June 2, 2011 • Current Events, Energy Efficiency, Energy Innovation, Perspectives, Sustainability

Speeding up

by Eric Bickel

In California, interest in high-speed rail systems is gathering speed. The push toward high-speed rail systems that largely replicate those in Europe has created quite a debate in the political world, as well as the blogosphere (both against high speed rail and for it).
However, when looking at the numbers and the economics, the need for debate becomes clear. California has been a growing energy consumer and has been leading the West Coast region higher as a total percentage of motor gasoline demand (see Figure 1). A high-speed rail system will directly impact gasoline usage in the long term, and with gas prices causing me to begin sleeping under my desk, that’s really all I care about in this article. While the immediate national impact of a rail system in California would be minimal, down the road we could see a ripple effect take form and eventually move the prices at a pump near you. So while the upfront costs may be substantial, the long-run benefits could easily outweigh them should the push accelerate the process of bringing efficient mass transit to the US.

West Coast demand and % of US total

High-speed rail growth in California has a two-sided effect. The quick impact is the immediate change on miles driven by Californians. High-speed rail, done right, provides a legitimate alternative to drivers looking to travel medium to long distances quickly and efficiently. In a state where sustainability is the theme, this should be an attractive alternative to the current means of transportation. This reduction in miles driven will lower the demand for gasoline and ultimately cut down on pricing pressures in the West Coast region. Anything lowering the gas price in California would be great for people living in that area, as they typically pay premium retail prices compared to other regions (see Figure 2). But how does this impact you, non-Californian? As demand from this region falls, there will be more available supply of motor gasoline for consumers outside the state. So the demand destruction resulting from growing use of the rail system will result in lower pricing pressure on the wholesale level, everything else equal. And that’s assuming limited growth in rail systems outside of California. Should other states show interest in the system, then prices will respond rapidly.

US and California average gasoline prices

Another impact is from policy change. Right now, most of America is too spread out and too rural to pursue these types of projects. Aside from the giant metros (New York, Chicago, etc.) there isn’t much in terms of efficient mass transit. However, high-speed rail spans longer distances than typical inner-city transit, bringing in people from outside the immediate area. This is ultimately taking the theory of globalization and turning it inward, connecting multiple points in a way that speeds up the transit of people and ideas within a region. This concept isn’t far from the role that the Internet has played in global commerce, or how the growth in airline travel caused the lives of people from every point of the globe to intersect.

So, should the California project pan out (and it will take some time), we could see more and more regions in the US become interested in replicating it. Communities that are outside of major metropolitan areas could push for a strengthened connection to their bigger neighbors, and the bigger neighbors could find great benefit in agreeing. However, there is a right way and a wrong way to do this. Rail systems only work when the pool of participants (the group of people who are able to benefit from riding) is large enough to sustain the system itself. This is why the system is most likely to sprout up around medium to large metro areas (ahem, Louisville) as opposed to rural communities in the middle of nowhere (ahem, the state of Montana). That’s not to say that the system can’t stretch farther out as it grows organically, but the spurt of growth is likely to start in regions on the outskirts of heavily populated metros.

Right now, the push for high-speed rail is small scale in nature, but growth in the future could be as high speed as the train itself.

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