Randal O’Toole of the Cato Institute has a great blog post outlining the various ills besetting America’s government-subsidized passenger rail carrier Amtrak. The gist of O’Toole’s argument is that although both federal and state governments contribute large sums of money to keep Amtrak afloat, potential riders have not been nearly as enthusiastic. A recent National Journal article does cite Amtrak’s ridership as increasing 50 percent in the last fifteen years, but O’Toole points out that the increase was largely driven by a simultaneous increase in gas prices. Amtrak’s new riders aren’t somehow more attuned to taking passenger trains than they were before, they’re simply responding to market pricing and the laws of supply and demand.
If the federal government revoked its latest $1.4 billion annual subsidy, Amtrak probably would not have even seen that 50 percent increase. O’Toole reports that in 2012, Amtrak fares averaged about 33.9 cents per mile, while travel by air and automobile averaged 13.8 and 25 cents, respectively. Taking into account these factors, as well as user costs and subsidies, O’Toole estimates that Amtrak costs about four times as much as flying and nearly twice as much as taking a car. These figures, along with the fact that Amtrak’s share of total passenger travel in 2012 was around 0.14 percent, demonstrate that demand for passenger rail in America can hardly be called robust.
Even if greater demand for passenger rail did exist, the federal government would face the odd paradox of running a profitable industry that could probably be better handled by competition among private firms. Passenger trains already have at their disposal all the revenue they should ever need: fares and onboard sales. Why take money from hundreds of millions of people to finance the travel of only a few? Congress would do the nation a favor by phasing out funding for Amtrak, saving us all money in the process.