Last week President Obama killed the Keystone Pipeline, ensuring that oil from Canada will go to China, not here in the US. The environmental activists who own the Democratic Party were celebrating. They are also silent about a train wreck in Canada that caused an oil spill. Had Obama approved the Keystone initially, that oil spill would never have happened. Pipelines are significantly safer than rail for moving oil.
One of the major reasons Obama killed Keystone is his buddy Warren Buffett. Buffett owns the railroads that move most of the Canadian oil to US refineries and Keystone would have put a big dent in his profit margins.
In lieu of adequate pipeline infrastructure, oil companies have had to use alternative methods for shipping crude, including trucks, freight trains, and barges. In fact, more oil is moving by freight transit now than at any time since record-keeping began in 1981. From 2011 to 2012, U.S. rail deliveries of crude quadrupled. In North Dakota, which would have some usage of the Keystone XL, rail is used to carry 69% of production.
BNSF is the largest carrier of oil from North Dakota’s Bakken shale formation, and construction of the Keystone XL pipeline could put a dent in BNSF’s $22 billion annual revenue stream. In 2013, $5.7 billion of that came from industrial products, of which a major component is oil. Sales from that segment increased 14%, or $700 million, in 2013 due to “significantly higher petroleum products volumes.” Canadian National Railway and Canadian Pacific Railway have also been big beneficiaries of the political red tape, as they are the major shippers on the Canadian side.
Berkshire also benefits from the Keystone XL standoff via another subsidiary, Union Tank Car, which makes freight cars designed to haul crude oil. That company has been operating at full capacity in recent years, producing 6,240 cars annually amid excess industry demand from the shale boom. Buffett also said in his letter to shareholders last year that BNSF would add 5,000 tank cars to its fleet, evidence that demand is still growing for crude rail shipments.
Anyone who has been paying attention knows that the Keystone XL would have been safer than rail transport.
Anyone who has been paying attention knows that letting the EPA do anything is a disaster.
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