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The Investment Express

The USofA has a number of problems right now, but if you pair up a few of them they start to look remarkably complimentary. My picks? Put together the need for an economic stimulus that reaches further than the $600 checks written so far and the need to do something about our excessive dependence on oil.

Our oil consumption is a big problem. On average, people in the USofA consume twice as much energy as Europeans, meaning our energy overhead is double theirs. There are many reasons why this is the case, but one of them is our dependence on trucks to move stuff around a big nation. About 13% of our gasoline and diesel goes into trucking, which is 22 billion gallons per year; this is about $77 billion in annual expense just to move things around. We do get a lot of stuff shipped all over for this cost, since the trucking industry ships nearly $9 Trillion worth of stuff every year.

Is there a better way to do it? Of course there is. Imagine for a moment a high-speed rail system linking the nation at upwards of 200 MPH, the speed of a standard TGV train in France. This isn’t the newest mag-lev technology, but is the kind of system perfected decades ago and sporting a good track record of safety and reliability. With that kind of speed and bar-coded containerized cargo, it would be possible to ship nearly anything to anywhere in the nation overnight.

This is important because the average interstate truck spends 2.5 days on the road, which is to say there is $60 billion in inventory stuck out on the 47k miles of interstate right now. If we shipped everything overnight, there is at least $60B in capital freed up throughout the system.

A system that can do this would certainly cost us a lot. At an estimate $10 million per mile, it’s not cheap – but it’s a quarter of the estimated $40 million per lane mile to build interstate highways. To duplicate the interstate system would cost $470 billion at that rate, which is a bit less than the total cost of the Iraq War. But we could certainly make a big start for $60 billion, and start making a lot of progress towards saving a lot of the $77 billion a year we spend on fuel for trucks.

This may sound like a good idea by itself, and I certainly think it is. But when you realize that the construction industry is taking the biggest beating in this downturn, thanks to the collapse of the real estate bubble, the project takes on a new urgency. This is the time to start construction not only for the long term benefits, but also because the short-term stimulus may be just what the economy needs. Think of it as a kind of WPA project, building tomorrow while keeping families fed today.

This may seem like a lot to ask when we are already nearly broke. But this is an investment in a more efficient nation that will pay dividends for centuries. I didn’t even mention passenger service, which naturally would go along with the freight delivery; the potential savings there is also enormous.

High-speed rail linking the nation in one system is what our competition has already and it’s a big part of what makes them more efficient. Building this system would help get us through a major downturn and come through the other side stronger. It’s the best way to match up two of our problems so that we can solve both.

9 thoughts on “The Investment Express

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