Marc Cuniberti First conceived in 1996 as the California High-Speed Rail Authority under the administration of Governor Pete Wilson, the California high-speed bullet train project has yet to lay a single mile of track.
The original blueprint would take passengers from San Francisco to the Los Angeles area.
With construction progress stalling, Gavin Newsome introduced a scaled-down version 4 years ago. Newsome proposed building a 171-mile starter segment in the Central Valley that would begin operating in 2030 and cost $22.8 billion.
In a recent report from CNBC, estimates for completion now range from $88 billion to $128 billion.
No doubt with inflation raging, and no way of knowing what inflation will be as the years click by, I will stick by my original estimate of half a trillion before all is said and done.
Currently, there are 119 miles of active construction with the following comments posted by the Authority:
- The project has created over 10,000 good-paying labor jobs.
- The project generated $13.7 billion in economic output from July 2006 to June 2021.
- There are currently over 720 small businesses working on the project.
- To date, $4.8 billion of program expenditures have been spent in and benefitted disadvantaged communities.
No doubt there are ardent supporters of the project, but I am not one of them.
Using some common sense here, I have many more questions than answers and I don’t doubt so many others.
Forecasting a trip time from SF to LA of 2 hours and 40 minutes, who would want to take the train when you can fly for under $50 in less than half the time?
Those afraid of flying might consider it, but how many people is that?
The cost of building the thing is already way over budget (no surprise there) and realistically forecasting its total cost over decades is likely impossible.
In the CNBC report, its states executives involved say there isn’t enough money to finish the project which was originally forecasted to be finished in 2020 when Californians approved a $9 billion bond.
The Newsome planned 172-mile segment will only serve a handful of medium-sized cities in the Central Valley.
Now I would ask, how many people need to travel between medium-sized cities in the flat agricultural land of the Central Valley?
I am of the opinion that most of the travel by the folks down there is currently accomplished by pickup trucks.
Other concerns also pop into my brain such as how many gallons of gas, megawatts of electricity, tons of raw materials, and manpower hours will be consumed building the thing.
Yeah, the train is electric, but imagine the greenhouse gases that have already been spewed into the air shuttling workers, making and shipping materials, moving engineering and construction staff, their trailers, trucks, portables, and everything else needed to build such a monstrosity.
Let’s not even talk about the tons of dirt moved, the animal habitats that have been displaced or destroyed, or the farm and rural lands torn up or taken by eminent domain laws. Add to that the maintenance and staffing costs once put in service and the imagination wanders, and not to a good place.
By the time they’re finished, it may take years or even decades to reach a payback from an electric train how many will actually ride? One could argue there may never be a payback.
Logistically, Japan comes to mind when thinking of bullet trains.
But they make sense there because the island nation has millions of inhabitants crammed into the city after city, strewn along long narrow valleys surrounded by mountains with a limited number of airports.
I know, I’ve been there. Bullet trains by the very nature of the geology of Japan make sense.
But building a bullet train along a highway route where you can go straight for miles at 70 mph along Highway 5, or fly into one of dozens of airports on the cheap, who is going actually to buy a ticket and ride the thing?
I doubt a train ticket from SF to LA will beat a $50 airfare.
And if Amtrak is any indication, the tickets will be pricey, the breakdowns will be many, and forget about being on time.
From INSIDER.COM, Amtrak has never made a profit and takes massive subsidies from the government (you) every year.
Packing up my soapbox now, I conclude by forecasting (although I may be dead of old age by the time we know) the bullet train will never be built according to its original design or promise, will burn hundreds of billions in taxpayer dollars that could have been spent elsewhere, and at worst, won’t be built at all.
“Watching the markets so you don’t have to”
(As mentioned please use the below disclaimer exactly) THANKS (Regulations)
This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. His insurance agency is BAP INC. that can be contacted at (530)559-1214. Marc was voted best financial advisor in the county 2021.
