It's Just Going to Get Worse

California high-speed rail advocates are already backpedalling on the numbers, and from experience with other such projects, it will only get worse.

In the face of the state's perpetual budget crisis, some Californians are beginning to regret their votes in favor of the $9.9 billion high-speed rail bond last year. Even though proponents of the train have now admitted the bond was only a down payment on the actual cost to build the system, the numbers that were projected are changing"”and all in the wrong direction.

The business plan released by the train's advocates last month show the dramatic differences in what the voters were told and what reality is. For example, the price of a ticket from San Francisco to Los Angeles is now projected at $105, up from the previous $55 estimate.  That new number changed the ridership predictions: now 41 million annual riders by 2035, down from last year's prediction of 55 million passengers by 2030. The cost for building the train system has also grown.  The proponents had been thinking $33.6 billion (2008 dollars) but have revised upward to $42.6 billion.  Recently, the Obama administration announced $2.25 billion in funding for the project. Proponents said federal money would be used to close the gap between the voter-approved bond and the ultimate cost, but
this is a drop in the bucket and still will not work.

Do not expect a true LA to SF high speed rail line for less than $75 billion and the ridership numbers are still absurd, as discussed here.  By the way, Southwest's advanced fair from LAX to SFO is $114 right now.  If you are willing to go Burbank to Oakland, the fair is $90.

  • James H

    Yeah, but airplanes are sooo 20th century. Trains are cool, and the new mode of transportation for the 21st century! Plus, think of all the jobs created or saved building and operating the rail. These will be high-paid, gold-plated benefit, union jobs that will propel California into prosperity right?

  • morganovich

    am i the only one to whom a $75 billion train infrastructure project running right up the largest fault line in the US seems absurd?

  • missy

    Just to be completely annoying - there's a typo! It's "fare" not "fair."

  • MGW

    Unfortunately, I think this is the same type of situation as any other rail project. Ignoring time value of money and all that, the $75bn of capital costs works out to be $2k per annual rider. At $114 per airline ticket, that's enough to buy each annual rider a plane ticket for 17 years at no cost to the rider! Nevermind the $105 ticket they would have to pay (if they were each willing to pay $105 per ticket, the government could subsidize the difference for every annual rider for 200 years).

    Do these people have no understanding of math? Million Billion, Trillion, no big difference when it's not your money.

  • KTWO

    Again the only explanation is that these projects usually have little or nothing to do with transportation.

    They are decade long transfers of bond money to politicians and associates, they boost public employment, enrich the bond salesmen, the construction industry, and equipment manufacturers.

    Then in a decade or two the system will have some riders. Perhaps revenue will even cover operating costs. Or not. Whatever. That just doesn't matter. No one is responsible.

  • Stan

    Someone should tell Tyler Cowen, judging from his blog he's a fan.

  • me

    Sometimes, I wish people would just stop unreasonable spending for one day; give all of us who shake our heads in despair waaaay too often a breather.

    On a second note, here's an article about a scenario in which light rail might actually make sense due to drastically different economics:

    China is building out their light rail system in a big way. (See: http://blog.foolsmountain.com/2010/02/04/high-speed-rails-in-china/). Now, payoff might not be economically feasible at todays rater, compared to European systems (as the article points out, the economic savings are higher in Europe due to average cost of labor), but there is the argument that exchange rates and cost of labor in China will change soon; at this time, labor is dirt-cheap there right now, so the cost of actually building light rail is at what will probably turn out to be an all-time low, while labor costs will make the investment pay off once they rise. Odd.

  • Bob Smith

    Rail is just as bad an idea in China as it is here. "Do it now while labor is cheap" ignores opportunity costs. People-moving rail is only good for China if you're a freedom-hating Communist, because it furthers government control of people's movements.

  • Craigo

    It has to be said that the dates and reduction in numbers look more like a Himalayan Glacier in an IPCC report. With about the same prospect of an accurate outcome.

  • delurking

    That typo is quit the understatement. $114 from LAX to SFO! $90 from Burbank to Oakland! Fair? How about generous?

  • NormD

    That $2.25B comes with strings attached. If construction does not start by 2012 and complete by 2018 (dates may be off) then CA must refund the money to the Feds. I can see this being used to beat Californians into providing more funds, ie, if we don't pass tax/bond thus-and-such we will have to come up with $2.25B!

  • Matt

    I don't know about you, but I wouldn't pay more than ten bucks to get into a fair.

  • rxc

    For comparison, the French are building a new TGV line from Tours to Bordeaux (near where I live), about 300 km long. They will be spending about 15-25 million euros/km for this line, to drop the transport time between Bordeaux and Paris from 3 hours to 2 hours. They also hope to extend this line into Spain, where it will meet a similar Spanish line. This can work here because there is a large collection network of trains to get people from the smaller towns into the major hubs. I don't think those links really exist in California.

    They are meeting some heavy resistance from farmers who are losing valuable grapes, and the usual NIMBYs. This is a relatively new phenomena here, though. When they built the first part of this line from Paris to Tours, it was very close to a straight line, and if your house was in the way, then "tant pis". Now the French are learning about environmental sensitivity. It will be interesting to see how they buy/condemn right-of-way in California.

  • markm

    rxc: High-speed rail must be pretty near a straight line, so it's bound to require more property condemnation than most transportation projects. The route also has to be quite flat, which IIRC is going to be quite a problem in CA: lots of tunnels, deep cuts, and filled in valleys (cost aside, consider the environmental impact of all that digging), and where there is flat land, it's expensive and often full of houses.

  • markm

    High speed rail may make more sense in China; they have 4 times the population as the USA, with a total area just barely smaller. I am also under the impression that the great majority of that population is concentrated in the eastern 1/4 of the surface area. So there are plenty of city-to-city runs short enough that 120 mph with ten minute stops beats 600mph with an hour-plus for loading, taking off, landing, and unloading - and the train stations can be a lot better located than airports are.

    We don't have any route where the cities are that large and closely spaced except arguably the Boston-NYC-DC corridor, and just try acquiring a new arrow-straight right-of-way through all that development. (Existing RR rights of way aren't straight enough, and are more valuable hauling freight anyhow.)

    Of course, the final Chinese "advantage" appears to be a very fast, cheap, and certain eminent domain process: just bribe a few officials and send hired thugs to kick the people out of their homes and businesses. No extended litigation, only small compensation to pay, and those that complain too loudly can be made to disappear.