NEW YORK (TheStreet) -- To people outside the Northeast, stories about Amtrak seem quaint.
Stories about people huddled overnight in trains or of entire train systems going down due to extreme cold are oddities to most Americans because passenger train systems themselves are a product of something most of the country doesn't have.
As population density increases, the need for transit grows because trains scale better than cars. Places like Manhattan could not exist if everyone had to drive a car to get anywhere. The roads are jammed as it is.As population density increases, the cost of road travel increases exponentially. Roads have to be repaired more often and accidents happen. Roads under repair create traffic jams, and frayed nerves create more accidents. With trains you can add cars and increase trip frequency. Density makes the train experience more convenient and comfortable. I learned this on a recent trip to New York City. I was able to get from Times Square to downtown at 11:30 p.m. without even thinking about the schedule. During the same hours in Atlanta, which is less dense, trains run 20 minutes apart. So in our biggest cities, and in traveling between cities close to one another, passenger trains remain essential. For other parts of the country, not so much. This is reflected in Amtrak's finances, which illustrate the irony involved in the whole "train subsidy" debate. Amtrak loses $1.5 billion each year, but dropping routes that are more than 400 miles long would let it break even, according to a Brookings Institution report from last March.
In other words, it's in serving the people who oppose train subsidies that the need for subsidies is created.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts