Have you heard of the bill that goes through a divided Congress with bipartisan support to reverse a 40-year bipartisan experiment in railroad deregulation? No, you didn’t because it doesn’t exist.
From the 1920s to the 1970s, the United States pulled one Venezuela back, leading to the near collapse of an industry vital to its economy. An unlikely reform promoted by President Jimmy Carter and his bipartisan allies in Congress put the Interstate Trade Commission on the brink of extinction and saved the country’s freight rail system by primarily deregulating it. Not only Washington, but the world rail community regards the Staggers Rail Act of 1980 as the rarest thing, a palpable success drafted by the US Congress.
He also left behind a residual agency, the little-known Surface Transportation Board, which in Joe Biden’s time was trying to revive executive order regulation. The board of directors has just canceled a merger project between Canadian National and American Kansas City Southern, without even officially considering it (rival Canadian Pacific has since signed an agreement). The board spoke vaguely in favor of “competition” concerns, but many noticed an Amtrak filing complaining that the potential acquirer, Canadian National, had achieved a D + rating (yes, Amtrak issues notes) for its reluctance to let its profitable business freight service be shut down in favor of Amtrak’s unprofitable passenger trains.
Whatever the motive, the council’s action has thrilled white-haired lawyers who have never reconciled with a rail industry free from Washington’s control. Their new hero is Mr. Biden. His July 9 manifesto on “competition” in the White House chose rail for a heavy hand. This may not be strictly related, but the statement also called for more favors for Amtrak, raising Mr. Biden’s brand as “President of Amtrak,” which touches a strange erogenous zone for the Liberals. .
The railroad is a complicated business. A load can travel halfway across the country in a matter of hours, then hang for days or weeks in a transit yard before the next part of its journey. The railways have recently increased their value to shareholders and customers with something called Precision Scheduled Railroading. Operational efficiency and profit margins are on the rise. Fewer workers are needed. Some low-margin customers have also been offloaded, that is, those who can ship efficiently by truck or whose service requires maintenance of infrequently used branch lines.
On the other hand, some shipments that used to be by truck now go by rail because rail matches trucks better in terms of speed and reliability. And so the economy evolves under the cogs of profit motivation.
One thing remains the same: The railways and their biggest customers (such as coal shippers, agricultural processors, and chemical factories) are doomed to live in a strain of anger because neither can exist without the other. Their old struggles were recently echoed at length in the Washington Monthly by think tanker Phillip Longman, who describes today’s freight railways as abusive monopolies. These companies, he says, are operated by modern-day “thief barons” who perversely want to reduce the industry “to the point of non-viability” for “short-term economic gain” (this will be news for one of those baron thieves, Warren Buffett, who rents his Burlington Northern Santa Fe as a source of long-term profit).
When this argument does not get him far, Mr. Longman deploys another argument: climate change. Because railways use less fuel per tonne-mile than trucks, railways should be forced to change their practices and tariffs to subsidize more freight from trucks to rail. The blessed result will be a “colder planet” thanks to “huge reductions in carbon emissions”.
The new head of Mr. Biden’s Surface Transportation Board, Martin Oberman, echoed this argument. In a speech, he claimed that “123 million tonnes of global warming-causing CO2 have been pumped into our atmosphere simply because railways have chosen not to maintain their market share over trucks (emphasis added) .
The wording is slippery. Both railways and their customers choose to maximize their efficiency and profitability. MM. Oberman and Longman also fail to mention that any reduction in emissions would be infinitesimal compared to the atmosphere. It is yet another climate “fix” designed to mislead the media and the public who have no realistic notion of the quantities involved or the implausibility of US actions to influence the weather.
Climate change is indeed an unsolvable puzzle. Many religions produce charlatans who resort to a simpler “give me your money” message. -research can be a legacy of today.
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