Stimulus Puts Railroads on Fast Track to the Future

Today is a good day for fans of trains. Back during the construction of the stimulus package, the Obama administration successfully pushed to have $8 billion included for the development of high-speed rail systems, and he gave his transportation secretary two months to figure out what to do with it.

Today, we have our answer. Money will be allocated via two rounds of applications. The first will direct funds toward projects with short turnaround times and good job creation metrics. The second round will focus on efforts to lay the groundwork for longer term projects. Eleven major corridors are eligible; the route from Los Angeles to Las Vegas is not among them.

Transportation experts are hailing the proposal as a good step forward, but cautioning that building high-speed rail on the same scale as the interstate highway system is going to require a little more than $8 billion. Presumably, this is a down payment on more significant funding to come. I also think it's a pretty useful heads up to the American public. "Get yourself ready to contemplate rail travel in America, because it's on the way," or some such thing.

Some will cry boondoggle; certainly GOP leaders attempted to do so in (falsely) claiming that the $8 billion was destined for Harry Reid's Mag-Lev line. This is a little silly. Rail in the northeastern corridor demonstrates that transit can become a crucial, even indispensable, part of the the infrastructure powering a regional economy. And most of the initial investments will be more about building a basic, functional passenger system, as opposed to bullet trains. Upgrades will involve getting trains to speeds around 120 miles per hour, improving reliability, increasing frequency, and so on. In a country where intercity highway and air travel have become burdensome, expensive, and plagued by congestion and delays, and where reduced carbon emissions is a priority, these are the minimum acceptable steps for the rail system.

And as was the case with highway construction, improved rail service will create its own demand. Faster, more reliable trains will attract riders and drive investment. New investment will attract new riders, and so on. The result will be a more balanced, reliable, redundant transportation system, that also happens to be more convenient and greener.

So feel good about this, taxpayers. It's money well spent.

Comments

[TMFSinchiruna:]

I'm perplexed by the selection of tickers included with this article. Are you suggesting a link between plans to build high-speed passenger rails and the outlook for freight operators like BNI and NSC? Hmmmm.

I wouldn't want any investors to get the wrong impression from your headline that the railroad stocks are facing a bright future anytime soon. In point of fact, and most unfortunately, I believe the opposite to be the case.

www.fool.com/investing...

caps.fool.com/Blogs/Vi...

Apr 17 08:17 AM

[conceptwizard:]

Most major countries of the world have a high speed rail system, that works by the way. They also have trains that run on Hydrogen nowadays so this will meet the green machine requirements for Obamas new US dream. The downside will be the Airline stocks will continue to get pulverized. This is a great move and equals in political aspirations to the interstate projects of the past. If your looking for new green investment opportunities that are "to big to fail" this would be on my list. Check out "Bbombardier" they do most of the China and Japan rail systems. Private Investors should jump on board this project with the Government involved, look for politically connected corporations in these lines of work.

Apr 17 08:17 AM

[hwood007:]

I lived in both Asia and Europe for years. One of the few things that work better in Europe than America is trains transporting humans from one place to another. We do not like to give federal money to trains, but I use to take a train from DC to Roanoke VA several times a year. Think of how "green" that trip was compared to the same number of people driving their cars between the two locations. Trains look greener to me than trucks or cars.

Apr 17 10:15 AM

[Chris of NH:]

One comment, and this is NEVER a consideration for the Federal Government, but high speed rail is a major money loser for those countries who have it... it may well be good for commerce, but it loses billions in Japan (for example) and undercuts for-profit (not that they make any) transportation such as the airlines... for which a huge infrastructure the taxpayers already support exists.

This is just another way for the government to squander our money and collect, for itself, huge bribes and exact graft from the constructing $100/hr unions. And you can bet that the actual rail cars will be made for 1% less by a Eurozone or Chinese contractor who got the "sealed" bids from US manufacturers sent to him/her by the US department that runs the bidding process... and yes, we save 1% and lose 25% in net tax revenues from having the rail cars made here,,, but that nice bribe to a numbered Swiss bank account is too tempting for the congressional members to pass up. Treason anyone?

Cynical? Of course. Am I right? In a word, "yes".

Apr 17 10:34 AM

[Michael Del...:]

I do not think we are going to see hydrogen powered trains in the near future, but high-speed rail in areas that are already electrified (the northeast corridor) are possible in one to two years. High speed rails in Europe have absolutely decimated short-hop airline flights. Studies have shown that travelers prefer planes to trains when train travel exceeds about four hours. Thus, high speed trains in Europe (at 150 mph) will replace air flight out to about a 600 mile radius, and with a carbon footprint of 10% that of an airliner. High speed rail in the United States will run at a more modest 110 mph so we can expect high utilization on trips of 450 miles or less.

A high speed rail line from New York to Los Angeles sounds intriguing, but would probably have low ridership because most people would want to fly when crossing a continent.

Apr 17 10:45 AM

[Transportat...:]

Headline totally misleading. Who's tracks are these trains going to run on? Existing freight lines, hardly - ever try to mix two vehicles with one at 120 mph and one at 25 mph on the same infrastructure? Betwenn two city pairs that the density will require? If adding dedicated tracks, stations, tunnels, fly overs, bridges, etc. the costs will unfathomable and with a "not in my back yard philosophy", who is going to pay for the land required or the ransoms demanded by cities, towns and the citizenry. We are better off waiting for Star Trek transporter technology to move people.

Apr 17 10:56 AM

[Trane250:]

Transportation Guy has it right. Passenger trains interfere in a negative way with freight traffic. Curves are banked for freight train speeds not high speed passenger trains. Building new dedicated rail routes through urban areas is next to impossible.

Also, that there are no (0) American manufacturers of railroad passenger cars, integrated train sets, subway or light rail cars. How can we stimulate our economy when we must import these products?

The last (albeit very small) American manufacturer, Colorado Rail Car, went out of business in 2007. They made mostly observation cars for scenic railroads. Their attempt to supply equipment for Amtrak was a failure. The last truly integrated manufacturer was Pullman Standard of Butler, PA. They ceased operations in 1982.

The equipment for this rail initiative will be supplied by Bombardier (Canada); Siemens (Germany); Hitachi, Kinki, Sharyo and others (Japan); Alstom (France); AnsaldoBreda (Italy); Adtranz (Germany); Skoda (Czech Republic); CAF (Spain) & others.

Apr 17 11:26 AM

[Leftfield:]

Government spending is so far above any reasonable level with associated coercion and cronyism that I am almost always in opposition. At least here, along with whatever pittance for real infrastructure upgrades hidden in the pork bill, is some benefit.

My college daughters use trains and buses a lot. Detroit had light rail (trolleys) ripped up in their heyday to get people into cars with the attendant sprawl we're now stuck with. User-friendly mass transit can help us back to some rationality. Although, like defense, government-contracted projects have become mind-numbingly over-expensive. If we're going to have pork, this isn't the worst of it.

Apr 17 11:36 AM

[Old Wizard:]

I have a different cut about mass trasportation, even though I have been a proponent of 100mi/hr+ passenger rail for certain corridors for many years. My main focus today is in solving the gridlock that exists in our large city-suburban complexes. The amount of gasoline expended every day by commuters travelling to and from work due to traffic jams amounts to billions of gallons per year. Unfortunately, high speed rail between cities won't affect this waste very much. Take the northeast corridor as an example, going from DC to New Youk City is less than 4 hrs. and is very competitive and more comfortable than going by air and oh by the way is one of the only profitable routes in the USA,today. It still doesn't have the tracks which support it's inherent speed for the whole route. On the other hand, on both ends of this trip there are traffic bottle necks that stretch for at least 40 miles from the city's boundaries. The problem could be solved by building monorail spiders that run on electricity along the highways instead of increasing new road capacity. These spiders would have webs that connect to the existing hiways and in-place mass transportation hubs. What good does it do to increase car mileage if much of the advantage is wasted in traffic gridlock. Will those 40 mile electric cars expend much of that raange stuck in traffic? Sometimes looking outside the 9 dots before we emulate what works in Europe might yield a result that is tuned to our problem. In Europe, how many large suburban complexes exist compared to the USA,how many cars/capita, how many people live 25 miles or more from where they work?

Apr 17 12:37 PM

[Dave Shafer:]

Train companies not making money? Hmmmm.........Warren Buffett would disagree with you. But then again you folks are a better investor than Buffett, right?

GE makes fuel efficient train engines. So they could benefit from this.

Their are many routes where high speed trains will become successful. For example the Orlando, Miami, Tampa route. This will cut down on the mega automobile traffic on the highways in these areas. Routes like this are where the government will concentrate first.

Good deal, good ideas, great for out future!

Apr 17 12:49 PM

[Responsibility:]

Light rails or subways for busy city routes connecting with trains connecting close-by cities are good candidates. These will be green and will help to reduce medical costs from car accidents and pollution issues. Bus systems and other public transportation systems should be considered as well, including the conversion of polluting technologies to green technologies. Efficiency and costs should be important factors in these new schemes; we want practical systems, not showcase systems.

Apr 17 01:43 PM

[hwood007:]

Now trains make money moving freight but ony in a few places do they make money moving people. High speed trains will not work on current rails but low speed trains would and could reduce the carbon our foot print. I lived in Berlin and train/subway traffic reduced auto traffic by a large amount. Years ago, we allowed passengar trains to disapear because we would not support them with tax dollars and now we want to try an support high speed trains with tax dollars. If we do that, the amount of dollars is going to be much greater than you think. I can remember when my father would conduct a passenger train, but he mostly was the freight conductor as passenger trains went out of style. Atlanta has 700 sq miles and is a traffic night mare. You can not get down town from the burbs by subway and auto traffic is a mess. You can drive to a station near the city, park, and take the subway to town. A lot of carbon gas could be saved if we used rail service a little more.

Apr 17 01:48 PM

[Valley Boy:]

High speed rail between most American cities would be impractical.
Exceptions would include the densely populated corridors between
Washington, DC and Boston, Los Angeles and San Diego, and
Chicago and Milwaukee. One has to look at the cost-benefit ratio
for this type of public investment. Airports and airlines serving transportation needs between most cities are currently practical. Airplanes are continually being improved to the extent feasible.
Let's instead focus on extending the light rail systems in our metro
areas since it is the urban people who will likely ride the trains.

Apr 17 02:14 PM

[MRZ:]

Airlines will not get pulverized, they still exist in Europe and really competitively priced...


On Apr 17 08:17 AM conceptwizard wrote:

> Most major countries of the world have a high speed rail system,
> that works by the way. They also have trains that run on Hydrogen
> nowadays so this will meet the green machine requirements for Obamas
> new US dream. The downside will be the Airline stocks will continue
> to get pulverized. This is a great move and equals in political aspirations
> to the interstate projects of the past. If your looking for new green
> investment opportunities that are "to big to fail" this would be
> on my list. Check out "Bbombardier" they do most of the China and
> Japan rail systems. Private Investors should jump on board this project
> with the Government involved, look for politically connected corporations
> in these lines of work.

Apr 22 05:39 PM

[ACAGal:]

BNI has just put a hydrogen train on the tracks, which I find interesting. It is not passenger, but it is heading to Colorado, then CA....forgive the church sponsored add, see the train.
www.wibw.com/localnews...

As far as our passenger service, I road the Osaka express in 1967. The USA is so far behind in passenger service it is almost third world. I agree that plain and train service in Europe and Japan are still successful despite really smooth, high speed passenger trains, that are also full of passengers.

Jun 30 03:07 PM