disrupt service. There is also the potential for massive legal costs. In the case of the Lac-Mégantic derailment , explosion and fire destroyed a area roughly a half mile in radius. The result of this are major lawsuits. This has caused the railroad, the Montreal, Maine and Atlantic Canada Company to file for bankruptcy and its assets are scheduled to be auctioned in January 2014

eNewsletter

eNewsletter for January 6, 2014

When some people hear about plans to build a major stadium depending on rail transit; the first thing they complain about is people won’t take the trains and there won’t be enough parking. These were the same complaints when PETCO Park was built in San Diego. Parking is limited in this part of San Diego. I have lived in San Diego County for about 25 years. I remember the opposition to  PETCO Park because of its location and limited parking. Parking has never been a problem at PETCO Park. I remember that after the first baseball season at PETCO Park which set attendance records compared to the recent past, it was found that there was in fact surplus parking all baseball season long with Trolley and Coaster ridership higher than expected.

January 6, 2014

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