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Amtrak Derails on Increased Demand

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Rising tide of commuters faces crowds, delays.

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Amtrak ridership rose 13% in July from a year ago as high gasoline prices force more people out of their cars.

But there's just one problem: Amtrak is straining to meet increased demand, the Wall Street Journal reports.

Ridership is up 8% on Amtrak's Northeast Corridor between Boston, New York and Washington, the system's most heavily traveled line, but passengers are forced to stand on some trains while aging track and the overhead electrical distribution system limit train speed in some areas.

Amtrak doesn't have enough rolling stock to add coaches to currently scheduled trains or to add trains at peak hours. Premium-priced Acela Express service in the Northeast Corridor is nearing capacity.

There's no immediate fix. The House and Senate have approved bills that could increase Amtrak's funding by 33% or more starting in October. The measures also would create a grant program to encourage states to expand rail service.

Democratic Senator Tom Carper of Delaware has introduced a bill that would authorize about $3 billion in borrowing by Amtrak to replace old rail cars and would divert $400 million in gasoline taxes each year to set create a fund to buy new rail equipment, including locomotives.

That's a start. Amtrak estimates it needs $5 billion to complete needed repairs and upgrades on the Boston-New York-Washington line alone. It recently shut down service between Boston and New York to replace a section of the bridge across the Thames River in Connecticut.

In California, ridership between San Francisco and Sacramento is up 33%.

Some dream about 200-mph service between major cities, but that's not likely. It would require billions of dollars to acquire the right-of-way and billions more to build special tracks parallel to existing lines.

For now, expect crowded trains. In the future, look for better service with speeds topping out at about 100 mph on trains using newer but traditional equipment.

Meanwhile, Exxon-Mobil (XOM), Chevron (CVX), Conoco (COP) and Valero (VLO) can look for solid quarterly earnings reports.
No positions in stocks mentioned.
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