Another Prediction for What's in Store with Honolulu's Rail

I am optimistic about the outcome of the lawsuit against Honolulu Rail in federal court. There was no such suit against the Silver Line addition to the Washington DC Metro. So the line is now under construction. These two excerpts from a recent article in New Geography are important:

• While rail might seem like the most obvious solution, it is also by far the most expensive and slowest option. The price tag is staggering, and the rail extension will take years to construct. The better option would have been to make use of the existing roadways, and implement an expansive bus rapid transit system (BRT).
• The 23 mile extension of the Washington Metro rapid transit system is forecast to cost $6.8 billion dollars; roughly $296 million per mile. The constant scramble to finance the over-budget project has resulted in more than one construction setback.
  

What's important is that this system is about the same length as Honolulu's, and it is heavy rail like Honolulu's. So despite the fact that its construction is relatively easy (in the middle of an existing toll road) compared to the nightmare of shoehorning elevated stations and guideways in densely populated Honolulu the cost is staggering and it will likely surpass $7 Billion.

Remember that the financial analysis report conducted for Governor Lingle said that the likely cost of Honolulu Rail will be $7.2 Billion.

So when mayor candidate Carlisle promised that he will "get Honolulu's financial house in order" what did he mean? The answer is clear: "Adding several Billions of new debt onto Honolulu's financial house."

I strongly suggest that you read the rest of the article linked above as it presents a most suitable solution for the Dulles connection and for Honolulu: Bus Rapid Transit on HOT lanes. Much better results are a much lower cost.

A $6 Billion Plan for Hawaii's Long-term Prosperity

Dr. Martin Wachs recently wrote an important article on public investment for transportation and jobs. (See blog post below.) He observed that Democrats and Republicans, liberals and conservatives, rural and urban elected officials—all seek funding for roads and transit projects in their districts, asserting repeatedly that these expenditures will create jobs. He correctly asserts that construction jobs do not inherently have higher economic impact than other new jobs. Construction may generate construction jobs but it also is a huge cost item in and of itself and puts a lot of stress on city and state budgets. (All states except North Dacota have deficits.) Finally Wachs says that a shovel-ready project in no way assures that it will have long-term net economic benefits.

Given Wachs’ sound, detailed and impartial assessment, you now can make your own decision between Plan A and Plan B for Honolulu, Hawaii.

For about six billion dollars you can choose either A or B defined as follows.

Plan A

• Mufi Hannemann's 20 mile, 21 station elevated heavy rail with 3 park-and-ride facilities and no power plant. All of it is a taxpayer subsidized project.

Plan B

• 11 miles of reversible HOT lanes that will improve the Central Oahu-to-town tidal traffic problem by over 30%.
• 3 Superferry vessels to connect our islands and provide a resiliency backbone when an island is hit by a disaster.
• A small Hawaii-based international airline with round-trips to Beijing, Shanghai, Osaka, Moscow, Dubai, Singapore, Sao Paolo and Frankfurt, e.g., Aloha Worldwide.
• A coal power-plant that will reduce Oahu's oil dependency by 15%. All these can be done as incentivized private projects, or public-private partnerships.
  

Which plan is best for Hawaii's long term economic prosperity and which one is best for short term political pork?

You know that the correct answer is Plan B. Why are about 75% of Hawaii's politicians choosing Plan A? Because they care about themselves, because doing the same thing again and again is less work, and because they are told what to do by special interests (their party, big money supporters, and unions.)

UCLA/RAND Expert on Transportation, Jobs and Economic Growth

Dr. Martin Wachs [1] recently wrote important article on public investment in transportation, and jobs. It dispels the sweet sounding myths promoted by politicians, contractors and unions. The full article can be found here [2]. Key excerpts are given below.

Democrats and Republicans, liberals and conservatives, rural and urban elected officials—all seek funding for roads and transit projects in their districts, asserting repeatedly that these expenditures will create jobs. President Obama vigorously sought to create jobs through transportation spending in the recent economic stimulus package. This seemed familiar: in 1991, when signing the historic Intermodal Surface Transportation Efficiency Act (ISTEA), President George H.W. Bush stated that the value of the bill “is summed up by three words: jobs, jobs, jobs.”

Transportation projects are not all equally effective at creating jobs or stimulating economic growth. Sound transportation investments lower the costs of moving people and goods. Short-term job creation, while vitally important to economic recovery, should not cause us to ignore the longer-term view.

Transportation dollars should be spent on programs that most enhance long-term economic productivity. ... For example, building an ill-advised rail line might give a local economy a short-term boost in employment, only to saddle taxpayers with large operating deficits in the future.

Building the Interstate Highway System created many construction jobs, but it would be a huge mistake to interpret that employment as the system’s contribution to the economy. Workers who drew salaries from the construction program benefitted, but far less than the travelers and shippers of goods who have used those facilities every day for six decades.

By building an effective transportation network, government transportation spending draws jobs to those industries that benefit from the investment. At the same time, this moves jobs away from activities that would have been financed in the absence of the transportation investment. So while transportation investment can “create jobs,” it can also destroy them.

Public officials often mention that each billion dollars of transportation infrastructure investment will create over 30,000 new jobs. This estimate relies on what is called the “multiplier effect.” Construction workers spend their income to buy hamburgers, television sets, and automobile insurance, so a given dollar of construction expenditure ends up having more than a dollar’s worth of impact, thus “multiplying” the effect of the expenditure. Unfortunately, asserting that any expenditure will create a specific number of jobs is not well supported by evidence. Actually, in the short term, construction jobs and expenditures on steel and concrete are economic costs [that weigh heavily on the budget.]

To create or preserve jobs in the short term, it might be more effective to use federal dollars to subsidize the operations and maintenance of transportation systems. Dollars spent on operating bus lines, for example, are spent largely on labor and thus quickly recirculate in the local economy. By contrast, dollars spent on capital or construction projects may include costly expenditures on concrete and steel imported from outside the US. Construction jobs do not inherently have higher multipliers than jobs driving buses.

Identifying a project as shovel-ready in no way assures that it will produce long-term net economic benefits. Simply equating any transportation investment with jobs and gains for the economy cannot remain a sound basis for public policy. America needs to do a better job of systematically evaluating alternative investments.

One way to judge a public investment is to determine whether or not it generates a rate of return to society that exceeds the return earned on other investments in the private or public sectors.

NOTES

[1] Martin Wachs is Professor Emeritus of Civil and Environmental Engineering and City and Regional Planning at the University of California, Berkeley, and former Director of the Institute of Transportation Studies and of the University of California Transportation Center. He is also former Chair of the Department of Urban Planning at UCLA. He is currently a Senior Research Associate at the RAND Corporation (wachs@rand.org).

[2] TRANSPORTATION, JOBS, AND ECONOMIC GROWTH, Access, No. 38, University of California, 2011

Hawaii Energy Cost: Double U.S. Average and Likely to Stay There

Another disadvantageous first for Hawaii, and most of it due to our price of electricity.* We are hooked on oil and the future does not bode well for us because actually it may be cheaper to stay with oil.

Notably crude oil pricing today is at $80. Oil prices may decline further to around $50/barrel (in year 2000 constant dollars) for more than a decade because:

1. China, India and Germany are focusing on coal. Brazil on ethanol.
   
2. The success of fracking and other unconventional methods for extracting natural gas (see below.)
3. The expected reduction in the political turmoil of oil producing countries.
4. The localized success of electric vehicles and the continues improvements in vehicle MPG.
5. The modest introduction of additional large nuclear plants, wind and solar installations.

There is great attention focused on natural gas, worldwide. According to The Economist, August 9, 2011 existing and potential assets (in parentheses) of natural gas for a half dozen countries are as follows, in trillion cubic meters. These are truly vast energy deposits:

• Argentina 0.4 (21.9)
• Australia 3.1 (11.2)
• Canada 1.8 (11.0)
• China 3.0 (36.1)
• Poland 0.2 (5.3)
• USA 7.7 (24.4)

As a result of all these, the likelihood of large price drops in the development of renewable technology is less rosy. This is a major loss for Hawaii which is too tiny to absorb the costs of developing technology.

(*) ENERGY COST INDEX 2011: RANKING THE STATES, August 2011.

Data Sources for the chart with data from SBEC: Gas price index from gas prices provided by the AAA’s website www.fuelgaugereport.com accessed on July 22, 2011, and electricity cost index is an index of state’s average revenue per kilowatt-hour for electricity utilities (data for 2011 through April from the U.S. Energy Information Administration).

It's August 6 in Hiroshima, and 1945 in Detroit.

Image 1: Man-made devastation (1945) ...
Image 2: ... and spectacular recovery (2010) in Hiroshima, Japan.
Image 3: One hopes the same for Detroit and other decimated American cities.
But the happenings in Washington, D.C. give no such hope.

Trains Helped Kill the Greek Economy – They’ll Kill Hawaii’s too

“Some years back a Greek finance minister, fed up with his country's waste and extravagance claimed that he could save money by shutting down the national railway and driving around its passengers in taxis.” [1]

Too bad he didn't execute his plan for the closure of the railways. In 2009 the Greek railways collected $250 million in fares and posted a net loss of $1.4 Billion. A Billion wasted here, and a Billion wasted there … the rest is history for the Greek economy. Greece is now in a debt crisis.

In 2000 a Greek colleague and I conducted research on Greek railroads and we developed models which predicted that the rail freight service would soon carry nothing [2]. No way, they said. Four years later the freight operations of Greek shut down for good. Unfortunately, investment on Obama-like medium-speed rail passenger service continued unabated in Greece. So the budget hole got even bigger.

The lesson here is that public investment in non-performing infrastructure will eventually swamp the budget and saddle current and future generations with a heavy debt burden. Non-performing is any infrastructure in constant need of subsidy whose contribution to the economy is less than its true cost. Roads cost a lot, but contribute much more to the economy, health and safety of the population. Trains cost even more, but offer much much less.

What do you think the future holds for our tiny island that "wants" a five to seven Billion dollar train?

What do you think the future holds for the car-dependent, and highway and airport vested state of California which still plans for a $35 Billion “high speed rail”? A lot of good answers can be found in the article: High Speed Rail and Social Equity. Basically, the only high speed rail that makes sense (and money) is the 340-mile Shinkansen. All the rest, including California's, are A Fast Track to Nowhere.

The lessons about trains "modern" trains can be summarized by three common sense idioms, as follows.

You can’t teach an old dog new tricks. Trains went obsolete for a reason. You can’t solve 21st century mobility problems with 19th century technology. There are always a few exceptions, but Greece, California and Hawaii trains have nothing exceptional.

Those who refuse to do arithmetic are doomed to talk nonsense. One can write a book on this but I will mention only three rail related “math” of Honolulu mayor Peter Carlisle: (1) Get Honolulu’s financial house in order ... by spending over five billion on rail, (2) HART will cost us nothing, and (3) The Ansaldo contract will save Honolulu tens of millions in rail costs. All of them pure nonsense.

They are taking Honolulu for a (train) ride. Biased politicians, biased government officials and their paid consultants deceive the public in order to get elected, become chief of a new division and make millions, respectively.


[1] The Economist, July 2, 2011, p.8.
[2] Paravantis, John A. and Panos D. Prevedouros, Railroads in Greece: History, Characteristics and Forecasts. Transportation Research Record, No. 1742: 34-44, 2001.