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Gold/Mining/Energy : PEAK OIL - The New Y2K or The Beginning of the Real End?
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To: Doug R who wrote (321)4/14/2005 2:40:20 PM
From: Mahatmabenfoo   of 1183
 
> JP Morgan downgraded railroad stocks Burlington Northern and
> Norfolk Southern to neutral today.
> Airlines won't be the only transportation stocks to feel it

Interesting.

I was doing some reading about the most efficient modes of transportation. Car, truck, bus, or train -- the answers turn out to be extremely complicated, because for each there are issues of government subsidies, whether the cars are run full, whether an alternative fuel is possible. For example, governments pay for highways ($85 billion EVERY year!) but not for railroads, and passenger railcars are optimized for comfort, not fuel efficiency. OTHO commuter rail travel is subsidized.

Peak oil just makes the analysis more complicated. Presumably a business slow down would give railroads less to transport. But full railcars are a lot cheaper than trucks, especially when you factor in the money paid by governments to keep highways rolling. I imagine railroads could return to coal, if need be (which may be less farfetched than it sounds -- most Chinese and Indian railroads relied on coal, not long ago).

The bottom line... I don't know what to conclude. My gut sense is peak oil may be good to railroads over the long term.

- Charles
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