Op-Ed: Taxpayers shouldn’t foot the bill for Amtrak Gulf Coast rail service | National
The Surface Transportation Board (STB) is expected to have a decision very soon on whether or not to launch new Amtrak Gulf Coast rail service from New Orleans, Louisiana to Mobile, Alabama. This would mark the first return of Amtrak passenger service to this part of the country since Hurricane Katrina hit the area in 2005. While perhaps symbolically positive, if the STB were to approve this new passenger service, it would be a absolute disaster for rail freight. in the region and would cost taxpayers millions of dollars in unnecessary expenses.
First, neither Amtrak nor anyone else has been able to demonstrate sufficient demand for this line. As it stands, only 11 of Amtrak’s 45 routes are profitable. Routes that demonstrate profitability are primarily located in the densely populated Northeast Corridor, running from Washington, DC to Boston, Massachusetts. The other 34 will be heavily subsidized by US taxpayers. This new route from New Orleans to Mobile will certainly suffer the same fate of being dependent on subsidies.
The way Amtrak is trying to get things done without being upfront about the lack of expected demand is astounding. Amtrak released a study in 2015 as part of its bid to inaugurate new passenger service on the Gulf Coast that demonstrated the lack of demand. The 2015 report showed that ridership had already dropped significantly before Hurricane Katrina. Their 2015 ridership estimates on the new line total 38,400 passengers per year. During the last testimony prior to the STB, Amtrak admitted to having more recent assessments that show the 2015 estimates are too high. During cross-examination, Amtrak executive Jim Blair conceded that a more appropriate estimate, buried in Amtrak’s 2021-2026 five-year plan document, would only be 24,300 runners per year. With these new numbers, assuming that Amtrak went ahead with its plans to operate four trips a day, seven days a week, the new service would accommodate only about 16 passengers per trip on that line, while losing an estimated $336.00 per passenger. It’s sad and embarrassing.
It is also important to take into account the current context. All of these studies and estimates were collected either in the pre-pandemic world or in its first year. According to Department of Transportation data, Amtrak averages only 65-70% of its pre-pandemic ridership. So it makes sense that Amtrak would continue to publicly point to 2015 numbers while timidly knowing that the number is far lower, putting an even greater strain on taxpayers’ money. There simply isn’t widespread demand for such new rail service on the Gulf Coast.
One should ask where this proposal comes from. It appears a concentrated set of special interests in Mississippi are driving the project forward, led by Sen. Roger Wicker, R-Miss. A large majority of those federal dollars would go to the state of Mississippi, giving contracts and other resources to businesses in the state. It’s much more about filling pockets of vested interests than providing meaningful commuter rail service on the Gulf Coast.
It is for this reason that many lawmakers in Alabama and Louisiana – the other two states that are part of this project – oppose it. The entire bipartisan Alabama Congressional delegation sent a letter to the STB opposing the project, stating, “A decision by the Board of Directors to mandate Amtrak service in this case will have significant consequences for the network. national railway and supply chain.” They also cited the potential for this rail service to disrupt needed expansions in the Port of Mobile.
More worrying is the fact that there will be severe disruption for freight rail operators across the region. Amtrak said it would approach “host railroads” to make necessary infrastructure changes and to raise capital for service. Amtrak also refused to commit to using the billions it received in the infrastructure bill to make these changes. The cost will be borne by freight rail operators and the US taxpayer.
This decision by the STB will set precedents that will reverberate in the future. If Amtrak wins in this case, it could intimidate freight rail operators in other parts of the country, disrupting their service. Driving near empty passenger trains on lines that could be used by rail freight is generally a bad idea. It’s especially worse during a supply chain crisis that could very soon be exacerbated by ongoing lockdowns in China. The strength of the national supply chain is essential.
Surprisingly, Amtrak’s 2021-2026 five-year plan shows the new line will generate an $8.2 million loss in its first year – a huge cost to be paid by all taxpayers who subsidize Amtrak. Mobile and New Orleans are not far apart. It’s entirely doable by car, or even limited air service. Amtrak could even charter a 25-person bus for each trip between each city at presumably much lower costs than projected for this new rail project. There is simply no good reason to endorse this project.
David Williams is the President of the Alliance for Taxpayer Protection.