When President Obama announced he was killing the Keystone XL pipeline,
he said he was agreeing with the State Department’s assessment that the
pipeline from Canada “would not serve the national interests of the
United States.” The fact is that it would not have benefitted the
personal financial interests of friend and economic mentor, Warren
Buffett, who can rest assured that oil from Canada and the nearby Bakken
formation in North Dakota will continue to be transported by a railroad
he owns. As Investor’s Business Daily noted in a 2011 editorial:
Killing the Keystone XL pipeline may help one of the world's richest men
get richer. North Dakota's booming oil fields will now grow more
dependent on a railroad the president's economic guru just bought….
As oil production ramps up in the Bakken fields of North Dakota, plans to
use the pipeline to transport it have been dashed.
As a result, North Dakota's booming oil producers will have to rely even
more on the Burlington Northern Santa Fe (BNSF) railroad, which Buffett
just bought, to ship it to refineries.
[/Investor’s Business Daily]
Buffett's Berkshire Hathaway has agreed to buy Burlington Northern Santa
Fe in a deal valuing the railroad at $34 billion. Berkshire Hathaway
already owns about 22% of Burlington Northern, and will pay $100 a share
in cash and stock for the rest of the company.
When President Obama was first running for office, he publicly declared
that Warren Buffet was his prime source for economic advice. As CNBC
noted in July 2008:
Barack Obama calls on Warren Buffett, among others, as he turns his
attention to the troubled U.S. economy now that he's returned from his
international tour that featured a well-attended speech in Berlin.
In an interview with Tom Brokaw on NBC's Meet the Press over the weekend,
Obama said that today he would be "pulling together" some of his "core
economic advisers" to "examine the policies that we've already put
forward--a middle class tax cut, a second round of stimulus, a effort to
shore up the housing market in addition to the bill that was already
passed through Congress, what we need to do in terms of energy and
infrastructure."
[/CNBC]
President Obama would soon launch an endless review process that would
kick the Keystone oil can down the road until he was ready to kill it, a
non-suspicious interval of time having elapsed after economic mentor
Warren Buffet would buy the railroad that would replace Keystone XL. So
how did Buffett do on his investment and did he profit from buddy Obama’s
delaying and then killing the pipeline? Some would say handsomely. As
Forbes reported last year:
His company, Berkshire Hathaway, purchased Burlington
Northern Santa Fe for $34 billion four years ago. FORBES
estimates its value has doubled since then. Part of the
reason: hauling oil out of the Bakken formation of North
Dakota.
Doubling a $34 billion investment in just four years is huge. Warren
Buffett is a respected investor but it doesn’t hurt to have the ear of
the President as he kills off your competition in oil transport. As
Investor’s Business Daily editorialized in January:
Keystone XL would bring up to 830,000 barrels of oil per
day and directly create 20,000 truly shovel-ready jobs.
And it would carry not only Canadian oil, but also oil
from the Bakken shale formation of North Dakota.
Even if it carried only Canadian oil to foreign markets,
it and the Gulf Coast refineries that would process the
oil would be operated not by robots but by American
workers. Would President Obama rather live in a world
dependent on oil from North America or on oil from the
Middle East and OPEC?
[/Investor’s Business Daily]
President Obama says these would only be temporary jobs. But so are the
infrastructure jobs he favors. Building a bridge creates jobs, but are
they “temporary” because the bridge will eventually be completed? The
workers will simply move on to the next project. So will the Keystone
workers, particularly if we remove the restrictions on and animus toward
fossil fuel development?
How could it not benefit our national economic and security interest?
With a proposed linkup with the booming production in North Dakota, North
American energy independence would be assured. If we also lifted the ban
on exporting crude, the geopolitical stage would experience a seismic
shift felt from Riyadh to Moscow as North American crude and liquefied
natural gas offered countries a source immune from Middle East eruptions.
Sure, gasoline prices have fallen, but largely due to another technology
President Obama and his environmentalist base opposed, also for alleged
environmental reasons – hydraulic fracturing or “fracking”. When they go
up again, and they will, wouldn’t it be nice to keep our petrodollars
here at home? Just why is it that President Obama wants Iranian crude on
the world market, but not American?
If Warren Buffett is shedding any tears over the demise of Keystone XL,
he’s crying all the way to the bank.
Source:
http://bit.ly/20HAmPZ
Related: Shipping Crude Oil by Rail: A Victim of its Own Success?
http://bit.ly/1NFg3gH
Are Pipeline Spills A Foregone Conclusion?
http://bit.ly/1OzONll
Rail v. Pipelines: No Safe Bet for Oil
http://bit.ly/1QedL9P
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