By Norris McDonald
Environmentalists might claim a win when President Obama rejects the Keystone XL pipeline, but it is more likely that Warren Buffet's purchase of a Canadian tar sands company and his lock on significant railroad assets will be responsible for the decision. Canada also gave President Obama an out by announcing an eastern pipeline project.
Warren Buffett's Berkshire Hathaway announced through a regulatory filing with the Securities and Exchange Commission that it bought $524 million worth of Suncor stock last quarter. Suncor is a Canadian oil company that derives most of its current oil production -- and future expansion plans -- from Alberta's oil sands.
Buffett bought Suncor to help ensure a steady supply of oil for his Burlington Northern Sante Fe (BNSF) railroad. Oil currently accounts for about 4% of BNSF's freight. That's expected to double over the next several years.
Suncor owns huge tracts of oil sands resources from which oil production is projected to continue to grow.
Suncor doesn't have the same transportation issues as some other oil sands producers. It has locked up more than enough pipeline and rail capacity to move its current and planed production for several years. Plus, it owns several refineries, which help the firm avoid having to sell its crude for the depressed, mid-continent prices.
The State Department said in its recent environmental impact statement that if a permit
for the Keystone XL pipeline is denied, oil producers would simply send their product to markets via railroads. The pipeline would carry oil from northern Alberta to the Texas Gulf Coast. As a result, the State Department reasoned, blocking the pipeline would have no beneficial impact on greenhouse gas emissions because the oil sands would be developed anyway.
I initially thought that President Obama would direct the State Department to approve the Keystone XL pipeline because he would conclude that the oil would be shipped by rail anyway, probably further increasing greenhouse gas emissions.
In his climate change speech on Tuesday, President Obama said:
“Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest,” Obama said. “And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution.”But now, with the Canadian eastern pipeline proposal and the Buffet 'influence,' I have to conclude that President Obama will reject the Keystone XL Pipeline because he will get the environementalist cred, hold harmless from the Canadians because of the eastern pipeline proposal and thanks from a future supporter, Warren Buffet. (CNN Money, 8/15/2013,WSJ, 8/7/2013, Photo: Getty Images, Wash Post, 7/8/2013, Wash Post, 6/24/2013, Wash Post, 6/24/2013, FleetNewsDaily))
“The net effects of climate impact will be absolutely critical to determining whether this project will go forward,” he added. “It is relevant.”