Obama's Full Speed Ahead on High Speed Rail is Premature

President Obama in his SOTU address tonight touted High Speed Rail (HSR) as a viable means to address transportation issues. Not sure if he has read the TxDOT Restructure Council's assessment of HSR so I've made it available to him here on this blog.

Please read, Mr. President and consider that Texas is leading the nation in job creation, in large part because of our common sense and conservative leadership.

High Speed Rail in Texas: Proceed With Caution

When it comes to the development of high speed rail (HSR) in Texas, financial wariness might be the most responsible approach.

The concept of high speed rail has gathered a lot of public momentum in the U.S. in recent years, and until the recent elections, a surprising level of support in Washington as well. Recent change in control of the U.S. House of Representatives might complicate the Administration’s HSR agenda. For Texans convinced that it is the transportation idea whose time has come, a few facts might be helpful.

Without question, some European and Asian countries have developed advanced and successful HSR lines. HSR speeds clearly provide valuable travel time savings, although often at a premium cost to passengers. HSR safety records are excellent. In some cases, HSR might even free up capacity in other modes (roads and air) and improve overall transportation system efficiencies. But as intriguing as it might be, there is good reason to tread very cautiously when it comes to the financial viability of HSR in the U.S.

There are only around 50 high speed rail lines around the world today. Virtually all were developed as replacements or enhancements of existing conventional rail systems, with established, pre-existing ridership that migrated and expanded naturally from an existing service to a new and more attractive service. No such established ridership base exists in Texas.

Also, the demographic and economic conditions that support the financial viability of HSR are rare, and in the U.S. they might not yet exist. Ridership levels on successful single HSR lines in Asia and Europe ranges from 83 million passengers per year to 20 million passengers per year. In contrast, the combined ridership of all Amtrak lines throughout the U.S. was 28.7 million passengers in FY 2010; AMTRAK's Northeast Corridor connecting Washington DC, New York and Boston, which some believe represents the most viable U.S. corridor for HSR, carried just 10.4 million passengers in fiscal year 2010. Overall financial performance of HSR depends directly on whether enough people choose to pay a premium cost to choose HSR over of alternative modes; even with an existing conventional rail ridership base, HSR projects have rarely met their full ridership forecasts, and in some cases have fallen far short.

As for cost, depending on the complexity of the engineering work required, the degree of urbanization along the route and the necessary rolling stock capacity, construction and rolling stock capital costs typically range from $56 million to $112 million per mile (mileage between Houston and Dallas: 225). Also, it is not unusual for HSR projects to take over a decade to complete, creating the need for significant capital outlays before there is any cash flow. If debt is involved, delays in construction or passenger ramp-up, or shortfalls in ridership yield, can create significant financial stress. Over time most lines seem to recover operating and maintenance costs, but few fully recover the capital costs from passenger revenue alone. Governments contemplating the possible benefits of HSR, whether through public, private or public-private partnership structures, should assume a near certainty of need for continuing financial support.

It is easy to envision a future Texas in which efforts to add needed capacity to existing intercity corridors such as I-10, I-35 and I-45 are overwhelmed by prohibitive costs, lack of resources, environmental constraints and public/political resistance. At that point, supplemental capacity represented by HSR might make sense and prove even more attractive than the development of alternative highway corridors. In light of the long lead time required to plan, design and develop HSR, the immediate challenge is clearly and objectively assessing whether such a system might make sense for Texas, and if so what is the most responsible, incremental path to that future. First steps in that direction might best include analysis, planning, design and development of corridors and conventional rail strategies, from which someday an even more advanced HSR technology than exists today might emerge as a viable option for Texas.

Source: TxDOT Restructure Council Final Report