HSR Trainset Bids Could Create New Domestic Industry

Feb 23rd, 2015 | Posted by

Late last week Bloomberg News examined the “Race to Build California Bullet Train” – and how it could spur the development of a new domestic manufacturing industry:

California has set off a global race to supply train cars for the state’s nascent high-speed rail line, a $1 billion contract proponents say could fuel a U.S. manufacturing boom worth far more than that….

Overseas companies have long eyed the U.S. as an undeveloped market for high-speed rail. Still, opposition to public financing of such lines among Republicans and others has left California the only state pursuing a bullet-train system. The state’s rail authority expects to order as many as 95 trains over the next 14 years, making the purchase worth more than $3 billion.

Of course, more work will be needed to sustain this nascent industry:

“We don’t have a high-speed rail industry in the United States,” said Daniel Krause, the director of policy and operations at the U.S. High Speed Rail Association, an advocacy group in Washington. “We hope to have enough projects in the future that we can have multiple companies ongoing building cars for a large market.’

Fully agree. Someday Congress will see the light, though probably not until Republicans are no longer in charge. Still, it’s good that another prediction of longtime HSR supporters is going to come to pass: California’s HSR project will indeed create the foundation of a new industry.

The Era of Cheap Gas is Over

Feb 17th, 2015 | Posted by

This blog has the sad duty to report that the era of cheap gas is over – by which I mean the “era” that lasted from the fall of 2014 to the end of January 2015.

The global collapse in oil prices was not going to last, no matter how much people wished and hoped it would be some kind of return to an assumed normalcy of low prices. The decline was driven by the Saudis’ desire to break some of their rivals, especially Russia but also North American shale producers, by crashing the price of oil. That has been accomplished, and so it’s now time to let the price start rising again.

California drivers have already begun to see the effects:

The state’s average cost for a gallon of regular gasoline has jumped 36 cents since the end of January, reaching $2.79 on Monday, according to GasBuddy.com. Prices are rising throughout the country, but not as quickly, with the national average climbing 20 cents this month to hit $2.25.

Some observers want to believe that the price will remain low for some time:

“Those prices that we got used to in 2011, 2012, 2013 — I don’t see those coming back anytime soon,” Cinquegrana said.

I don’t agree with him – California’s average price will soon be above $3, which is has been the norm ever since 2006. There have been occasional crashes in the price since 2006, notably in 2009 and again at the end of 2014, but $3 and above is the new norm. Peak oil is still real, and the only way to have cheap transportation costs is to move beyond oil. There’s no getting around that basic fact, and that’s one reason why high speed rail remains so important to California’s future.

Report Shows HSR Will Be Economic Boost to Central Valley

Feb 16th, 2015 | Posted by

Last week the California High Speed Rail Authority received an in-depth, 176-page report examining California High-Speed Rail and the Central Valley Economy. Assembled by Tony Oliveira and Parsons Brinckerhoff, the study shows that high speed rail will provide a major economic boost to the Central Valley – especially if it is built without delay.

The Fresno Bee’s Tim Sheehan provided a good summary of the study:

“Some stakeholders described the Central Valley as an ‘island’ that is isolated from the rest of California by geographic and economic barriers, and saw high-speed rail as a means to help break down those barriers,” Oliveira said.

Specifically, agriculture plays a disproportionate role in the Central Valley economy, which produces greater poverty and higher unemployment than in the rest of the state. The solution isn’t to destroy the agriculture industry, but to diversify the Valley’s economic base so that the entire region is not dependent on an industry that does not provide a good path to prosperity for its workers.

Agriculture represented about 15% of the Valley’s employment, and 10% of the region’s gross domestic product — far higher than the statewide proportions of 2.5% of jobs and 2% of GDP. In his report, Oliveira described the region’s lower income and lower educational attainment as a “chicken-and-egg scenario — an industry base that is focused primarily on farming and the public sector requires relatively lower levels of education.”

“This is one factor that discourages residents from pursuing higher levels of education and, subsequently, deters key knowledge industry employers from locating in the region due to a lack of qualified workers,” he added.

The study suggests that while agriculture is and will remain the backbone of the Valley economy, some community and economic leaders in the region believe high-speed rail could be a catalyst for improving the situation. “There is interest in seeing the rail authority collaborate with the region’s higher education institutions on a range of initiatives — job training, research, advancing applied sciences — which are the foundation for growing new business and employment opportunities.”

High speed rail would indeed help solve this crisis. It would open up the Valley’s more affordable homes to coastal workers – without necessarily fueling sprawl that would threaten farmland. It would make it easier for coastal businesses to relocate to the Central Valley, where land use costs are lower, without alienating themselves from their pool of employees. That all in turn generates some of the growth and incomes needed to support a knowledge economy in cities like Fresno and Bakersfield – on top of, rather than in place of, agriculture.

The whole report is worth reading closely – in part because it shows why the Central Valley is the right place to start this project, and why the Highway 99 corridor cities are right to be given stations on the route.

Gavin Newsom Flip Flops on HSR But Still Wants to be Governor in 2018

Feb 11th, 2015 | Posted by

Today Gavin Newsom announced his intention to run for governor in 2018. He cast himself as someone who would carry on Jerry Brown’s legacy:

Today, Californians are blessed with the remarkable leadership of Governor Jerry Brown, who in the face of long odds has led our state to firm fiscal footing and brought us to the enviable position of dreaming – and achieving – big dreams again.

Even so, long-term challenges remain daunting – we must continue to grow our economy and create private-sector jobs, we must invest in public education and keep college affordable, we must address the widening inequalities that separate our communities and we must maintain California’s historic leadership in meeting the climate challenge.

Those are nice words. But Newsom has consistently failed to demonstrate in practice that he actually believes this. His flip-flop on high speed rail is perhaps the best example of his unreliability on job creation, meeting the climate challenge, and his opposition to Governor Brown’s remarkable leadership in dreaming big again.

In 2009, during his first, abortive campaign for governor, Newsom embraced high speed rail. He toured France’s TGV and spoke enthusiastically about how HSR would help San Francisco. He brought up HSR, unprompted, in a town hall meeting in Alameda County. At the California Democratic Party convention that year, he told me that he was strongly supportive of HSR – even looking forward to presiding over the opening of the route:

Newsom specifically mentioned high speed rail in his answer – that when he was younger he took a trip to Europe and rode their high speed trains, but when he came back “all we had was Caltrain.” Newsom was a strong supporter of last fall’s Proposition 1A, and has been one of the leading forces behind getting the Transbay Terminal done. Newsom wants to build HSR as governor of California – if he won two terms he might be able to preside over the opening of the LA-SF route in 2018.

In 2014, however, panicking at reports that the project was in trouble, Newsom went on a right-wing talk radio show and flip-flopped:

“I would take the dollars and redirect it to other, more pressing infrastructure needs,” Newsom said during an appearance on the Seattle-based Ben Shapiro Show on AM 770 KTTH…

“I am not the only Democrat that feels this way,” Newsom said during his radio appearance. “I gotta tell you, I am one of the few that just said it publicly. Most are now saying it privately.”

But that wasn’t true. Sacramento Democrats voted just a few months later to give 25% of the cap-and-trade revenue to the high speed rail project, a crucial vote of confidence in HSR. Polls showed a majority of voters support HSR. Neel Kashkari thought he could use the “crazy train” as a way to defeat Jerry Brown. Instead, Brown won by 20 points. Controller Betty Yee switched her position and came out in favor of HSR on the campaign trail last fall, a sign that being pro-HSR is actually a winning political position in California.

Newsom’s flip flop on HSR wasn’t just bad policy, it was terrible politics. It showed that he is a craven politician whose word cannot be trusted, someone who will abandon important efforts to reduce CO2 emissions at the first sign of trouble. It also shows he is not actually in touch with the thinking of California Democrats.

Newsom’s new opposition to HSR didn’t undermine the project. But it did undermine his standing among California progressives and transit advocates, many of whom have reacted coolly or with outright hostility to today’s announcement. Newsom’s HSR flip flop is going to make it much harder for him to convince California Democrats to support him in his bid to succeed Jerry Brown. If Californians want someone focused on jobs, on fighting climate change, and on dreaming big again, they’re going to have to look elsewhere. Gavin Newsom isn’t that person.