President Barack Obama's decision to withhold approval of the Keystone XL pipeline will hugely benefit one of his largest supporters - Warren Buffett.
Buffett made a $34 billion dollar investment in the Burlington Northern Santa Fe railroad (BNSF) one year after Obama was elected. BNSF essentially invented the business of carrying crude oil by rail when it launched its first long oil train in 2009. Rail shipments from North Dakota have surged from fewer than 100,000 barrels a day in 2010 to 800,000 barrels a day last October.
No wonder Buffet has such a good friend in the White House.
President Barack Obama presenst a 2010 Presidential Medal of Freedom to Warren Buffett, Tuesday, Feb. 15, 2011, during a ceremony in the East Room of the White House in Washington. (AP Photo/Carolyn Kaster)
Mr. Obama sites environmental issues as the key reason to hold up the Keystone XL Pipeline. But his rhetoric is more fiction than fact.
Three years of State Department environmental impact studies have found "no significant impacts." The truth is that the pipeline poses a far smaller environmental risk than moving oil by train.
While most crude oil is transported by pipeline, rail transport has been steadily increasing from 9,500 carloads in 2008 to 407,000 carloads in 2013 according to the Association of American Railroads. Moving oil by rail has come under increased scrutiny since the derailment and explosion of a train carrying crude in Lac-Megantic, Quebec last July in which 47 people were killed. More crude oil was spilled in American rail incidents in 2013 than in the previous four decades, according to a McClatchy Newspaper analysis of federal data.
The Keystone XL pipeline was supposed to link Alberta, Canada to the Texas Gulf Coast, thereby increasing U.S. independence from Organization of the Petroleum Exporting Countries. Canadian crude imports by rail have jumped from 1.6 million barrels to 40 million barrels from 2010 to 2013.
The Keystone XL pipeline is a "no brainer." It makes no sense to move this oil by rail when a pipeline can do the same job with far greater safety and at a far lower price.
Transporting crude oil by rail cost $10 to $15 a barrel compared to $5 a barrel by pipeline. Clearly the president is not concerned with the cost of transporting oil. He is far more concerned with making sure that his primary contributor continues to make millions from moving oil.
Mr. Obama professes to be a man of the people, but which people? The super rich continue to do very well with Obama in the White House.
The Keystone XL pipeline will help us reduce the need for Arabian oil. If we can break the hold of OPEC and gain energy independence, we can also change our footprint in the Middle East. Without the need of Saudi Arabian crude, we could let the Middle East drown in its oil. We could pull our troops out of Saudi Arabia and other Middle Eastern countries, thereby significantly reducing our military expense.
Like a ship without a rudder, we continue to flounder without the leadership necessary to secure our energy independence.
The president knows how to do one thing well - campaign. Six years into his presidency, when he is not playing golf, Mr. Obama travels throughout the U.S. in search of money to secure his political aims. One thing he is not in search of is what it takes to be a leader.
Until we can elect a president with wisdom and foresight we will continue to muddle along in endless debates about how to secure our energy independence.
John Lawrence Allen, a nationally recognized legal expert, represents investors nationwide in securities arbitration. Mr. Allen’s second book, “Make Wall Street Pay You Back,” was just released. For more information visit www.MakeWallStreetPayYouBack.com.
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