Obama’s bullish on high-speed rail

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In an effort to relieve traffic congestion, save energy, and clean up the air, President Obama has called for the swift development of a high-speed passenger rail system.

The President said that this was not some fanciful, pie-in-the-sky vision of the future, and that the country could not afford not to invest in a major upgrade to rail travel. Certainly we couldn’t agree more. But thanks to decades of complacency, this, like many other desperately needed projects, will not be easy.


The fact is, rail is one of the cheapest and most fuel-efficient forms of transportation available today. But the unfortunate truth is that our current rail system is nothing short of an absolute joke when compared with the rest of the world. Running primarily on diesel, and with limited destinations, we are significantly behind the eight ball on this.
So yes, our rail system needs a major overhaul. But will the Obama administration, and all those heavily-funded oil-loving bureaucrats in Washington offer more than just rhetoric? We certainly hope so. But we also have to be realistic. The $8 billion from the American Recovery and Reinvestment Act and the $1 billion a year for five years which is requested in the federal budget, is not going to cut it.
To truly transform our rail system, it would likely cost trillions of dollars over the next few decades. Just to lay high-speed rail between the major cities in California would cost roughly $40 billion. And that’s just one system. Of course, it would still be worth every penny. A high-speed train system in California (one that would run from Fresno to Los Angeles in less than an hour and a half), would…
* Create about 160,000 construction-related jobs, and about 450,000 permanent jobs.
* Generate more than $1 billion in annual revenue surplus
* Reduce air pollution and related health care costs
* Reduce auto accident fatalities and injuries
* Relieve traffic congestion – which, by the way, costs about $20 billion a year in wasted fuel and time lost.
Of course, we still can’t lose sight of that $40 billion price tag. This isn’t chump change we’re talking about here. But to serve all those travelers using the high-speed train system, California would have to build almost 3,000 lane-miles of freeway, as well as five airport runways and 90 departure gates by 2020. This would cost more than double the price tag on the high-speed train system.
The integration of a high-speed rail system in this country would truly be an economic and environmental winner. And for all those folks that get all fired up over foreign oil reliance, this is one of your best solutions! The question, however, is will the new administration’s desire to upgrade our rail system be matched on the state and local level?
You see, the administration has urged states and local communities to develop plans for a network of corridors (between 100 and 600 miles), that will compete for federal money. The grants will then be decided upon by the end of the summer. But beyond those grants, even more capital will need to be raised to accomplish such a lofty and necessary goal.
So lets hope those on the local level don’t allow outdated misconceptions and personal prejudices about high-speed rail to impede some much needed progress. Because if this is done right, not only will we eventually have a way to displace billions of barrels of foreign oil without having to make any major sacrifices – but we will also have a system that will ultimately generate revenue while enabling us to provide a stronger, cleaner transportation infrastructure for future generations.

I am the co-founder and managing editor of Green Chip Stocks. We are an independent investment research service focused exclusively on "green" markets.