Electricity is a lot more expensive than oil based energy.
In 2009, the industrial price of electricity in California is around $0.10 / kWh. That's $0.028 / MJ. The current price of diesel oil is $2.801 / gallon, which is $0.616 / litre which is $0.016 /MJ (assuming 38.6 MJ/l as the heat of combustion of diesel oil).
So diesel oil is $0.016 / MJ while electricity is $0.028. As you can see, electricity is a _lot_ more expensive in ideal circumstances (all the energy is converted to useful work). Now obviously, not all of the heat in the combustion engine can be converted to mechanical energy so there's quite a loss there while electrical engines have very good energy efficieny ratios, but still, oil is a lot cheaper than electricity, and that is the main reason it is used as the primary energy source.
EDIT: I have made a huge (100x) mistake, thanks for eru for spotting it, it's corrected now. Still, my point stands.
Thanks for the numbers. I guess I will have to run some numbers on my own, to see if that turn out.
In principal electricity should be at least as cheap as Diesel in terms of usable energy --- because if it was more expensive you could use Diesel to generate electricity (arbitrage opportunity).
Also the efficency of moving Diesel engines is not that good. Less than 30% or so. And they can't get much better without raising their working temperature, because the theoretic maximum (Carnot Engine) isn't that much higher. Moving engines have to be quiet compact --- on trains less so than in cars. The big stationary engines in the power plants do not have to conform to this limitation. (But there is some loss in transmiting the electrity through the power lines, too.)
I'll come back with some numbers soon.
Edit: I don't know why someone downvoted you. If your numbers are wrong, they should they so. If not, there's no reason to downvote.
You should be multiplying the diesel price/joule numbers by roughly 5x to make them comparable to electrics.
When you buy metered electricity, you're paying for the end product. Internal combustion engines are roughly 20% efficient on average, going from chemical energy to kinetic. Electric motors are 90%+ from electricity to kinetic.
"Electric locomotives benefit from the high efficiency of electric motors, often above 90%. Additional efficiency can be gained from regenerative braking, which allows kinetic energy to be recovered during braking to put some power back on the line."
In 2009, the industrial price of electricity in California is around $0.10 / kWh. That's $0.028 / MJ. The current price of diesel oil is $2.801 / gallon, which is $0.616 / litre which is $0.016 /MJ (assuming 38.6 MJ/l as the heat of combustion of diesel oil).
So diesel oil is $0.016 / MJ while electricity is $0.028. As you can see, electricity is a _lot_ more expensive in ideal circumstances (all the energy is converted to useful work). Now obviously, not all of the heat in the combustion engine can be converted to mechanical energy so there's quite a loss there while electrical engines have very good energy efficieny ratios, but still, oil is a lot cheaper than electricity, and that is the main reason it is used as the primary energy source.
EDIT: I have made a huge (100x) mistake, thanks for eru for spotting it, it's corrected now. Still, my point stands.