Monthly Archives: November 2010

Passenger Rail under a Drewbert Administration

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Some readers out there might know my love for rail travel and my feeling that we a grossly under served in the U.S.. Contrary to frequent accusations that I’m some sort of Marxist, I do not feel that passenger rail would best be served by a government takeover and subsidy. So here is my outline for passenger rail in the US.

Passenger Rail under a Drewbert administration:

Requirements:

1. Ability to maintain speeds above 100mph on trips over 30 miles.
2. Ability to maintain speeds above 130mph on trips over 60 miles.
3. Ability to maintain speeds above 160mph on trips over 120 miles terrain permitting.
4. All electric motive power.
5. Utilize a hub and spoke system.
6. Speed limits set at a federal level rather than local (this addresses a problem demonstrated with Amtrak’s Acela were local townships set absurdly low rail speed limits)

The basic structure would be that the railroad is operated privately, but the rail infrastructure for passenger service is federalized. New lines would be built for the Federal government by the existing rail operators. All passenger lines would be electrified.

Since the federal government would own and maintain the rails, a fuel tax would be levied to cover maintenance and expansion costs. The tax would be indexed to inflation and be structured in such a way that the tax cost per mile would be lower for electric locomotives. The exception to this would be the freight yards which would continue under existing ownership/operation/maintenance structure. Passenger stations would be owned and operated by state, county, or local governments and funded by a fee-per-use system similar to the gates at airports. Conrail would be re-introduced as the entity that owns, maintains, and runs traffic control on the lines.

Passenger trains would be owned and operated by the existing freight lines. In order to spur passenger train offerings, all passenger trains would be fuel tax exempt. As an incentive to offer the most reliable, fastest, and safest service possible, a gradually increasing standard of service would be established. Passenger trains that met that standard of service would qualify the freight operator for a fuel tax reduction on their freight operations. However, at no point can the tax reduction exceed 60% of the fuel tax paid. The credit would be structured in such a way that it the most effective way for the operator to get the largest rebate would be to operate frequent trips to minimize the impact of a single late arrival.

Since there is a need for more than just intercity travel, the tax rebate would be broken into 3 segments, each worth 20% of total fuel tax paid. The trip lengths specified in the requirements section would be the bases for each rebate bracket and could be earned independently of each other. Therefore, if a freight operator decides it is not in it’s best financial interest to offer the highest speed intercity travel (which might be the case the a company like the Union Pacific which operates in a lot of mountainous terrain) they could still qualify for the full rebate from each of the other two segments.

Amtrak would continue to operate during the transition phase, but would eventually be privatized completely or broken up and sold off to the freight railroads.

Some further points:

  • One of the arguments against privately run passenger rail is the claim that it nearly bankrupted the railroads in the 1960s. They weren’t nearly bankrupted. They were bankrupted. However, not because of passenger rail specifically, but because of price regulation generally and an inability to innovate their transportation structure specifically. Price controls weren’t removed until the late ’70s (by Jimmy Carter if I recall correctly) and by then it was far too late. The FRA didn’t allow intermodel for a long time after the concept was introduced.
  • The government takeover of the existing lines would be a government purchase, funded by the new fuel tax, and it would relieve the companies of a liability on their books. Additionally, the railroads would suddenly gain access to areas of the country where they do not operate.
  • The freight railroads of today are some of the most cost efficient companies on the planet.
  • The freight railroads of the 60’s were too fractured. Due to multiple companies servicing a particular area, there was far too much overlap capacity the led to waste. The consolidation into Conrail eventually took care of that overlap and within 10 years Conrail was turning a profit again.
  • Shippers would now be able to choose their carrier instead of only being serviced by whoever owns the “last mile” line today.

The net result would be five new multi-billion dollar companies competing for your traveling needs with little to no subsidy from the government with a heavy incentive on energy efficiency and clean energy.