The road to recovery: rail and trucking tend to lead the way, but tight money could slow down needed infrastructure improvements.

• Position: TRANSPORTATION

Painfully high gasoline prices in North Carolina crept even higher--averaging more than $4 a gallon--after two hurricanes slammed Gulf Coast refineries in September. Pricey petrol made trains more competitive with trucks and helped bolster rail revenue. But in October, gas prices started plunging, ending the year well below $2 a gallon. Meanwhile, declines in the automobile and construction industries hurt both railroads and trucking companies, says Scott M. Saylor, president of North Carolina Railroad Co. It owns the 317-mile line between Charlotte and the state port in Morehead City.

BNC: When is a turnaround due?

Saylor: Transportation, particularly rail and trucking, tends to be a leading indictor, so I hope that by the third quarter of 2009 we would start to see better news.

How is the state keeping up its transportation infrastructure?

It's aging, and our tax system isn't designed to fund major increases in highway infrastructure. Some of our railroad bridges are 90 and 100 years old. They're safe, but some need to be replaced. That's expensive. We're looking at one in Charlotte that would cost $30 million. But construction costs for the last 18 months have been declining, so right now might be a good time to build. We recently did a preliminary design for the Charlotte project, and if we could build right now, it would cost 15% less than at this time last year.

With fuel use down, won't there be less tax revenue for transportation improvements?

Taxes certainly have become an unreliable income stream. But gas tax aside, North Carolina must receive its fair share of federal funding. We really need to get more of our tax dollars back than we're paying out at the federal level. There haven't been many federally funded projects for rail.

What's the role of transportation in economic development?

As companies manage their costs, it's an increasing factor in site selection. When Spirit AeroSystems decided to build an aircraft-parts plant in Kinston, it wanted two things: an East Coast location with access to a port and the ability to move oversized containers for export. Standard highway clearance is 17 feet, so its containers are too tall to move on the highway. Transportation was a key element because they've developed into a just-in-time industry for commercial aircraft assembly.

Your new study says commuter trains could run between Goldsboro and Greensboro for about $1 billion in upgrades.

We think it could be the highest and best use...