When the Oracle of Omaha, Warren Buffett, buys, Wall Street listens. That is why the recent $500 million investment in Suncor Energy Inc. by Buffett’s Berkshire Hathaway investment company was good news for all the companies in the tar sands. It certainly tells us that business interests are not the same as those of us who care about our environment and the future of our planet.
Industry analysts tell us that Buffett recognized the depressed price of the tar sands companies because of the distribution problems. They say he saw the arguments as an opportunity rather than a problem. Americans are quite up to date on the waffling of President Obama’s administration on the Keystone XL Pipeline and are aware of the strong American environmentalist lobby helping fight the Northern Gateway pipeline across British Columbia to Kitimat. They are less aware of the growing fight against reversing the Enbridge pipeline to Montreal and the proposal to switch TransCanada’s main eastern gas pipeline to higher pressure bitumen slurry. Buffett has bought into a hornet’s nest but, as usual, he has an ace up his sleeve.
Even if all the current pipeline proposals were approved in Canada and the United States, that would be only half of the capacity that the tar sands people will want within ten years. Buffett’s Berkshire Hathaway interests include the key alternatives to pipelines. Besides a major American railway, this also includes Union Tank Car, one of the few companies building railway tank cars today that can carry crude oil. Despite the Lac-Mégantic disaster and despite the likelihood of more stringent safety demands on the railroads and on tank cars, this is still a major relief valve for the tar sands shipments.
Buffett’s bullishness is bound to impress and motivate other members of the Wall Street fraternity to jump into tar sand stocks and the pressure will become even more intense to override the objections of the environmentalists. As it stands, the oil sands industry has been able to stall the government on announcing the new environmental regulations that it tells Canadians about in the ads that are currently promoting the tar sands. The industry has put the government in the position of lying to the Canadian public and more and more Canadians are becoming aware of the duplicity.
But Mr. Buffett hardly seems to be concerned about the chicanery involved with bitumen from the tar sands. He is out to show the world how smart a businessman he is before he dies. He hardly seems to care about the environmental catastrophe that converting bitumen to synthetic oil creates for future generations.
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Copyright 2013 © Peter Lowry
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