Cheap Gas Affecting Amtrak's Bottom Line

Amtrak will be forced to make cuts of almost 4 percent, due primarily to low gasoline prices.

2 minute read

February 16, 2016, 10:00 AM PST

By Irvin Dawid


"A Feb. 9 letter obtained by The Inquirer from Joseph Boardman, Amtrak's president and CEO, to employees said that in January he requested cuts averaging 3.8 percent from the agency's department heads," writes Jason Laughlin for Philly.com.

Low gas prices are a big problem for Amtrak. The average cost of gas nationwide is $2 a gallon, the letter states, the lowest it's been since 2009. Low gas prices mean people eschew the train to drive short distances or fly long distances, Boardman wrote.

How fast gas prices are falling! Whatever was the date of the letter, it is 30-cents too low, referring to average gas prices, $1.698 as of Saturday, Feb. 13.

At the $2-a-gallon rate, a car getting 20 miles to the gallon driving about 300 miles from Philadelphia to Boston would use $30 in gasoline. [On Saturday it would have cost just over $25.]. The same one-way trip in coach on Amtrak's Northeast Regional train, booked two months in advance, is $69.

Boardman expressed "disappointment" at holiday travel during Thanksgiving, "typically a busy time for rail," writes Laughlin.

Help from the federal government to stave off cuts is unlikely considering that "(f)or the most current fiscal year, it received about $1.39 billion in federal appropriations," notes Laughlin. "It had sought about $2 billion."

As noted in a post last December, "the Northeast Corridor generated $479 million in adjusted operating surpluses, while its long-distance lines lost $495 million. Its state-supported routes, which generally run under 750 miles, reported $96 million in operating losses." Presumably those surpluses have been reduced and the operating losses increased due to the plummeting price of gasoline.

The other reasoned mentioned for low ridership was weather. However, a National Association of Railroad Passengers spokesman discounted it, stating that gas prices "were a more worrisome concern."
"The gas prices affect [ridership] on a longer-term basis than any weather event, basically," said Bruce Becker, NARP'S director of special projects, "and it affects the entire country, not just one section of the country."

There was no mention of low oil prices reducing Amtrak's operating expenses for diesel-powered trains as one hears about the airline industry's substantial savings on jet fuel costs now that oil is selling for less than $30 per barrel.

Boardman "plans to retire from Amtrak in September 2016," according to a he sent Amtrak's Board last December.

Hat tip to POLITICO Morning Transportation

Thursday, February 11, 2016 in Philadelphia Inquirer - Philly.com

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