California High Speed Rail: The Exorbitant Cost of Greenhouse Gas Reduction

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The inconsequential contribution of high speed rail (HSR) to the California greenhouse gas (GHG) reduction goal would be achieved at great cost.

• Assuming the most optimistic figures (Scenario 1), the HSR cost per ton of CO2 removal is nearly 40 times the IPCC ceiling of $50 per ton and nearly 200 times the price of carbon offsets now for sale and being purchased by leading California political officials.

• Assuming the least optimistic figures (Scenario 4), if the HSR cost per ton of CO2 removal were used for the entire 169,000,000 metric ton California objective, the total cost would be more than the current California gross state product ($1.8 trillion). If the nation were to reduce CO2 emissions by 3,000,000 tons (consistent with the McKinsey report) at the same cost per ton as HSR, the total annual cost would be 2.5 times the present gross domestic product of the United States ($33 trillion). Obviously, reducing CO2 emissions at this cost would decimate the economy and increase both unemployment and poverty.

• HSR’s impact on CO2 emissions is so inconsequential that a similar reduction would be achieved by a statewide 0.5 mile per gallon improvement in car and SUV fuel economy in 2030. This is less than the apparent improvement in national new auto and SUV fuel efficiency between the first six months of 2008 and 2007, based upon an analysis of the 20 leading vehicle models (10 autos and 10 SUVs).

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Only Gilroy to Palmdale May be Affordable

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue Should insufficient funding be available, the Phase I San Francisco-Los Angeles line could be scaled back to new HSR infrastructure limited to the section between Gilroy and Palmdale (a skeletal system). This would make it possible for high-speed trains to complete the downtown San Francisco to downtown Los Angeles route by operating at lower speeds over the existing-but-upgraded commuter rail and freight tracks between San Francisco and Gilroy and between Palmdale and Los Angeles (and perhaps to Anaheim).

Given the difficult financing situation, and considering how HSR construction costs vary for different segments, such a skeletal system could well emerge. For example, it appears that approximately one-half of Phase I construction costs are attributable to the San Francisco–Gilroy and Anaheim–Los Angeles–Palmdale segments. Hence, it is possible that the Gilroy–Palmdale section of the line could be built for between $15 billion and $22 billion, depending on the extent of capital cost overruns. It would be possible to fund such a truncated line from the currently hoped-for financing sources (state bond, matching federal funding and private investment). However, as indicated in Due Diligence Financial Projections obtaining this even this amount of funding is likely to be difficult.

Further, the Authority has indicated that the earliest segments to be built will be in the San Joaquin Valley. The first segment includes “development of a test track from Bakersfield to Merced, regardless of whether the Altamont or Pacheco Alignment is selected. Thus, the Central Valley is served between Bakersfield and Merced for either alternative.”

Consequently, events could develop in such a way that genuine HSR service would operate only between the peripheries of the Los Angeles and Bay Areas, namely Gilroy and Palmdale, meaning that California would have the form but not the substance of high-speed rail. The speeds on such a skeletal system would be faster than current rail services, but would fall far short of HSR standards and would provide little or no competition to airlines between the two major markets.

Because the existing Bay Area and Los Angeles rail lines are heavily utilized, the CHSRA would need to add track capacity, electrify the lines, and enhance grade-crossing protections. Even with such upgrading the HSR trains would need to mesh with the operating schedules and travel times of the commuter trains.

The skeletal system would be able to provide service between San Francisco and Los Angeles on a non-stop schedule of up to 5 hours and 30 minutes and between San Francisco and Anaheim with a stop in Los Angeles on a schedule of up to 6 hours and 15 minutes.

Another factor relevant to the Palmdale–Los Angeles segment is that the Southern California Association of Governments (SCAG) envisages construction of a maglev train system. Plans include maglev lines from the Los Angeles International Airport to the Palmdale airport. Such a development could exacerbate financial challenges for the HSR line, resulting in truncating even the Phase I operation into Los Angeles. This could result in Palmdale being the southern terminus for the HSR system with passengers transferring between it and the maglev system.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Exaggerating the Impacts on Modal Alternatives

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue One of the most eggregious exaggerations in a planning process rife with exaggeration and over-promotion has been the California High Speed Rail Authority's estimates of the cost of accomodating the future rail customers by highways and airports if the system is not built.

If the system were built, diversion of traffic from the highways and airports would be imperceptible. On average the CHSRA-developed Highway Alternative (calculated by this Due Diligence Report would reduce traffic congestion five times as much as HSR. Meeting the demand that would otherwise be switched to HSR would require much less alternative investments compared to the cost of HSR. The costs of the CHSRA’s asserted Highway and Aviation Alternatives to HSR cost of $82 billion is highly inflated due to dubious assumptions and fundamental flaws. Examples include the CHSRA proposing far more highway construction than is necessary to accommodate the demand.

Moreover, the CHSRA treats the commercial aviation system as if it is static—as if efficiencies to enhance capacity are impossible.The diversion of passengers from aviation is over-estimated. The CHSRA assumes that airlines will cancel a large share of the flights within California because passengers will have switched to HSR—and the diversion will free up airport capacity and make it possible to avoid costly airport expansions. This is not the experience even on the premier Japanese and French systems, which show that strong air markets remain after HSR corridors are in operation. The CHSRA’s created Highway and Aviation Alternatives is of no value in genuine cost analysis or in evaluating future roadway and airport expansion needs.

Call it cheerleading.

California High Speed Rail: Service to Pomona Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Service to San Gabriel Valley Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Service to Ontario Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Service to Modesto Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Service to Temecula-Murrieta Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Service to Stockton Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Service to Riverside-San Bernardino & Inland Empire Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Service to Oakland & East Bay Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Service to San Diego Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Service to Sacramento Unlikely

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue The CHSRA lacks a comprehensive financing plan. The proposed state bonds would be insufficient to build Phase I, much less the rest of the system. Little appears firm about potential matching funds from federal and local governments and from potential investors. The state Senate Transportation and Housing committee has issued cautionary statements about the availability of matching federal funds. Also, CHSRA advisor Lehman Brothers has outlined risks that can be a barrier to private investment, including cost overruns, failure to reach ridership and revenue projections and political meddling. Meanwhile, the cost of the project continues to grow.

In the final analysis, it will be most difficult for CHSRA to obtain sufficient financing to complete the Phase I San Francisco–Los Angeles–Anaheim route. This Due Diligence report concludes that commercial revenues from that route are unlikely to be sufficient to pay operating costs and debt service, much less finance Phase II and other extensions. As a result, it seems highly unlikely that the Inland Empire-San Diego, Sacramento, East Bay San Jose to Oakland and Altamont Pass routes will be built. Further, in the worst case, funding shortfalls could require greater use of modestly improved conventional rail infrastructure in Phase I, which could add hours to the promised travel times.

All of this could lead to negative financial consequences, such as substantial additional taxpayer subsidies, private investment losses, and commercial bond defaults.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: They Don’t Even have a Qualifying Train Design

California High Speed Rail: They Don’t Even have a Qualifying Train Design

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.


The Issue No existing HSR trains capable of meeting the speed and capacity goals of the CHSRA system can legally be used in the United States. The CHSRA’s intention to share tracks with commuter and freight trains complicates designing a train to meet Federal Railroad Administration safety standards that are considered the toughest in the world. Currently, no European or Asian HSR train meets U.S. crashworthiness standards. The necessary regulatory approvals of an overseas train are unlikely to be achieved without substantial changes in design and weight.

The CHSRA has yet to decide on basic design specifications for a train and has based studies on inconsistent seating capacities of 450-500, 650, 1,175, 1,200 and 1,600 per train. Also, a train redesigned for the U.S. will become much heavier and is thus unlikely to reach promised speeds. In short, the Authority does not have a usable train design and the eventually required modifications could substantially impair operating performance. Lower performance would negate the CHSRA’s assumptions on which it has based travel times, ridership projections, revenue forecasts and profits.

While builder specifications for the CHSRA’s train do not exist, because of the above circumstance it is fair to state that the CHSRA’s design may become the world’s longest and heaviest HSR train—yet be expected to operate at the highest speed current technology permits. It is likely that a series of designs, tests, prototypes and safety reviews never before achieved anywhere in the world must succeed for the CHSRA’s train to become a reality.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail to Operate Far Slower than Advertised

California High Speed Rail to Operate Far Slower than Advertised

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.


The Issue Based upon international HSR experience, it appears that the CHSRA speed and travel time objectives cannot be met. As a result, HSR will be less attractive as an alternative to airline travel and is likely to attract fewer passengers than projected. Notably, the CHSRA’s anticipated average speeds are not being achieved anywhere in the world, including on the most advanced systems. Incomplete consideration has been given to California’s urban and terrain profiles where HSR trains must operate more slowly than circumstances allow in, for example, France. This study, by assuming realistic speeds, estimates that a non-stop San Francisco–Los Angeles trip would take 3 hours and 41 minutes—59 minutes longer than the statutory requirement of 2 hours, 42 minutes. In the future, the CHSRA’s travel times may be further lengthened by train weight and safety issues and also by political demands to add stops to the system.

The proposed HSR system appears unlikely to provide travel time advantages for long-distance airline passengers. It is likely that HSR door-to-door travel times would be greater and there would be considerably less non-stop service than air service. Moreover, HSR would be unattractive to drivers in middle-distance automobile-oriented markets because little or no door-to-door time savings would be achieved and costly local connections would often be required (rental cars or taxicabs). Another convenience factor is that California urban areas lack the extensive local transit infrastructure that connects with HSR systems in dense Asian and European urban areas. The HSR system will experience disadvantages and commercial challenges in competing with air and auto travel that have been understated in CHSRA documentation.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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California High Speed Rail: Phony Climate Change Claims

California High Speed Rail: Phony Climate Change Claims

The Project California voters will be asked to approve a nearly $10 billion bond issue in the November election as the beginning of funding for the a high-speed rail system intended to serve San Francisco, Los Angeles, San Diego, Sacramento, Fresno, Riverside-San Bernardino and points between. Promoters claim that the remaining necessary funding (from $45 billion to $71 billion, depending upon who you believe) would come from the federal government and private investors. There is no federal program to provide such massive funding and private investment seems highly unlikely given the overwhelming prospects for financial failure.

The Issue One of the principal proponent’s claims about high-speed rail is that it will reduce greenhouse gas emissions. In fact, high-speed rail’s environmental benefits have been greatly overstated.

California HSR will do little to reduce CO2 emissions (greenhouse gas emissions). Based upon California Air Resources Board projections, HSR would ultimately remove CO2 emissions equal to only 1.5 percent of the current state objective. This is a small fraction of the CHSRA’s exaggerated claims of “almost 50 percent” of the state objective. The Intergovernmental Panel on Climate Change (IPCC) has indicated that for between $20 and $50 per ton of reduced greenhouse gases emissions, deep reversal of CO2 concentrations can be achieved between 2030 and 2050. A McKinsey report indicates that substantial CO2 emission reductions can be achieved in the United States for less than $50 per ton. Yet the cost per ton of CO2 emission removal by HSR is far higher. ---.between 39 and 201 times the international IPCC ceiling of $50. The reality is that HSR’s impact on CO2 would be inconsequential while being exorbitantly costly.

Adapted from The California High Speed Rail Proposal: A Due Diligence Report By Wendell Cox & Joseph Vranich

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England's Mortgage Bailout: The High Cost of Town Planning

The Daily Telegraph in London reports that the government bailout of mortgage lender Bradford and Bingley will raise the exposure of the United Kingdom taxpayers to £150 billion (nearly $300 billion). Overall, this is approximately $5,000 per capita, considerably more than the $3,000 per capita United States taxpayer exposure likely after the nearly $800 billion in bailouts, including AIG and the proposed congressional package.

It may be surprising that the cost in the UK would be competitive, much less higher than in the United States, until the causes are analyzed. Surely, US lenders appear to have been more profligate with their (and now taxpayers’) money than UK lenders. Yet the bloated prices have started to fall, as prices begin to return to reality.

Lending profligacy was only the start of the problem. Blame town planning, or what is called “smart growth” in the United States. Elsewhere, we have documented the fact that the excessive price increases that led to the US mortgage meltdown were concentrated in markets with strong land use regulation (smart growth). In these markets, land use policies limited the amount of land available for development, interfered with the competitive pricing of land for development and otherwise increased costs. The smart growth markets, while accounting for only 30 percent of the population, represented more than 85 percent of the housing price increases. Without smart growth, the financial crisis might well have been handled in the United States without government intervention.

The British are not so lucky. Because of the Town and Country Planning Act of 1947 and its subsequent administration, the entire nation is victimized by smart growth style policies that simply do not allow enough houses to be built. Last year, British house construction fell to the lowest level since World War II, and has dropped 30 percent just since 1992. This is barely one-third of the level required in the nation according to James Hearfield, in Let’s Build: Why We Need Five Million New Homes in 10 Years.

For all the good it has done, the Blair government has made the housing market a “dog’s breakfast.” By requiring an untenably high share of new housing to be built in brownfield sites, the government has raised the price of housing and discouraged its development. It is not as if housing has not attracted the attention of the government. Indeed, it seems as if the more it has talked, the less has been built.

But there is much more than national policy. Local authorities have long since caved to property owners who think that their rights to property they can see is no less than their rights to property they own. The result is a nation that is saying no to the next generation. Never mind that the UK is among the most poorly housed nations in the developed world.

It is not, therefore surprising, that housing prices have risen with a vengeance. Owner occupied housing costs have doubled in the last decade relative to incomes. This means that the value of the owner occupied housing stock stands at nearly £3.5 trillion, when historic norms would place it at £1.7 trillion. The £150 billion (£0.150 trillion) may just be the beginning.

The Sub-Prime/Smart Growth Mortgage Market Bailout

The impending federal bailout of mortgage markets has a principal cause --- lax lending standards, such as sub-prime mortgages and an exaggerating cause --- excessive land use regulation, which drove house prices up beyond any precedent. More than 80 percent of the housing cost increase since 2000 occurred in markets with excessive land use regulation (also called "smart growth"). Without this excessive increase, the financial crisis would have been far less intense or may not have occurred at all.

These policies, often referred to as "smart growth," create a scarcity of land, artificially raise the price of housing, and, again, have increased the exposure of the market to risky mortgage debt. When more liberal loan policies were implemented, metropolitan areas that had adopted these more restrictive policies lacked the resilient land markets that would have allowed the greater demand to be accommodated without inordinate increases in house prices.

For more detail see:
How Smart Growth Exacerbated the International Financial Crisis (Heritage Foundation web memo)


How Smart Growth Exacerbated the International Financial Crisis (report)

Google Chrome: A Step in the Right Direction (Review)

I was happy to be one of the first to download Google Chrome, a new web browser, within minutes of its being made available on the internet. Somehow, Unlike, Microsoft, Google has managed to bring products to the market that are generally well tested and I have been pleased to use G-Mail and Google Earth, almost without any difficulty, from the beginning. That is not to say that their products are without difficulties. There are design problems with G-Mail, for example, but these are not program bugs, but rather software architecture issues --- I would have designed them differently.

This, of course, is much unlike Microsoft, whose products I find so infuriating that I even briefly switched to Apple, in an expensive failed experiment.

My haste in downloading Google Chrome was due to an associate's bad experience with the latest version of Firefox, which I had intended to download, but had not pressed all of the necessary buttons. He had, and lost hours because of design glitches. This put me in the market for an alternative not only to Internet Explorer, but also Firefox.

Google Chrome is generally an improvement on the other browsers. It has a clean look and more of the page is available for web page display. Some of the features are a bit unusual (as in the case of G-Mail), but the program passed my one-half hour test --- I must be up and running pretty well with any software within 30 minutes or it is removed from the registry. Google Chrome seems to be faster than Firefox and its display of tabs is more attractive and user friendly.

The import of bookmarks from Firefox was not completely successful, but the 5 percent that was missed I will add as it becomes necessary.

There are two problems, neither of which is sufficient to require a return to Firefox or, God Forbid to Internet Explorer:

URL’s do not show on downloaded PDF documents. This is a problem, because I often send links to these documents and have to go to a previous page to find the link. This may just be a setting problem I have not yet figured out, but it is annoying.

The greatest annoyance, however, makes me fear that a strain of Gate’s Disease has struck Google. The one program that Google Chrome does not work well with is G-Mail, its own mail program. It routinely hangs up and when it does not is very slow, unlike other operations with Google Chrome. How Microsoftian can you get than to not be able to handle your own programs. I recall the previous version of XL (2003) rarely closed without crashing on a Windows system. The G-Mail problem is akin to that. Again, however, the problem is not great enough to justify a return to Firefox. I, however, do keep Firefox open only for the purpose of using G-Mail (that explains how serious the problem is).

All in all, however, Google Chrome is a significant step forward, despite being a “beta.” One can only hope that someone from the Chrome product will have coffee with someone from the G-Mail product and there will be “peace in the valley” again.

Transit Use Captures Only 3% of Road Use Decline

Based upon 2008 Second Quarter data from the United States Federal Highway Administration and the American Public Transportation Association, it is estimated that the increase in transit use accounted for only 3 percent of the decline in urban roadway travel.

Small Town America

With all of the discussion in the presidential campaign about small towns, it is well to review the situation of local governance in the United States.

According to the 2002 United States Census of Governments

There were 19,429 municipalities (cities, towns, boroughs and villages) with a population of 175,845,000. The average sized municipality was 9,000.

There were 16,504 townships and towns that are analogous to townships, with a population of 52,365,000. The average sized township had a population of 3,200.

All together, there were 35,933 cities, towns, boroughs, villages and townships in the United States. The total population was 227,210,000. The average population was 6,300.

Small town America appears to be alive and well.