3 Things: Strong Dollar, Oil, Missed Employment Submitted by Tyler Durden on 03/12/2015 15:16 -0400 BLS Bureau of Labor Statistics ETC Federal Reserve Fisher Gallup headlines Payroll Data Personal Consumption Recession Richard Fisher Tyler Durden Unemployment Unemployment Claims Unemployment Insurance in Share 1 Submitted by Lance Roberts of STA Wealth Management , In a recent Reuter's article , Dr. Richard Fisher of the Dallas Federal Reserve stated: " Sharp gains in the U.S. dollar are good for the U.S. labor market." This is not actually the case as I will discuss in all three parts of today's "3 Things." A Strong Dollar Is Not Good For Exports In today's globally interconnected world exports have become a critical component of both corporate profitability and economic growth. Increases in the labor market are a by-product of stronger economic growth and corporate profitability. The chart below shows the US Dollar as compared to the annual percentage change in exports on a quarterly basis. I have inverted the scale of exports to more clearly show the correlation between a rising dollar and weaker exports. Importantly, a strongly rising dollar has also been witnessed just prior to the onset of an economic recession. Companies tend NOT to aggressively hire employees when profitability is coming under pressure from weaker exports. Falling Oil Prices Are Not An Economic Boon What is interesting about Dr. Fisher's statement is that he recently stated the collapsing oil prices are not good for the economy or the labor market. This is something I addressed recently in "Oil Prices, Rig Counts And The Economic Impact:" "Oil and gas production make up a hefty chunk of the "mining and manufacturing" component of the employment rolls. Since 2000, when the oil price boom gained traction, Texas has comprised more than 40% of all jobs in the country according to first quarter data from the Dallas Federal Reserve." (Read more here) It is difficult to suggest that a surging dollar is good for the labor market when it is exactly the surging dollar that exacerbated the collapse in oil prices. Furthermore, despite the fact that nearly 100% of all economists expected that falling oil and gasoline prices would be reflected in a boost of consumer spending, this has yet to be the case. I explained the fallacy of this premise previously : "Graphically, we can show this by analyzing real (inflation adjusted) gasoline prices compared to total Personal Consumption Expenditures (PCE) .I am using "PCE" as it is the broadest measure of consumer spending and comprises almost 70% of the entire GDP calculation." "The vertical orange line shows peaks in gasoline prices that should correspond (according to mainstream consensus) to a subsequent increase in retail sales. The majority of the jobs 'created' since the financial crisis have been lower wage paying jobs in retail, healthcare and other service sectors of the economy. Conversely, the jobs created within the energy space are some of the highest wage paying opportunities available in engineering, technology, accounting, legal, etc. In fact, each job created in energy related areas has had a 'ripple effect' of creating 2.8 jobs elsewhere in the economy from piping to coatings, trucking and transportation, restaurants and retail. Simply put, lower oil and gasoline prices may have a bigger detraction on the economy that the 'savings' provided to consumers. Newton's third law of motion states: "For every action there is an equal and opposite reaction." The Case Of Missing "Oil Gas" Jobs I discussed previously that the Bureau Of Labor Statistics was overstating employment since the end of the financial crisis by more than 3 million jobs. To wit: "However, that does not completely resolve the issue of the disparity between reported employment and the large number of individuals sitting outside the labor force. The answer likely resides in the BLS's employment calculation process and the subsequent adjustments that may potentially be overstating employment gains. The most questionable of those adjustments is the birth/death model which is a monthly guess at the addition and subtraction of businesses to the economy. This is an extremely important point as it suggests that employment, as presented by the BLS, has been significantly overstated over the past six years. If we take the differential as stated by Gallup and compare that to the annual birth/death adjustment used by the BLS, we find that jobs have been overstated by 3,678,000 or more than 613,000 annually." "...this goes a long way in explaining the existing slack in the labor force and lack of wage growth." Political Calculations has recently added to this analysis by supplying an answer to the missing "job losses" that have yet to be reflected in the monthly employment report. "Casey Mulligan has worked up the numbers and wonders if the U.S. job market for adults has really been shrinking recently:" The headline payroll employment was (seasonally adjusted) higher in February than in January. However, the headline does not include the self employed or agricultural workers. If we add those in (from the household survey), the number of jobs fell from Jan to Feb. If we also look at it per capita terms, jobs per capita fell two months in a row after being essentially constant Nov-Dec. Jobs in Thousands through Feb 2015 Jobs per Adult through Feb 2015 To be clear, I am measuring the vast majority of jobs from the same establishment survey that makes headlines. All I'm doing is adding an estimate for the narrow category of workers known to be excluded (in terms of FRED series , my formula is PAYEMS + LNS12027714 + LNS12032184). Interestingly, self employment fell 340,000 in the past month and 238,000 over the past year. "We think we can explain part of what Professor Mulligan is seeing in the data, and also solve the mystery that is perplexing ZeroHedge's Tyler Durden. The key to resolving Tyler Durden's mystery and Casey Mulligan's jobs data is to recognize that 84% of workers in the U.S.' oil, gas and mining industries are employed as independent contractors, who are not counted as being actual employees of the firms that have announced they are laying off workers. Instead, as workers who get 1099 forms as contractors instead of W-2 forms as employees from the firms that employ them for filing their federal income tax returns, they are considered to be self-employed. As such, many job losses that might be resulting from the ongoing simultaneous declines of global oil prices and extraction-industry-related business revenues would not necessarily be captured in the nonfarm payroll data, because they're really being counted as self-employed, who aren't counted as part of the nonfarm payroll. Unless one does exactly what Casey Mulligan has done - add the number of farm workers and self-employed individuals to the non-farm payroll numbers to get the bigger picture. But that's not because the BLS isn't counting them - it's because their definition of the nonfarm payroll isn't sufficient to capture the particular dynamic playing out in the nation's oil, gas and mining industries. Or for that matter, any other industries with high percentages of self-employed independent contractors . And that situation isn't just limited to the nonfarm payroll data. Many of these independent contractors being laid off from their jobs would not be eligible for unemployment insurance benefits either, so the data for first-time unemployment claims is also unlikely to register their displacement from the U.S. labor force until the numbers reach deep into the actual payrolls of these firms." With all deference to Dr. Richard Fisher, the surging dollar is not good for either the economy or ultimately a stronger labor market. This is particularly the case when the dollar is only stronger because the rest of the world is on the brink of recession and or deflation. The negative impact of a surging dollar in a weak economic environment will more than likely outweigh any positive inputs for the U.S. consumer. Time will tell, but the evidence is mounting that the we are likely closer to the end of the current economic cycle than the beginning. Average: 4.75 Your rating: None Average: 4.8 ( 8 votes)
Q3 2013 Earnings\Financials: The Party is Over Submitted by rcwhalen on 09/26/2013 07:01 -0400 Bank of America Bank of America Ben Bernanke Case-Shiller ETC Fannie Mae Federal Deposit Insurance Corporation Financial Accounting Standards Board Freddie Mac headlines Housing Market Mortgage Bankers Association Mortgage Loans non-performing loans Real estate recovery in Share 1 "The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis." Benjamin Bernanke It’s once again earnings season and a great deal of attention will be focused on financials. Over the past three months, the equity market values of most of the largest universal banks have traded off as investors have started to appreciate that the party is ending in terms of new mortgage originations driven by refinance transactions. As I noted in the last post, the guidance from all of the big banks is decidedly negative for Q3 because of the prospective decline in revenue and transaction volumes in mortgages. While refinance transactions are falling rapidly, mortgage loan purchases volumes are not growing nearly enough to make up for the drop in overall volumes. The chart below shows the total loan originations, refinance and purchase volumes for all lenders from the Mortgage Bankers Association through Q1 2013: Close your eyes and imagine what this chart will look like next year. Looking at the banking industry as a whole, the mortgage story is likely to dominate the headlines next month during earnings season -- even if the financial media wants to ignore the implication for the “housing recovery.” A lot of analysts want to believe that the relatively modest rise in interest rates since the bottom last summer is the culprit in terms of falling mortgage loan volumes, but my view is that three factors – declining affordability, a stagnant job market and flat to down consumer income – are the structural factors behind the anemic demand for mortgage loans, particularly mortgages for home purchases. While banks are happy to make loans, especially jumbos, to existing customers for refinance transactions, the new Basel III rules and GSE lending standards make it problematic for banks to move down the risk curve, especially if doing so takes us outside the agency bucket patrolled by the New Calvinists at the Consumer Finance Protection Bureau. Loans that are not “qualified mortgages” that can qualify for a federal guarantee are very costly for banks, both in terms of capital costs and charges for liquidity, MSRs, etc. The chart below shows bank mortgage portfolios for first and second liens, and sales and securitization volume, for all FDIC insured banks. As you can see from the chart, the total retained portfolio of real estate loans held by US banks has dropped about 20% since 2007, from ~ $5 trillion to $4 trillion today. The major area of shrinkage has been in 1-4 family loans, while second liens have also been shrinking slowly. Sales and securitization of second liens is very small and was not included in the chart. The series for 1-4 family loan sales and securitizations is also falling, again owing to the secular decline in agency volumes and other factors. As the watering hole shrinks, the GSEs and TBTF banks will consume one another in vicious competition. By the way, has anybody noticed that Freddie Mac is discounting its loan guarantee fees in competition with Fannie Mae? We’ll come back to that soon… Jumbo loans were the only part of the mortgage complex to show growth in 1H 2013, up 17% YOY according to Inside Mortgage Finance. Jumbo originations were about $115 billion in 1H 2013. The sharp inflection point in 2009, of note, is attributable to the new FASB rules regarding off-balance sheet accounting for special purposes entities. While banks still sell most of their origination volumes into the agency market, the portion being retained on balance sheet is slowly shrinking. So given that the Case-Shiller national survey of home prices is up 12% YOY, how does one interpret the decline in bank financing for home purchases over the same period? The easy answer is that about half of the gains reflected in Case-Shiller over the past couple years are attributable to the gradual resolution of bank REO and the disappearance of the spread between distressed home sales and voluntary home sales. About half of all home purchases were cash during 2012. But when you consider that the ex-REO gain in Case-Shiller is about half of that 12% figure YOY and that bank credit underlying the housing market has been shrinking all the while, how does that make you feel about the future prospects for home price appreciation (HPA)? Hold that thought. In terms of industry revenue and earnings, the general is more important than the particular. For example, the increase in Q2 2013 earnings was largely driven by increases in non-interest income and reserve releases. Trading income also spiked. There is not a lot of organic revenue growth in the US banking industry today. Thus as some of the larger players have been guiding down on mortgage lending volumes, they have also warned of potential losses on the mortgage line because there is nothing available to take up the slack. The FDIC’s excellent Quarterly Banking Profile summarizes the situation: “Noninterest income was $6.7 billion (11.1 percent) higher than in second quarter 2012. Income from trading rose by $5.1 billion (238.3 percent) compared with a year ago, when the industry reported a net loss on credit derivatives. Net gains on sales of loans and other assets were $1.9 billion (63.7 percent) above the level of a year earlier. For the third quarter in a row and fourth time in the last five quarters, net interest income posted a year-over-year decline, falling by $1.8 billion (1.7 percent) as interest income from loans and other investments declined faster than interest expense on deposits and other liabilities. Banks set aside $8.6 billion in provisions for loan losses during the quarter, a $5.6 billion (39.6 percent) reduction from a year earlier. This is the lowest quarterly loss provision for the industry since third quarter 2006, when quarterly provisions totaled $7.6 billion. Total noninterest expense was $1.4 billion (1.4 percent) lower than in second quarter 2012, when industry expenses were elevated by restructuring charges.” So the clear message to take away from the Q2 2013 data on the US banking industry is 1) cost cutting in terms of operations, 2) lower loan loss provisions and 3) increased non-interest fees are the key factors in terms of revenue drivers. There is no real visibility in terms of revenue growth. In Q3, however, the sharp drop in mortgage volumes is going to upset the carefully scripted ballet that has kept large bank earnings within an acceptable range for the Sell Side analyst and media communities. Given that mortgage origination and sale has been the dominant revenue line item for many of the largest banks over the past ten years, you would think that the financial media would be all over this story. After all, JPM has actually guided to an operating loss in mortgage in Q3-Q4. But no, instead we talk about pointless government litigation against bank shareholders and the London Whale. Go figure. Keep in mind that Q2 earnings were also helped by a 10% increase in the “fair value” of mortgage servicing right or MSRs, a non-cash adjustment that goes right to income thanks to the idiocy of fair value accounting. Just as the market for non-performing loans was a little fluffy in Q1 of this year, the market for MSRs is also showing a bit of foam right now. The real question is whether these markups will need to be adjusted, again, as and when the excitement subsides. Normally public companies don’t toy with the valuation of intangibles except at year-end. So when we actually start the Q3 earnings cycle for financials, watch for the word “surprise” in a lot of news reports and analyst opinions. Nobody seems to want to take notice of the very public guidance coming from some of the largest names in the banking complex because of what it implies for housing. But just to show you that God has a sense of humor; Bank of America and Citi have actually outperformed their asset peers in the TBTFgroup over the last three months. Hey, that’s what we need, an index comprised of TBTF banks. Be a useful surrogate for the credit quality of the United States. See you at Americatyst 2013 in Austin TX next week. Average: 5
Guest Post: Bakken - Hype Versus Reality Submitted by Tyler Durden on 09/23/2013 19:03 -0400 Bank of England BOE Ford Guest Post headlines Reality lang: en_U in Share 0 Submitted by Jim Quinn of The Burning Platform blog , As Wall Street, CNBC, and feckless politicians tout American energy independence from the miracle of shale oil, reality is already rearing its ugly head. Production grew by 24% over the first six months of 2012. Production has grown by only 7% over the first six months of 2013. That is a dramatic slowdown. The fact is that these wells deplete at an extremely rapid rate. Oil companies will always seek out the easiest to access oil first. They have already accessed the easy stuff. This explains thedramatic slowdown. Peak Bakken oil production will be below 1 million barrels per day. The last time I checked, we consumed 18 million barrels per day. I wonder when that energy independence will be achieved? Reality is a ****. Bakken Oil Production Growth Has Slowed Significantly In 2013 By: Devon Shire http://seekingalpha.com/author/devon-shire The headlines ring of “booming” American oil production and “gluts” of oil ( USO ). I’m here to tell you that while the boom is real, there is no glut of oil and we need to be aware that the huge production growth of the past eighteen months is going to slow. It already is slowing. I’ve been watching what is going on in the Bakken pretty closely because I think it is going to be an excellent proxy for what will happen across the country. Let’s take a look at what happened to production in North Dakota during the first six months of last year (2012). Here is the raw data detailing barrels of oil production per day: December 2011 – 535,000 boe/day January 2012 – 547,000 boe/day February 2012 – 559,000 boe/day March 2012 – 580,000 boe/day April 2012 – 611,000 boe/day May 2012 – 644,000 boe/day June 2012 – 664,000 boe/day Daily production in North Dakota increased by 129,000 barrels per day from December 2011 to June 2012. Now let’s look at the same period for this year (2013): December 2012 – 768,000 boe/day January 2013 – 739,000 boe/day February 2013 – 780,000 boe/day March 2013 – 785,000 boe/day April 2013 – 793,000 boe/day May 2013 – 811,000 boe/day June 2013 – 821,000 boe/day Where last year production increased by 129,000 barrels per day in the first six months of the year, this year production is up by only 53,000 barrels per day. Yes, the rate of growth in the Bakken has slowed considerably in 2013. To understand why, a person needs to look at the production profile for these horizontal oil wells. By the end of the first year of production, a new well is producing at a rate that is 30% of where it was the year before. That means a huge amount of drilling each year has to be done just to offset the production lost due to these steep decline rates. Without a continuous step change each year in the number of wells being drilled and the capital available to do so, production in the Bakken is going to flatten. Good things are still happening, but we can’t repeat every year the hyperbolic growth that we saw in 2012. What this means for investors is that we shouldn’t expect oil prices to fall much from where we have seen them over the past three years. For the past three years WTI oil prices have ranged from $85 per barrel to $105 per barrel. I think $85 is about as low as we can go for an extended period of time because that is likely just about the marginal cost of production for oil in the world today. Production growth in the Bakken is slowing and so too will production growth in the Eagle Ford. That is the nature of these horizontal oil fields. We get an initial surge in production as capital comes into the play. Then that growth rate slows steadily until it flattens and enters a decline. 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On The Progressing Extinction Of The US Middle Class Submitted by Tyler Durden on 03/14/2013 14:14 -0400 Ben Bernanke headlines Reality Beneath the positive headlines Bloomberg's Joe Brusuelas notes that there is evidence that a good portion of consumers continue to face a difficult adjustment to the $125 billion tax hike in January and the 15 percent increase in gasoline prices during the past four months. Spending among the upper quintile of income earners is masking weakness elsewhere but it is jobs headlines that are really hiding the dismal reality in America . As the following chart shows, confirming our earlier discussion , the middle-class income-earner is becoming an endangered species (with no 'conservation group' willing to stand up for them) as the government holds the lowest income earners' hand and Bernanke the highest. Charts: Bloomberg Average: 5 Your rating: None Average: 5 ( 9 votes) Tweet Login or register to post comments 13873 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: The Morning After Guest Post: Who Destroyed The Middle Class - Part 2 Guest Post: Who Destroyed The Middle Class - Part 3 Overnight Sentiment: No Progress Means Lots Of Progress Guest Post: Alert: Nuclear (And Economic) Meltdown In Progress
Getting On The Train - The Rail Resurrection Gets Underway Submitted by Tyler Durden on 11/01/2012 18:41 -0400 Guest Post headlines New York City Renaissance Submitted by Gregor McDonald, a PeakProsperity.com contributing editor Getting On The Train Given emerging data in 2012, it's becoming increasingly clear that the post-war automobile era in the United States is now in well-articulated decline .Accordingly, it makes sense to note the beginning of a long-term supertrend that is just getting started: the resurrection of America’s rail system. At Seattle’s historic King Street Station (a classic example of early 20th Century railroad architecture), a nasty looking dropped-tile ceiling – which hung above travellers for decades – was removed late last year to reveal ornate plasterwork as the building undergoes extensive renovation. These cosmetic (and structural) alterations are part of a wide-ranging upgrade to the entire Cascades passenger rail service that runs from Vancouver, British Columbia, to Eugene, Oregon. In Tacoma, for example, a new station will either be built or renovated, and part of the Cascades line will be re-routed from its current shoreline path more directly through that city. Elsewhere, bridges are being rebuilt, track is being upgraded, and other infrastructure improvements are underway as part of the $500 million program to resurrect more efficient, faster inter-city rail in the 466-mile Amtrak route through this part of the Pacific Northwest. These changes will not bring European-style high-speed rail to the United States. Indeed, in many similar projects across the country, top speeds of 125 mph will characterize new system capability, rather than the average speed actually maintained from city to city. However, the incremental improvements now underway will become the platform for the next phase of investment, as Americans are increasingly persuaded to limit their car ownership and make rail transport part of their lives once again. What America Lost Up until World War II, rail transport of all kinds – intercity, light rail, and commuter rail – dominated transportation in America. Los Angeles had the largest light-rail system in the entire world, connecting the San Fernando Valley to Long Beach, and San Bernardino County to central L.A. and the northern reaches of Orange County. As the old saying goes, however, the car killed America . And the following 40 years from 1945-1985 saw a relentless decline of all forms of rail in the United States. To get a sense of what the country lost as it eagerly built out a vast highway infrastructure and foolishly stopped investing in rail, let's look at two historical maps showing a veritable collapse of passenger route miles over just a ten year period. The first map shows that in 1962 intercity passenger rail network still covered 88,710 route miles . Just ten years later, however, with intrusive highways bisecting American cities and ruining the integrity of their downtowns, the number of passenger route miles had collapsed by over 75%(!), to just 19,366 miles. Laughing at Amtrak Most people born after World War II have regarded Amtrak as a kind of joke, with its routine dysfunction and massive annual operating losses. The economics of national rail transport, however, deem that your railway system will only be as efficient as the proper mix of investment and operational fitness allows. If you starve your railways of upgrades, make them share tracks with freight rail, and divert national infrastructure spending to other modes of transport, the results will be quite predictable. One of the great misunderstandings of public rail transport is the mistaken belief that it should run at an operating profit. Not so. The purpose of commuter rail, light-rail, or intercity rail is to harvest economy-wide efficiencies and to ensure that wasteful expenditures spent collectively on transportation can be directed elsewhere. These "savings" were not an issue and were harder to determine during the cheap oil era, when much of the national highway system was built during the era of $14/bbl oil. Now, however, the impact on household budgets and monthly cash flow from much higher oil prices is pushing U.S. transportation demand rather dramatically away from roads and highways – and instead to rail. In Los Angeles, for example, where the aggressive Measure R has been restoring L.A.'s lost light-rail system, annual ridership has made extraordinary gains. A recent piece from LA Observed reports that " verage weekday ridership on Metro's rail lines in September soared to 357,096, up nearly 12 percent over the same time last year and 16 percent over 2010 ." Similar restorations of commuter rail in cities like Boston and improvements in either infrastructure or rolling stock in the NY Metro region have emerged in the past decade. Indeed, some U.S. regions took the signal of oil's price revolution early and began work on local rail systems long before federal spending began to shift, ever so slightly, to rail transport. Meanwhile, on the national level, Amtrak just announced that ridership hit an all-time high and has climbed nearly 50% in the past decade. From its October 2012 press release : Amtrak carried more than 31.2 million passengers in Fiscal Year 2012 ending September 30, marking the highest annual ridership total since America's Railroad started operations in 1971 and the ninth ridership record during the last ten years. A year-over-year comparison of FY 2012 to FY 2011 shows ridership grew 3.5 percent to a new record of 31,240,565 passengers and ticket revenue jumped 6.8 percent to a best ever $2.02 billion. In addition, Amtrak system-wide on-time performance increased to 83 percent, up from 78.1 percent and its highest level in 12 years. During FY 2012, ridership on the Northeast Corridor is up 4.8 percent to a record 11.4 million, state-supported and other short distance routes is up 2.1 percent to a record 15.1 million and long-distance services is up 4.7 percent to their best showing in 19 years at 4.7 million. Also, FY 2012 produced other ridership achievements including new records for 25 of 44 Amtrak services, and 12 consecutive monthly records with July being the single best month in the history of Amtrak. Since FY 2000, Amtrak ridership is up 49 percent. Rationalizing the Rail System Many will decry the fact that Amtrak and the United States as a whole are still not in a position to offer European- or Asian-style high-speed-rail, where sustained traveling speeds routinely average above 150 mph. However, five to six decades of neglect necessitate that the U.S. undertake its resurrection of rail in phases. Two of the many projects around the country (The Vermonter The Cascade Line) demonstrate exactly the type of initial heavy-lifting that must be done, in which fundamental changes are made in route selection and in the separation of tracks between freight and passenger rail. The Vermonter: New York City to Burlington Three states, Vermont, Massachusetts, and Connecticut, are currently in partnership with Amtrak to upgrade tracks, bridges, and stations along the route between Burlington and New York City. The state of Vermont has just completed its part by upgrading track with new, very long, continuously-welded rail , which will increase speeds. Work in Connecticut and Massachusetts is now underway, but one of the more significant transformations occurs in the switching of 60 miles of track from Palmer and Amherst back to the other side of the Connecticut River. This is actually a restoration of the original route between Vermont and New York, and means that trains from Springfield, MA will now travel north to Holyoke, Northampton, and then Greenfield before joining up again with the current route through Brattleboro in southern Vermont. Below is one of the new train stations, located in Greenfield, Massachusetts . In bringing The Vermonter back to the west side of the Connecticut River, Amtrak is rationalizing the route in several ways, but most importantly it is reducing the passenger train's exposure to freight traffic. Shared tracks, in which passenger service and freight traffic run on the same routes, is actually an enormous problem in the United States and accounts for a tremendous amount of the dysfunction that many users of Amtrak services experience. The biggest change in the Vermont-New York City trip, therefore, will come via on-time reliability as the transfer away from Palmer, MA will greatly reduce overlap with freight rail. Completion of this project is currently set for 2014. The Cascades Line The twin ports of Vancouver, Washington and Portland, Oregon – straddling each side of the Columbia River – have seen very strong growth the past few years as increasing volumes of lumber, potash, and wheat are shipped to Asia. Accordingly, on the north side of the river at the Port of Vancouver (Washington), a large freight rail project has been underway to help increase loadings. But one of the little-noticed initiatives is the construction of new track to alleviate congestion for passenger trains as they head out of Portland toward Seattle. Finally, these trains will be able to steer clear of freight traffic at the Vancouver, Washington side of the river. As usual, these are not the types of splashy, high-profile infrastructure improvements that garner headlines. But the Portland to Seattle route typically has had very poor on-time reliability, which invariably reduces ridership. As mentioned in the start of this essay, Cascades Line improvements are quite wide-ranging, with the Federal Government having awarded over $800 million to multiple projects. The upgrades will continue for several years, with noticeable differences in on-time reliability already in force. Aiming for the Virtuous Circle: Reliability and Ridership Amtrak's 50% increase in ridership the past decade certainly began as a result of rising oil prices, and not because of any notable service improvements. However in the latter part of the decade and especially in the past 3-4 years, Amtrak (and other rail networks) have started to deliver substantial improvements to riders as the upgrade cycle gains momentum. Deep skepticism has greeted just about every major rail project in the country over the past twenty years. But a virtuous circle, in which riders are persuaded to reduce car-miles driven, has started to unfold as heavier demand comes online for rail services. This has been especially true in cities such as Los Angeles which started its light-rail project twenty years ago, greeted initially greeted by a fearful public. Now however, L.A. is laying track down along many of the same routes from its pre-war light-rail system. It is finally becoming possible to live in Los Angeles without a car. Continuing the Virtuous Circle Various trends are already coming together that will support the resurrection of rail and possibly strengthen it as we move out towards 2025. In Part II, Reducing Your Exposure to Oil , we explore ways to take part in the U.S. rail renaissance. I also offer a case study how much savings a household can capture by moving to a city that is served by extensive rail transport. Finally, I give a brief update on energy transition, as the developed world continues to move away from high-priced oil and pursues economic development along the contours of the powergrid. Click here to read Part II of this report ( free executive summary; paid enrollment required for full access ). Average: 3.2 Your rating: None Average: 3.2 ( 20 votes) Tweet Login or register to post comments 6940 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: “The Great Train Robbery,” California Version CBO on Electric Cars - Don't Buy Them! Bleeding the Taxpayer: An Old Technology Dolled Up As New Cash Strapped California Votes For $68 Billion Monorail To Get Federal Bailout Guest Post: The Demise Of The Car
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