Wednesday, September 19, 2012

California High Speed Rail from Fresno to Merced!

Can a bullet train through farm country help to reinvent California?  Will the owners of the land near the bullet train stations become rich?  Will Southwest's stock price plummet as guys like me substitute from plane to train to go from LA to Northern California?  I realize that every journey starts with a first step but these first 65 miles are expensive.  All those who support this train should be required to ride it enough trips so that the average cost per mile of use per passenger is less than that of a new Mercedes.

So, suppose this train costs $100 billion dollars.

Suppose that 5 million people ride it a year and the train lives for 20 years.    Suppose that the average ride is 150 miles.   Assuming the interest rate is 0% and there is no maintenance investment for these trains then the average cost per passenger mile over the life of this train  =  100 billion/(100 million*150) =  1000/150 = 6.66.

Suppose that you buy a $100,000 Mercedes and you alone drive it 100,000 miles.  You must buy gas at $4 a gallon and if the vehicle achieves 25 MPG then you will need $16,000 in gas.   The average cost per passenger mile = 1.16 = 116000/100000.    

So the Bullet train's cost is 6.66 times higher than the Mercedes.  Think about it!

This is the challenge that the train faces.  For my loyal readers, what do you predict will be the ridership per year?   There are 365 days in a year.   Do you believe that more than 13,900 people will ride it a day?