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Mass Transit Investing

Making Money From Mass Transit Momentum

By Jeff Siegel
Friday, July 11th, 2008

Last month, the American Public Transportation Association (APTA) announced that U.S. commuters took 2.6 billion trips on public transportation in the first three months of 2008. 

That's nearly 85 million more trips than the first quarter of 2007.

APTA also announced that:

·        Last year, 10.3 billion trips were taken on U.S. public transportation.  This represents the highest number of trips taken in 50 years.

·        In the first quarter of 2008, use of public transportation increased by 3.3 percent, while vehicle miles traveled on our nation's roads declined by 2.3 percent.

·        Light rail systems had the highest increase in ridership, boasting a 10.3 percent increase in the first quarter.  Baltimore's light rail system alone increased its ridership by 16.8 percent.

Still, while these are all impressive numbers, how realistic is it that these ridership numbers will continue to increase?

Even with $4.00 gas, there are many that still have absolutely no interest in public transportation. 

Whether it's because of misconceptions about dirty or unsafe buses and trains, the comfort and familiarity of our own cars, or the inability of local mass transit administrations to provide convenient, efficient, and inexpensive alternatives - not everyone is jumping on the public transportation bandwagon.

In fact, in a recent Baltimore Sun article, commuters recounted their experiences with Maryland's public transportation system.  Here's one that I found extremely poignant...

"The real disappointment is that I'm spending about $8 on gasoline to get to work and home. It takes me about 20 to 25 minutes one way, and I can drink my coffee while I drive.

The MTA solution takes two hours, costs about $4.30 round trip (I have to pay express fees for the #15 bus) and I can't have coffee while in the coach. The real issue here is that it costs me over 3 hours a day to save two gallons of gasoline, but only saves me $4. This, to me, is not a wise tradeoff."

Where's the tipping point?

Public transportation is a great idea.  It can help relieve rush hour congestion, displace foreign oil and reduce greenhouse gas emissions. 

But if it can't operate in a way that meets the demands of the consumer (especially when it comes to cost and convenience), it'll never be much more than the niche it is in most cities today.

And this is unfortunate, when you consider just how successful public transportation systems in other parts of the world are.  If you've ever spent anytime in Europe, you know exactly what I'm talking about.

Of course, there's still the belief that we haven't yet hit that tipping point that'll ultimately force some commuters to finally make the transition to mass transit. 

Is it $5 a gallon, $6, $8? 

No one really knows.   

But one thing is for sure, individual states and cities aren't waiting around to find out.

No time to wait

Across the nation, cities and states are betting big on the future of public transportation.

Some aren't even waiting around for federal funds to make new projects happen.

Thanks to legislation in 21 states that enables transit agencies to form public-private partnerships to design, build and maintain local transit networks, some cities are moving ahead without federal resources.  In fact, just last year the city of Houston announced that its transit authority would be using a private partner to take four different transit corridors from concept to operation as quickly as possible. 

Bottom line: Construction on some of these transit projects needs to begin now...not three years from now.  So waiting around for Washington is simply not an option.

Of course, in all fairness, the House did authorize an extra $1.7 billion in funding for public transportation last month.  Under the plan, $750 million would be distributed throughout urban areas, and $100 million would be distributed through rural areas.

Not surprisingly, urban areas would get the lion's share of this funding.  This is primarily because traffic congestion in many urban areas is actually getting worse.

According to the Texas Transportation Institute's 2007 Urban Mobility Report, congestion in 2007 caused urban commuters to travel 4.2 billion hours more and to purchase an extra 2.9 billion gallons of fuel for a congestion cost of $78 billion.

That's billion - with a "B"

Still, whether or not this funding ever gets passed is anybody's guess.

So in the meantime, we're focusing on the individual states and cities that are moving now...without handouts from the Hill.  Because this is where new public transportation projects are leading us to opportunities stemming from bus contracts, infrastructure development and train/light rail deals.

In fact, there's one mass transit company that's been building a massive backlog of regional contracts over the past year.  And once market conditions ease up a bit, Nick Hodge, managing editor of the Alternative Energy Speculator, will be recommending this company to his readers.

There's not much more I can say about this particular company right now, as Nick has not revealed it to his readers yet.  But if you'd like to learn more about Nick's most recent recommendation - one that's up 23% in just the past week (while the rest of the market got hammered), click here now.

To a new way of life, and a new generation of wealth...

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Jeff


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Comments:

Comment by Butchrgt on 2008-07-12
Great news to see an improvement on the use of Mass Transit vehicles. It is a step in the right direction to relief some of the fossil fuel demands and poluion challenges many of the major cities are experiencing. It's like learning how to walk all over again, we know the basics for using Mass Transit's as one of the primary uses for commerical transportation, all we need to do is tweak up what we already have to improve travelers comfort and subsidities. We must insure the consumer is happy using trains and busses for travelling vs their own vehicles plus the wear and tear on their vehicles and high consumption of fuel. By using commerical transportation services they would be more rested for the remaining day and less stressed at their place of employment, allowing them to be more productive.
It is wonderful to see private companies entering the transportation field without the delay the US Government would cause to get the fleet of trains and busses up and running. They will eventually be controlled by the Deptartment of Transportation, but at least they are in a positive mode taking the initiative
to get the ball rolling. It is great to see someone with a plan step out of the box for a change with some direction and motivation to get the job moving in the right direction.

Comment by Jim Glendenning on 2008-07-12
For mass transit to work the organization of a city has to be rationalized around it. Financial district in one area, manufacturing and heavy construction in one area, shopping in another area with residential built around these central business areas. That's the way New York City, Philadelphia and many other major eastern cities are organized.

When you get out west where cities grew up around the automobile there is no rational way to make mass transit work. Think Los Angeles. If there was ever a city that shows the effect of the auto on the way it is spread out and de-centralized, LA is it.

There is no mass transit system in the U.S. that makes money or even breaks even. The enviros love the idea of mass transit, they just don't want to face the fact that it doesn't work except in certain eastern cities.

Comment by Laura Anne Bunyard on 2008-07-12
I live in an area where one company has made it for public transportation. Most people just call a taxi. I drive back roads to save gas. The last time I bought gas was 30 June. I still have 1/4 tank. Until I am done blowing my checking account apart, I will not be able to purchase any memberships or stocks.