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Could you explain the "Railroads > Trucking when oil shoots up" in more detail? I would assume that the fuel costs of diesel locomotives are just as tied to oi

Could you explain the "Railroads > Trucking when oil shoots up" in more detail? I would assume that the fuel costs of diesel locomotives are just as tied to oil prices than fuel costs of trucks. The operating costs of electric locomotives would get equally more expensive as well as electricity prices are not independent of oil prices (and electricity is always more expensive than oil).

tedunangst 17y ago
Assume trains are more fuel efficient, but less convenient because of fixed routes and the cost of loading and unloading the cargo onto trucks at the endpoints. As fuel savings increase, trains become more attractive.
jakarta 17y ago
the costs b/w trucks and freights differ after a certain price point and it becomes cheaper to have goods travel by freight than by truck. So, if you go back and look at when oil was at its high, railroads were performing better than trucks
thingie 17y ago
Possibly, if price of the fuel is, say (it's just a random number, really), 1/3 of all expenses for the railroads, and 1/2 for trucks, then rising cost of oil will hurt trucks more (even if also those 2/3 of other expenses sees some increase). (Electric engines are out of the question for BNSF. Insanely high cost to electrify the network.)
eru 17y ago
> as electricity prices are not independent of oil prices (and electricity is always more expensive than oil). Oil isn't used to generate electricity. At least not much. Look for coal, nuclear power, some natural gas. In general electricity is much cheaper than oil based forms of energy. The reason why cars run on gasoline and Diesel is, that those have a much higher energy density than current batteries.
- DrJokepu 17y ago
  Electricity is a lot more expensive than oil based energy. In 2009, the industrial price of electricity in California is around $0.10 / kWh. That's $0.028 / MJ. The current price of diesel oil is $2.801 / gallon, which is $0.616 / litre which is $0.016 /MJ (assuming 38.6 MJ/l as the heat of combustion of diesel oil). So diesel oil is $0.016 / MJ while electricity is $0.028. As you can see, electricity is a _lot_ more expensive in ideal circumstances (all the energy is converted to useful work). Now obviously, not all of the heat in the combustion engine can be converted to mechanical energy so there's quite a loss there while electrical engines have very good energy efficieny ratios, but still, oil is a lot cheaper than electricity, and that is the main reason it is used as the primary energy source. EDIT: I have made a huge (100x) mistake, thanks for eru for spotting it, it's corrected now. Still, my point stands.
  - eru 17y ago
    Thanks for the numbers. I guess I will have to run some numbers on my own, to see if that turn out. In principal electricity should be at least as cheap as Diesel in terms of usable energy --- because if it was more expensive you could use Diesel to generate electricity (arbitrage opportunity). Also the efficency of moving Diesel engines is not that good. Less than 30% or so. And they can't get much better without raising their working temperature, because the theoretic maximum (Carnot Engine) isn't that much higher. Moving engines have to be quiet compact --- on trains less so than in cars. The big stationary engines in the power plants do not have to conform to this limitation. (But there is some loss in transmiting the electrity through the power lines, too.) I'll come back with some numbers soon. Edit: I don't know why someone downvoted you. If your numbers are wrong, they should they so. If not, there's no reason to downvote.
    - eru 17y ago
      "Electrification has a high initial capital cost but the operating costs are lower." "Even in sparsely populated large countries (Finland, Sweden) electrification has proven to be more economical than diesels." (from http://en.wikipedia.org/wiki/Dieselization http://en.wikipedia.org/wiki/Dieselization) 10 $ per kW/h sounds very high. Are you sure it's not 0.10 $ per kW/h?
eserorg 17y ago
Freight rail efficiency is measured in "labor-cost-per-revenue-ton-mile". The cost of trucking is dominated by the fuel-cost-per-ton-mile. Whereas the cost of moving 1 ton of goods over rail is dominated by the cost of labor, the cost of moving 1 ton of goods via truck is dominated by the cost of fuel. In point of fact, rail freight gets ~436 ton miles per gallon. The only mode of transport that gets more ton-miles-per-gallon is water transport (DSO, dry bulk shipping, oil and gas tankers, panamax, river barges, etc...) The edge case is liquid and gaseous hydrocarbons, which can be transported via pipeline. It's no surprise that Buffet has been buying up oil and gas pipelines over the past several years. The only catch here is that waterway transport inside the United States has sub-optimal efficiency due to the Jones Act.

tedunangst 17y ago

Assume trains are more fuel efficient, but less convenient because of fixed routes and the cost of loading and unloading the cargo onto trucks at the endpoints. As fuel savings increase, trains become more attractive.

jakarta 17y ago

the costs b/w trucks and freights differ after a certain price point and it becomes cheaper to have goods travel by freight than by truck. So, if you go back and look at when oil was at its high, railroads were performing better than trucks

thingie 17y ago

Possibly, if price of the fuel is, say (it's just a random number, really), 1/3 of all expenses for the railroads, and 1/2 for trucks, then rising cost of oil will hurt trucks more (even if also those 2/3 of other expenses sees some increase). (Electric engines are out of the question for BNSF. Insanely high cost to electrify the network.)

eru 17y ago

> as electricity prices are not independent of oil prices (and electricity is always more expensive than oil). Oil isn't used to generate electricity. At least not much. Look for coal, nuclear power, some natural gas. In general electricity is much cheaper than oil based forms of energy. The reason why cars run on gasoline and Diesel is, that those have a much higher energy density than current batteries.

DrJokepu 17y ago
Electricity is a lot more expensive than oil based energy. In 2009, the industrial price of electricity in California is around $0.10 / kWh. That's $0.028 / MJ. The current price of diesel oil is $2.801 / gallon, which is $0.616 / litre which is $0.016 /MJ (assuming 38.6 MJ/l as the heat of combustion of diesel oil). So diesel oil is $0.016 / MJ while electricity is $0.028. As you can see, electricity is a _lot_ more expensive in ideal circumstances (all the energy is converted to useful work). Now obviously, not all of the heat in the combustion engine can be converted to mechanical energy so there's quite a loss there while electrical engines have very good energy efficieny ratios, but still, oil is a lot cheaper than electricity, and that is the main reason it is used as the primary energy source. EDIT: I have made a huge (100x) mistake, thanks for eru for spotting it, it's corrected now. Still, my point stands.
- eru 17y ago
  Thanks for the numbers. I guess I will have to run some numbers on my own, to see if that turn out. In principal electricity should be at least as cheap as Diesel in terms of usable energy --- because if it was more expensive you could use Diesel to generate electricity (arbitrage opportunity). Also the efficency of moving Diesel engines is not that good. Less than 30% or so. And they can't get much better without raising their working temperature, because the theoretic maximum (Carnot Engine) isn't that much higher. Moving engines have to be quiet compact --- on trains less so than in cars. The big stationary engines in the power plants do not have to conform to this limitation. (But there is some loss in transmiting the electrity through the power lines, too.) I'll come back with some numbers soon. Edit: I don't know why someone downvoted you. If your numbers are wrong, they should they so. If not, there's no reason to downvote.
  - eru 17y ago
    "Electrification has a high initial capital cost but the operating costs are lower." "Even in sparsely populated large countries (Finland, Sweden) electrification has proven to be more economical than diesels." (from http://en.wikipedia.org/wiki/Dieselization http://en.wikipedia.org/wiki/Dieselization) 10 $ per kW/h sounds very high. Are you sure it's not 0.10 $ per kW/h?

eserorg 17y ago

Freight rail efficiency is measured in "labor-cost-per-revenue-ton-mile". The cost of trucking is dominated by the fuel-cost-per-ton-mile. Whereas the cost of moving 1 ton of goods over rail is dominated by the cost of labor, the cost of moving 1 ton of goods via truck is dominated by the cost of fuel. In point of fact, rail freight gets ~436 ton miles per gallon. The only mode of transport that gets more ton-miles-per-gallon is water transport (DSO, dry bulk shipping, oil and gas tankers, panamax, river barges, etc...) The edge case is liquid and gaseous hydrocarbons, which can be transported via pipeline. It's no surprise that Buffet has been buying up oil and gas pipelines over the past several years. The only catch here is that waterway transport inside the United States has sub-optimal efficiency due to the Jones Act.