I just read this story on MSNBC about the new climate change/energy bill that just passed the House. From the looks of it, the impact on the railroads coud be profound. Here’s what I think could potentialy happen if this passes the Senate:
Lower demand for coal will mean railroads could loose one of their biggest revenue sources
Increased use of biofuels could mean more ethanol and grain revenue.
Stricter emission regulation for locomotives and possibly tax incentives to retire older locomotives and replace them with cleaner power.
Move towards electrification, CNG or biofuels for motive power.
Increased funder for rapid transit could lead to the construction of new systems and expansion of existing ones.
Possible loss of revennue from industries moving to less restrictive countries.
Possible increase in intermodal traffic from increased imports as a result of number 6.
Grants for capacity expansion.
It seems to me this bill could do both a lot of good and a lot of bad for the rail industry. What do you guys think?
This bill will kill the economy and put us back to the late 19th century and the railroads will suffer the most . Not just coal and oil , but plastics , the steel industry , the auto industry , will all disapear or be so reduced there will be no need for railroads , because the there will be no jobs and no money to buy anything . The jobs that will make a comeback is the buggy whip makers .and cande stick makers .
The bill has not yet passed and as the economy continues to sink into the mud, it will be hard for the Senate to pass the bill in the Fall. Stay tuned – oh, I forgot you can’t use your TV’s any more!
…This bill seems destined to be rejected by the Senate in current form.
Will need much modification to move any farther. Surely compromise will have to take place to allow us to use all kind of energy. Much to be sorted out on this one…
I cannot see how it can do any good for the rail industry.
The bill will impose carbon caps on the railroads and they will have to either reduce their CO2 output to a level beneath the caps, or purchase carbon credits to raise their caps. It will undoubtedly be the latter because the amount of CO2 they produce will exceed the caps, and it will cost more to reduce the CO2 than to buy the credits. They will pass the cost of the credits to their customers because this burden will fall on all railroads equally, and there will be no competitor that the customers can turn to in order to avoid the pass-on. The burden will also fall on trucking, and they will be able to pass it on to the customers likewise because there will be no competitor that customers can turn to in order to avoid the burden.
However, there may indeed be a disparity between the affect of the burden as passed through railroads compared to it as passed through trucking. The green thinking is that railroads are more fuel efficient than trucking, and the whole point of cap and trade is to financially punish consumers into becoming more efficient and reducing their consumption of everything.
For the sake of discussion, let’s assume the bill passes as-is. And while I am a bit tempted to offer opinion, instead I’ll offer some information that might either pour cold water on the flames, or fan them, depending upon what opinions others might have.
I am not particularly concerned that we’ll be walking away from a vast resource of coal that we could have mined. In reality most of the cheaply won coal under shallow cover and near to markets has already been mined. Much of what remains in the ground is afflicted by discouraging geology, discouraging location, or both, and the price to mine the coal and transport it to market from many once reknowned coal fields is
It was said of the broadcasting industry that the eliminaiton of ciggarette and other tobacco advertising would seal its doom. That was back in the 60s. How many more radio and TV stations are there today? So what if certain commodities are lost by the rail industry, there are still a lot of commodities, including people, that need and will need to be transported. This energy bill is good for everyone in the long run, so don’t sweat the small stuff and don’t be pushed around by ignorant, self serving, politics.
Well it is not law yet, and it may never become law if the population learns what it would mean if it does become law. But despite the fact that the bill is not yet law, the bill clearly states its objectives in the reduction of CO2 within a timeframe, and this can be translated into the cost to the consumer for significantly higher charges for heating, cooling, lighting, transportation, food, and all consumer goods. I would not call it “small stuff” as you say.
The basic objective is to crush out the fossil fuel economy by punishing taxes, and use the money to create a brand new renewable fuel economy and its market out of whole cloth.
There is a January 8, 2008 tape of then Presidential candidate Barack Obama which would be worth listening to. I have heard it several times and he basically says that under his plan electricity costs would “skyrocket” to cover cap and trade provisions.
Read into his statement what you want and form your own conclusions. Hopefully someone will find the tape and link it.
One can easily find the tape of the interview with a San Francisco news paper. There is an extended portion of the interview, not just the line about “electricity rates would necessarily skyrocket”.
I would provide a link, but as we all know…that is beyond my ability at this time.
Type in January 8, 2008 Obama speech cap and trade.
How can you say that this will benefit everyone in the long run? Increased costs for anything transported via truck and rail will benefit whom, excactly?
Answer is in the old line the 100 year old man said that if he knew he was going to live that long he would have taken care of his health better. Would you rather drive 80 mph with cheap gas now and have either no energy sources or an air quality that prevents one from going outdoors 50 years from now? Or clean up now, pay a little more, but also be able to do more, enjoy life so to speak, 50 years from now. We do too much living for the moment without regard for the total future.
I certainly am on the side of most folks saying: Certainly we’re not in favor of escalating electric rates…{One reason, we have a totally electric home}, but part of that conversation also states of rebates or adjustments to counter increases would have to be worked out.
Certainly, the legistration can not pass in the form that I’ve read about…More compromising and rethinking surely will have to be done.
I’d like to see leverage {of some kind, we must have}, work on OPEC nations putting the squeeze on oil prices when demand is low now and storage tanks are overrunning…
Where do you think the money for the “rebates” will come from? Does that just get created from thin air, or is it taken from one party to be given to a different party?
Remember, electric rates affect the price of everything, from food and clothing to cars to internet access. Will every tenant, homeowner, manufacturer, and service provider be entitled to “rebates or adjustments”? If so who pays for them?
I agree with all your points except the one above about the intent being to create a renewable energy source.
“I’m from the government and am here to help…” is a comedic statement until one adds the 4 words which make it painfully true–“…myself to your money.”
If the past is any indication, i.e. Social Security Trust Fund, Cap and Trade is going to be a new source of income for the general fund of the US Treasury. As a deep well of new taxes must be found to fund trillions of dollars of new expenditures by our powers to be. If 1% of the Cap and Trade money ever goes toward funding renewable energy I would be amazed.
Even if the taxes generated by Cap and Trade were used for Renewable Energy, it is still unfathomable that the US government would even consider such a huge tax increase in the middle of the current economic situation.
It will only prolong the depths of the current economic crisis.
You don’t need real numbers to know things have changed. As recent as mid-'08 along CSX between Atlanta and Catersville trains were a constant parade, almost like shooting fish in a barrel–one by every 20-30 minutes. Today hours go by with nothing in site.
Call me a pessimist, but I only see an increase in intermodal as the only benefit for railroads coming from the Cap and Trade legislation. I don’t believe this increase will out weigh the losses that railroads will see from decreased coal traffic and other business lost to more off-shore product
I agree with all your points except the one above about the intent being to create a renewable energy source.
“I’m from the government and am here to help…” is a comedic statement until one adds the 4 words which make it painfully true–“…myself to your money.”
If the past is any indication, i.e. Social Security Trust Fund, Cap and Trade is going to be a new source of income for the general fund of the US Treasury. As a deep well of new taxes must be found to fund trillions of dollars of new expenditures by our powers to be. If 1% of the Cap and Trade money ever goes toward funding renewable energy I would be amazed.
Even if the taxes generated by Cap and Trade were used for Renewable Energy, it is still unfathomable that the US government would even consider such a huge tax increase in the middle of the current economic situation.
It will only prolong the depths of the current economic crisis.
You don’t need real numbers to know things have changed. As recent as mid-'08 along CSX between Atlanta and Catersville trains were a constant parade, almost like shooting fish in a barrel–one by every 20-30 minutes. Today hours go by with nothing in site.
Call me a pessimist, but I only see an increase in intermodal as the only benefit for railroads coming from the Cap and Trade legislation. I don’t believe this increase will out weigh the losses that railroads will see from decreased coal traffic and other business
Ask that 100 year old man if he thinks the environment was better when he was a youth. Horse poop and urine in the streets, outdoor plumbing, coal fireplaces heating homes, oil lamps, steam locomotives, etc.
50 years from now, there will be alternative energy sources. However, if the past is any indication, it will be the private industry, free enterprise system finding the solution. The only reason it would have taken 50 years is because government delayed the process by 25 years.
Remember, in the free enterprise system, profits are the catalyst while in government we get taxes and regulations which are the inhibitor or blocker.
Cap and Trade is based on CO2 which is not a pollutant. Without CO2 we have no plant life thus no oxygen. All the environmental data that is being broadcast as the truth is based on computer models. The data going into these models is subject to the bias of the person putting the data in or the one funding the “study”.
I think #1 is going to take a long while to occur. It’s not hard to manage a steadily declining market and make money. You get to suck the life out of the assets without having to worry about replacement costs, so the cash can be invested in the company elsewhere.
2 & 3 are chump change.
Electification is interesting, but I think nothing will get rolling on this soon.
is a non issue to frt RRs
This is a wild card. I think RWM has it right, the labor costs will trump CO2 tax avoidance, but cheap labor has been chased around the globe and there is only one place left to go
Being overlooked is that there is an overabundance of CO2 with less green stuff to absorb it.
Also the government has been a catylist in getting private enterprise to act and not just a tax and spend group. Much in this country would not be if the government hadn’t acted first or otherwise bonded, chartered, enacted, or outright built something. Just because investors cannot make thier 100% return within 12 months and constant dividens of 30% after that, does not mean it shouldn’t be done.