Graphite powder works but should only be applied where there is a
significant gap between opposing polarities. I have used in on N Scale
locomotives and ruined one because the axle to wheel insulator was
extremely thin. Arcing occurred which created a permanent carbon
short. Where is works it can be a god send.
For track work I have used artist graphite sticks. This solves the
problem with the powder. It is a lubricant and so will reduce pulling
power if you have grades.