Buffett’s Bet on Rail: What Does It Mean for Transport and Energy?
The financial world was riveted this morning by billionaire investor Warren Buffett's move to take full ownership of the Burlington Northern Santa Fe (BNSF) railroad, a $34 billion deal that ranks as the largest ever executed by Buffett's company, Berkshire Hathaway.
Warren Buffett (Photo: Redfin)BNSF last year... moved a ton of goods 470 miles on one gallon of diesel. It releases far fewer pollutants into the atmosphere. It saves enormously on energy consumption and... it diminishes highway congestion. Rails last year moved 40 percent, more than 40 percent, over the country. They moved more than all those trucks, just the four big railroads. It's a very effective way of moving goods. I basically believe this country will prosper and you'll have more people moving more goods 10 and 20 and 30 years from now, and the rails should benefit.
That environmental rationale for Buffett's deal struck some in Washington as dubious. Frank O'Donnell, president of the green group Clean Air Watch, wrote on his website that the BNSF deal was "the biggest climate story of the day," bigger even than the political maneuverings of the Senate environment committee:
This is a $34 billion dollar bet that coal will remain the centerpiece of American energy policy in the future. Buffett clearly believes that coal use will remain strong -- and possibly grow. So he is putting his money on a vision of America with no effective climate policy at all -- or at least one that doesn’t slow coal growth.
BNSF's reliance on coal is indisputable; the black stuff has accounted for nearly half of its tonnage this year, and MarketWatch estimates that 10 percent of U.S. electricity comes from coal hauled by the railroad.
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