Rail Transportation is the Future

Trend: Rail will slowly replace planes and trucks for long-distance transportation as the price of oil spirals upward.

Chris Nelder at Energy & Capital points out that railroads are the most energy-efficient way to transport goods and people. Excerpts below.

Link: Peak Oil and the Rail Revolution

In the last 90 days, jet fuel prices have spiked 38%, rising along with crude.

It was no surprise to me, then, to see some of the smaller carriers starting to go belly up this year. As oil has hit record high after record high, fuel costs have actually exceeded labor costs for many airlines, accounting for as much as 40% of operating expenses.

...rail is bound to gain market share in the coming decades as the airline industry contracts. This is because rail is by far the cheapest and most fuel-efficient form of transport, requiring about a third less fuel than air for personal travel, and as little as 3% of the energy for freight.

Rail can also run on renewably generated electricity, making it a true transportation alternative for the future.

Now, I realize that the only long-distance passenger carrier in the country, Amtrak, is terminally broken and underfunded and suffering from decades of neglect. But as the rail resurgence in freight travel picks up speed, I have no doubt that passenger rail will follow.

Simon Fraser University professor Anthony Perl, author of the new book Transport Revolutions, predicts that in 2025, no more than 25 airports will be functional. Electric powered transportation and rail will be the standard transport options.

Very simply, in a post-peak oil world, rail is a no-brainer. It's probably the longest safe bet one could possibly make.

That would explain why the sector has attracted large investments from some of the wealthiest investors in the country over the last several years.

Bill Gates has become the largest investor in Canadian National Railway (NYSE: CNI). Warren Buffett and George Soros have taken large positions in both Union Pacific (NYSE: UNP) and Norfolk Southern (NYSE: NSC). And Carl Icahn has taken a $122 million stake in CSX Corporation (NYSE: CSX).

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