Thoughts on State of the Union / Campaign Speech

Russ Steele

No, I could not bring myself to listen to another boring lie that would avoid the real issues, huge national debt, high unemployment, stimulus that did not work, run way spending, job killing EPA regulations, etc.  So, I read it online this morning. Here are my observations:

Only one mention of climate change in the speech, but a lot “was was” about doubling down on alternative energy:

We can also spur energy innovation with new incentives. The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change. 

And then there was this bit of nonsense

Our experience with shale gas shows us that the payoffs on these public investments don’t always come right away.

What has the government done to develop shale gas? The development of shale gas drilling technology was the work of private industry and private investment. In fact, Obama’s EPA is trying to shut down the use of fracking, which is the critical technology to the production of shale gas and oil. Oil an gas production in Federal land has declined, while it has grown on private and state land.

No high-speed rail in the speech is year. Zero!  It was a big issue in 2010, devoting five paragraphs to high-speed rail.  So what prompted the high-speed rail to vanish this year?  Reality? Could it been the cost has become so expensive and bloated it is no longer politically viable Maybe Obama’s speech writers got the California State Auditors report, financing become “increasingly risky.” and he was not even talking about operations cost.

Hot Air has some more insight to the issue:

The auditor warns that the state has no clear way to raise the $105 billion in funding necessary to complete the project, but that’s just half of the problem:

“The success or failure of the program” depends on obtaining up to $105 billion in additional funding, which has not been identified, the report says. It also finds that cost estimates for the initial phase do not include operating or maintenance outlays, which the auditor estimates could total $97 billion between 2025 and 2060.

Supposedly, this will get recouped by fare sales, since the project’s legal foundation requires it to cover its costs without subsidies.  The project estimates 40 million riders a year by 2030, which would mean 1.4 billion boardings during that 35-year stretch.  That’s almost certainly a fantasy; Richard White points out in the link above that BART only achieved 25% of its estimated ridership.

Let’s take that ridership assumption at face value.  That would make the cost of a boarding $70 just to cover ongoing operating and maintenance costs, with the bonds for construction still outstanding and adding interest costs to the state’s commitment.  The principal of $105 billion in bonds would add another $75 per boarding cost to the ticket, bring us — without the interest — to $145 per boarding, or about $290 per round ticket, which is far above what it costs for an airline ticket to make the same trip in less time with more departure and arrival choices.  Even if these riders are assumed to be round-trip fares in the state’s cost analysis (usually that’s expressed as “boardings” and not round trips), the base cost without interest of $145 per round trip is about the cost of airline tickets between the two population centers, which Travelocity prices out at around $149 … without putting taxpayers at risk.

The California high-speed rail project isn’t “increasingly risky.”  It’s increasingly insane.  Small wonder it has disappeared from Obama’s wish list.

Now if Governor Brown would get the message, high-speed rail is an economic black hole, every thing goes in and nothing comes out.

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About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

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