It Is Time for the US to Sell Its Highways?

It Is Time for the US to Sell Its Highways?

ByGroovy Green Aug 28, 2008

It’s difficult to imagine a person not having heard the old axiom “Buy low, sell high”, and it is prudent advice when you are making financial decisions. It’s the second part of that adage that might warrant a look at our strategy for infrastructure improvement in this country. If you are looking to make the maximum amount of money by selling something you want to sell that something when it’s at its highest value. I wonder then, is it time for our government to sell its infrastructure? You know, since the effects of Peak Oil are beginning to make themselves felt, the value of the infrastructure developed to serve cars running on cheap oil will decline each year into the future; starting soon. Selling high might mean selling soon.

Now, I don’t think we should sell all of it, by any means. We should keep the ports and the train lines, but is now a good time to start selling our roads, highways and airports? There has been news recently of other governments selling their infrastructure, and considering the value of these items in an energy scarce future I would contend that their value will never be higher. In fact, there is already plenty of news about airlines facing massive losses. (And starting to charge for baggage, pillows and normal drinks) How valuable will an airport be if we don’t have airlines? Or what if the ones we do have are marginally profitable? I say it’s better to sell now while the full force of Peak Oil hasn’t quite made itself felt.

I would say the same about roads and bridges. Now, you can’t sell every bridge because you wouldn’t want it to be impossible to cross a river in the future, but the states could certainly lease some of them to companies looking for stable investments. They could at least see some return on all the money we’ve sunk into them. You could say that this is not “fair” or it might smack of fraud, but I would say that it isn’t. If these companies and profiteers can create our current credit crisis, and then look for a bailout from Uncle Sam, they should be smart enough to see through this and see the future for what it will be, but most likely they won’t.

The deal in Pennsylvania applies to just 469 miles of the 3.9 million miles of roadways in our country. Assuming that we could sell (or lease like in PA) 1% of these roads we could raise just over $1.3 Trillion dollars (assuming the same pricing per mile) which would go a long way to building our necessary rail infrastructure. Granted, this figure is obviously not really manageable, but with some effort I would expect we could recognize a fair portion of this number. Rail infrastructure, which has a much longer lifespan than roads, and also a higher carrying capacity, is where we should be focusing these infrastructure dollars.

Based on an estimate I saw for a brand new railway line to Yucca Mountain for nuclear waste the cost to build a new mile of railway is $6.2M, or an estimate of a railway line in Illinois which was running $93K per mile (I’ve since lost the link to the news article). The cost to rehab a railway line, at least in Missouri, is around $250K per mile. That means that for our $1.3Trillion we could build just under 210,000 miles of brand new tracks, using the Yucca example or 13M miles based on the Illinois cost.

These numbers are kind of ridiculous, but the point is that by redirecting our investment from roads, which are really short term, costly, maintenance ridden items to railways, we could build a world class infrastructure for less money, less maintenance and possibly one that might work a little better. It’s high time we the people get something for infrastructure investments other than crappy service, lots of traffic, pollution and an ever spiraling pyramid of costs and maintenance. Buy low, sell high. Sell high, buy low. That’s the key. Better to sell it now than hold it until it’s worthless, which we all know it will soon be.