Day: February 21, 2012

The market approach to the Union Pacific problem

Union Pacific is the largest railroad in the US, and they are also strongly against passenger rail. Concerning Amtrak, UP has been a pain in the ass when it comes to requests to allow for more service. For example, when Amtrak sought to increase service on the Sunset Limited (New Orleans to LA) from 3 times a week to daily, UP demanded $750 million in ransom money. This ludicrous amount was simply their way of telling Amtrak to bugger off. The reason behind the astronomical amount is less to do with logical business planning and probably more of political/ideological grandstanding.

However, Amtrak’s Sunset Limited is small peanuts compared to California where the state plans to build a high-speed rail line (HSR) that will run next to UP rail lines for the majority of the route. The problem is, because UP is against passenger rail, instead of helping the HSR program by working together to use excess land (land which was originally given to UP by the government), they have taken the opposite approach and banned the HSR authority from using any of their right-of-way (ROW). This has raised the cost of HSR by a huge amount, because instead of using vacant land, the authority will be forced to purchase land that is occupied by businesses and farmers. The land cost isn’t the only added expense. Bridges have been built over the UP rail lines leaving completely clear the entire piece of land they own, even the unused area. Because HSR will have to be built outside of the UP land, every single bridge will have to be rebuilt, or the line will be forced onto very tall viaducts. Neither choice is a good one, and both are remarkably expensive. Click to read more!