free html hit counter Peak Oil Debunked: 353. RAILWAYS BOOMING

Thursday, May 15, 2008

353. RAILWAYS BOOMING

On the whole, the peak oil community places way too much emphasis on industries that are dying and not enough on industries that are booming. This blog, on the other hand, has long emphasized the stimulative/creative aspect of peak oil -- i.e. that PO will cause explosive growth in the mitigating industries. The picture of peak oil is one of creative destruction or metamorphosis -- growth in another direction -- not downward collapse.

Railways are a classic example of this dynamic, and very instructive:
The rail freight industry is having its biggest building boom in
nearly a century, a turnaround as abrupt as it is ambitious. It is
largely fuelled by growing global trade and rising fuel costs for big
18-wheeler trucks.

In 2002, the major railroads laid off 4700 workers; in 2006, they
hired more than 5000. Profit has doubled industry-wide since 2003, and
share prices have soared. The value of the largest railroad, the Union
Pacific, has tripled since 2001.

This year alone, the railroads will spend nearly $US10 billion ($A10.7
billion) to add tracks, build switch yards and terminals, and open
tunnels to handle the coming flood of traffic. Freight rail tonnage
will rise nearly 90% by 2035, according to the Transportation
Department.

[...]

But the changing global market has fuelled prosperity — and the need
to add track for the first time in 80 years. Soaring diesel prices and
a driver shortage have pushed freight from 18-wheelers back on to the
rails. Source
by JD

24 Comments:

At Thursday, May 15, 2008 at 6:54:00 AM PDT, Anonymous Uf Mcguf said...

Just about any railroad related stock is a great investment to have right now. Union Pacific (UNP) has gone up about $20 a share since I bought it a month ago. It's been paying a nice quarterly dividend for, I think, over 100 years and it just declared a two for one stock split. Plus it's a Warren Buffet pick along with Burlington Northern. These stocks should continue to climb as long as crude is high and the trucking industry remains less efficient.

And I can't understand why more doomers aren't jumping into these investments along with oil ETFS such as USO and DBO. I guess they'll just continue to pay big penaltys by early panic-driven 401k withdrawls and have their life savings depreciate under smelly mattresses.

 
At Thursday, May 15, 2008 at 10:05:00 AM PDT, Anonymous Anonymous said...

In the US just about nobody thinks that wages will increase significantly with increased competition from China and the record of wage increases over the last 8 years. I don't think that boomers will retire because they don't have the money, so no wage increases there.

Peak oil could lead to an increase in wages because we'd need more human labor to do the work that oil can't do anymore. this real wage increase could offset the rise in prices people would experience for peak oil. so instead of the doomer scenario of zombie hordes roaming the countryside or population dieoff people's lives could actually improve.

instead of spending $5,000-10,000 dollars a year on cars people could save that money and take the bus, car pool and lead less stressful lives. no more driving yourself in traffic. you could sleep, do some extra work or whatever on the bus. you could telecommute. you could walk or ride the bike and get healthier. you could spend more time at home instead of on the road.

peak oil could actually, in the long run, save you money and give you a more enjoyable life!

those that created companies to deal with peak oil could become fabulously wealthy like during the dotcom era.

 
At Thursday, May 15, 2008 at 6:15:00 PM PDT, Anonymous Anonymous said...

Hello,

I've seen this blog quite a few times. It's actually good to see there are a few people that believe peak oil won't kill 90 percent and suggest solutions that will help us survive and hope for the future.

Keep up the good work, JD.

--Dibbadong--

 
At Friday, May 16, 2008 at 12:55:00 AM PDT, Anonymous Cosmin said...

Hi JD!
First of all, thankyou a lot for this blog. For me at least, it has been a great counterbalance to the things I read on LATOC and other PO sites. It's also a pleasure to read all the debates here, they really taught me a thing or two about using sane arguments in a debate.

Now on topic. I live in Romania and just the other day I was talking to some friends about the railroad system here. Unfortunately, it's CRAP! Almost no improvements have been seen here in this area for a lot of years now; also, there aren't any signs of improvement in the near future. The majority of trains look awful (dirty, smelly, noisy, uncomfortable), the rails are old and there are a lot of speed limits (a train accident just happened here recently because of poor track quality).
Now let's compare a ~400km trip from my town to the country's capital, Bucharest. By train, it takes 6-7 hours (maybe more in summer, when speed limitations are more strict because of the overheated and dilated lines and also during winter, when the rails are covered in snow). By car, this takes 5-6 hours (if I drive relaxed). The price for a first class train ticket (second class is mostly unbearable for me and I'm not a guy who loves luxury) costs about 45 euros, while the gasoline for my car (a VERY comfortable VW Golf 5) costs almost the same, if not less (a little more if I really push the pedal, but the difference is insignificant).
Now, I put the most expensive and good quality gasoline in my car (costs about 1,28 euros/litre), so it's very easy to see that the train is nowhere near an alternative for me and many other people in my country right now.
Furthermore, the comparison above is made for one person travelling, but if we travel 2,3 or 4 persons in the same car, it's easy to see that it is WAY cheaper, even with the increasing price of fuel in my country).
Don't get me wrong, I would love to see the many car trips replaced by train trips in my country, but for that to happen, there are HUGE investments to be made in the railway infrastructure (electrify it all, buy new trains, invest in the rails so all trains could go with more than 100km/h).
Until then, I'll just keep reducing my gasoline consumption for my car (it's now somewhere around an average of 2 liters/day) and read this great BLOG.
Keep up the good work, JD, and again, thankyou!

 
At Friday, May 16, 2008 at 2:31:00 AM PDT, Anonymous Luis Dias said...

cosmin, great comment.

I live in Portugal and gas costs almost 1.5 euros/liter.

In here, a 300 km trip (Lisboa-Guarda) costs me 17 euros. Same trip on car costs me the gas and the highway tarif, going to 45 euros or smth like it.

I find it amazing that in Romania train prices are that high. It's a bad thing. You really need a better company taking care of the railway system.

OTOH, because gas prices are so high in my country and I can't afford not to drive, at least in my current job (near the village of Sintra, but in a region where there is no mass transit at all) I'm considering retrofitting my car to GPL. It costs 67 euro cents per liter, and is 80% as efficient as gas, which means an almost 50% cost saving procedure.

 
At Friday, May 16, 2008 at 2:50:00 AM PDT, Anonymous Cosmin said...

@luis dias:
Our railway company (only for human transportation I think) is not privately held, but owned by the state, which in my case, is the worst manager possible.
Because of poor management, costs are very high and we can't talk about profit in this field. What does the state do? Invest in the railway system to increase efficiency? Privatize the industry? Nope, just increases the ticket price in order to recover the costs (even so, officials say that there are huge losses).
To make the train - car comparison in my post above even more interesting, I'll mention that the 400km trip to the capital is not on the highway (this is science fiction here), but on a normal road, which, although very good quality, passes through tens on villages and towns, where I have to reduce speed. Even so, I get to my destination faster and more comfortable by car.
I mentioned this in order to better understand how railway is NOT an alternative here.
Oh, did I mention that many railway lines are not yet electrified ? The non-electrical locomotives have huge, smoking diesel engines; I'm very curious if there are any coal locomotives still working, although I haven't seen one in years on our railways.

Damn, now I got pissed and want to emigrate again :)

 
At Friday, May 16, 2008 at 2:57:00 AM PDT, Anonymous Luis Dias said...

JD, I don't know if you already posted any of this, its not fresh news, but I find it rather interesting:

"Desert state channels oil wealth into world's first sustainable city

Lord Foster designs car-free, solar-powered project for 50,000 people"

"The site is far from promising. Miles from a polluted sea, a fierce sun raises temperatures to 50C (120F) in the summer, and there is no fresh water, no soil and no animals. But tens of billions of petro-dollars will be poured into these seven square kilometres of desert on the outskirts of Abu Dhabi.

Called Masdar - "the source" in Arabic - the walled city is intended to house 50,000 people and 1,500 businesses. It will have no cars and be self-sufficient in renewable energy, the majority of which will be solar energy."

Source

Isn't it amazing? A truly sustainable city... in the worst kind of environment in Earth. And people still doubt we can manage through?

 
At Friday, May 16, 2008 at 3:00:00 AM PDT, Anonymous cosmin said...

Oops, forgot to mention two things:

1. @luis dias: there is a great controversy in my country these days about gasoline prices. Seems gasoline taxes are very low here (around 46%) compared to other countries and the gasoline price at refineries' "doors" is too high.
The media keep saying that gasoline prices in Romania are bigger (or at least the same) as other european countries, while our average salaries are way lower.
But now I see that gasoline in Portugal is 1,5 euros/liter (is that 95 or better gasoline?), as compared to Romania - 1,28 euros for the best possible gasoline and around 1,09 for the normal 95 gasoline. Is there any web site where I can see a good up to date gasoline prices chart for Europe (better if it's for the rest of the world) ?

2. @JD:
I'd love to see a more in-depth article about the present and future of urban electrical transport. In Romania it's the same problem as with the trains, it's CRAP (although not as smelly).
most cities don't have it (trolleybuses and trams) and those who have it are gradually giving up on it or are not investing in it. Instead, in my town at least, they are buying new buses from Belarus (WTF???), buses which run on diesel.
Seems we have a talent for going against the trend.

my best regards to all of you,
Cosmin

 
At Friday, May 16, 2008 at 4:56:00 AM PDT, Blogger John said...

@cosmin
The Rocky Mountain Institute has some great info on the potential increases in car efficiency. Also, Richard Gilbert has written Transport Revolutions, which details some of the major themes of a post peak transport system. Basically it's high speed rail, trams, on-rail personal transit, some electric cars, medium range flights only. Very interesting. Buy rail shares, short airlines!

 
At Friday, May 16, 2008 at 7:08:00 AM PDT, Anonymous Luis Dias said...

Cosmin,

I imagine such list may be on wikipedia, but perhaps only one page per country.

The gas price here has been on stampede with 14 "ups" since beginning of 2008. It's somewhere in the high 1.45/1.49 euros now. This, in americans dollar/gallon is a whooping

3.78541178*1.47/0.647542576=8.59334277 dollars per gallon.

So, stop whining american fags.

 
At Friday, May 16, 2008 at 8:02:00 AM PDT, Anonymous Cosmin said...

I managed to find some figures in the meantime, it should suffice for now.
In the meantime, I am willing to help any desperate american who fears gasoline prices will ruin his life. FOR FREE!!!
As a prelude, I stand as an example. I earn a salary of 1300 euros/month, which is almost 2000$. Gasoline prices (as well as food, clothes and other stuff) are as high as in USA (sometimes many are even more expensive, as they are imported, including from USA). I think the only thing cheaper here are some services.
So, with gasoline prices here being double those in the USA, I still manage to live a comfortable life (I own a new car, I can afford going out to a restaurant or just having a drink very often, I can have two vacations/year to travel with the car throughout Europe etc etc). I am constantly trying to reduce "waste" in my life, because I know there's a lot of it, so there's much room for improvement.
But what is really incredible is how many people manage to get by quite well (they don't starve, but eat quite well, they can afford a home, maybe one holiday / year) with a 500$/month salary, which is the average here. And all these with gasoline at ~8$/gallon (more than double as USA prices).
So please, peakoilers, especially american ones (it seems most of them are from there), take a moment to read this and try to find an explanation for these "incredible" facts I wrote above.
Oh, and like luis said, stop whining, you will be just fine :-)

Regards,
Cosmin

 
At Friday, May 16, 2008 at 8:26:00 AM PDT, Anonymous Cosmin said...

Oh, JD, your 4-word magical solution for peakoil isn't working in my country. It could work in a highly civilized country, with great infrastructure etc., but not here (read my explanation in the posts above).
What you managed to make me believe so far has more words and it goes like "You Don't Need SO MUCH Oil".
For that, I thank you.
Just hope these bastards who run the country really open their eyes sometime soon.

 
At Friday, May 16, 2008 at 11:33:00 AM PDT, Anonymous USAROCKS said...

With containerization of shipping, railways are naturally more efficient than trucks. If you've ever actually been to a port you would see that one rail-car can hold twice as many containers as a truck and that a train can literally pull thousands of containers.

This makes sense regardless of whether or not oil prices are high.

 
At Friday, May 16, 2008 at 12:52:00 PM PDT, Blogger Sean Daugherty said...

Luis, cosmin, I believe the standard American response to that is "Wah! You just don't understand what it's like to be an American! We need to be able to fuel our 4 MPG SUVs at trivial prices or we'd all die!" ;-)

To be fair, America is traditionally more reliant on automobiles than a lot of Europe. But a much larger part of this is that we really, really like to complain. For a lot of us, it's easier to imagine society collapsing entirely than having to learn to conserve or adapt. JD, of course, has lampooned this attitude at great length. Ultimately, we will adapt, because we'll have to, but you can bet a large number of us will be whining all the while.

 
At Saturday, May 17, 2008 at 2:30:00 AM PDT, Anonymous Cosmin said...

I just saw some interesting news, the EU is planning on restricting advertising on SUVs (I don't think they can ban them, but clearly stating their emissions and mileage during the commercial). This resembles what they did with cigarettes, where they put the contents and all sorts of warnings on the packs. Heh, who would have thought of something like this happening to the auto industry just some years ago ?

And my pessimism about railways in Romania just got a punch in the face, I read that they are planning on buying 50 new trains from a german company. This is good news and hopefully I'll read more on plans of modernizing the infrastructure.
Oh, and they also privatized our locomotive building company, the buyer is a company from the middle east. While some may see some irony here, I hope they'll focus on electric locomotives :)

@sean: I have a friend who lives in Boston (she's american) and we've been talking about the issue of increasing gasoline prices. She seemed to be quite affected by that, even though she drives a VW with pretty decent mileage and mostly commutes by train. It wasn't whining, but obviously she (thinks she) is affected.
After reading what you wrote, I can just imagine what the 4MPG SUV (Christ, are there really such cars???) driving people are thinking, as compared to her reaction. Again, I'm sure they'll all be fine, if not better in long-term.

 
At Saturday, May 17, 2008 at 5:04:00 PM PDT, Anonymous Anonymous said...

Just another American perspective here (instead of the SUV whiners) - my gasoline is the least of my worries. (even in a town with minimal public transportation.) My house - and everyone else's in my town - is heated with heating oil (currently about $4.60/gallon) and our winters go to 40 below (that's the same in F or C!). Adding "another blanket" isn't going to cut it. And yes, I'm looking into wood heat. I have the $ in savings to do that change, but many of my friends don't.

 
At Sunday, May 18, 2008 at 12:21:00 AM PDT, Anonymous Freak Oil said...

That is a point I have worried about as well. what to do when you can't afford to make the switch to something that saves money/energy?
I could cut my energy consumption by 60% but I can't afford to make those expensive initial investments to do so.....where in society does that make sense?

 
At Sunday, May 18, 2008 at 5:24:00 AM PDT, Anonymous Cosmin said...

The first step should be isolating the house better (in Romania they have a government programme to isolate blocks of flats).
If that is not the case (i.e. the house is already well isolated), shouldn't JD's solution of electrical space heaters work ? That should be quite cheap (50$ for a not-so-good-but-not-too-bad one in my country).

 
At Sunday, May 18, 2008 at 11:33:00 AM PDT, Anonymous Anonymous said...

It's me, the -40 heating oil person again. Cosmin, I wish it was so easy. My house is already well, well insulated (R55 ceiling, R29 walls, very very tight vapor barrier, less than 5% windows, etc.) And an electric space heater won't help, as our electricity is produced by burning diesel - we're at 20 cents a kwh and rising. It's more expensive to heat with electric. :(

One bright spot, though, is that we do have a useful and wonderful railroad. I'm hoping we connect it to the rest of North America soon!

 
At Sunday, May 18, 2008 at 1:37:00 PM PDT, Anonymous Freak Oil said...

can you use the cooling system from your diesel generator to heat your house? have you considered trying to locate a source or used vegetable oil to run that on or at least supplement ?

 
At Sunday, May 18, 2008 at 10:30:00 PM PDT, Blogger bob said...

any comments on the current May report from the IEA?

isn't time for another p.o. diaper change?

 
At Thursday, May 22, 2008 at 8:22:00 AM PDT, Blogger David Grenier said...

Most people I know spend most of their money not on clothes and the like - which may be equal to their cost in Romania - but on housing and health care. Also, while it is ridiculous that some folks drive inefficent SUVs (I think they mostly get 12-14mpg), the fact is our infrastructure does not allow most folks to get around without a car, and many folks have ridiculous commutes over which they have little control - they have to buy the house they can afford and take the job that they can get, and if it means driving 60-100 miles a day to and from work, so be it.

So while gas is more expensive in europe, it's also more of a luxury than a necessity as it is here.

At least we can hope that with prices increasing here, we will eventually make it less of a necessity here as well. But to do so is going to require large-scale solutions, and we're a country that likes to focus on trivial individual consumer choices, and that won't do all that much here.

 
At Thursday, May 22, 2008 at 8:22:00 AM PDT, Blogger David Grenier said...

Most people I know spend most of their money not on clothes and the like - which may be equal to their cost in Romania - but on housing and health care. Also, while it is ridiculous that some folks drive inefficent SUVs (I think they mostly get 12-14mpg), the fact is our infrastructure does not allow most folks to get around without a car, and many folks have ridiculous commutes over which they have little control - they have to buy the house they can afford and take the job that they can get, and if it means driving 60-100 miles a day to and from work, so be it.

So while gas is more expensive in europe, it's also more of a luxury than a necessity as it is here.

At least we can hope that with prices increasing here, we will eventually make it less of a necessity here as well. But to do so is going to require large-scale solutions, and we're a country that likes to focus on trivial individual consumer choices, and that won't do all that much here.

 
At Thursday, May 29, 2008 at 5:54:00 AM PDT, Anonymous Anonymous said...

The picture of peak oil is one of creative destruction or metamorphosis -- growth in another direction -- not downward collapse.

This is perhaps the funniest thing you have every written about peak oil but then again, most of your post prove little.. Time will be the deciding factor as to who is correct about peak oil..

Trains are doing well because of the big increase in coal shipments.. Do your research..

 

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