January 3, 2014

Buffett buy shows Fracking Dilemma - exploding trains

By Mark Wachtler

January 3, 2014. Casselton, ND. (ONN) When yet another freight train carrying oil from North Dakota fracking sites exploded four days ago, Warren Buffett – the owner of the train line – made a major financial investment directly linked to America’s fracking boom. Thanks to his business partnership with President Obama, Buffett has spent the last five years making a fortune on federal policies before they’re announced. Is this another example?

47 people were killed when this train carrying fracked oil exploded in the town of Lac-Mégantic, Quebec. Image courtesy of Mining Awareness blog.

Warren Buffett is in the unique position of being one of President Obama’s biggest financial donors, most trusted advisers, as well as being the second richest man in the world. Buffett somehow made a fortune by investing in just the right corporations to take advantage of the President’s Stimulus Program. He’s also made a fortune investing in just the right corporations to profit handsomely from Obama’s ‘green initiatives’ and ‘alternative energy’ policies. Now, the world’s most psychic investor has jumped into the recent North Dakota fracking boom with both feet.



Rockefeller, Vanderbilt and Buffett

Those who choose to ignore history are doomed to repeat it. That wise old saying has proven itself true once again and it’s playing out in the form of today’s American fracking boom. John D. Rockefeller is the original Rockefeller who lifted the cut-throat family out of poverty and onto the throne of the wealthiest family in America. Rockefeller made his fortune in US oil. His counterpart and rival, Cornelius Vanderbilt, made his fortune in oil too, but by transporting it via railroad across America.

Today, Warren Buffett is using his privileged, inside information to once again make a fortune by trading on US federal government policy before it’s finalized. And he’s doing it by taking the place of both Rockefeller and Vanderbilt in America’s rerun of the 19th century oil boom. So far, Buffett’s Berkshire Hathaway has amassed large ownership stakes in US railroads. He then bought fracking companies. Now, he’s bought a corporation that specializes in moving fracked oil via pipeline instead of by rail.

For his part, and to protect from federal anti-trust prosecution, Warren Buffett swears he doesn’t know anything and is only trying to invest in the latest fracking craze by purchasing the companies that make up the industry. First, he took over America’s railroads. Six months ago, he bought a half-billion-dollar stake in Suncor. Two months ago, he bought a $3 billion stake in ExxonMobil.  He also purchased 27 million shares of Phillips 66. And four days ago, only hours after his latest train blew up carrying the explosive oil, he acquired a subsidiary of Phillips 66 that lubricates oil pipelines. See a trend?

Exploding trains

Who knew the oil excavated via the controversial fracking method was more volatile and explosive than typical oil? What a horrifying surprise it must have been for the owner of America’s major railroads, Warren Buffett, to suddenly discover his trains are blowing up due to the fracked oil’s explosive nature. Buffett invested heavily in US railroads just prior to the Obama administration’s surprise endorsement of fracking.

With tons of oil in North and South Dakota waiting to be moved to Canada and the Gulf coast but no pipelines in place yet to get it there, Buffett jumped on America’s railroads knowing they were the only way to move the millions upon millions of barrels of expected oil. But since then, a number of trains have literally blown up due to the highly explosive nature of fracked oil.

Six months ago, a train carrying fracked oil through the Canadian town of Lac-Mégantic, Quebec exploded in the center of town, creating a mushroom cloud visible for miles and destroying a large portion of the city. 47 people were killed in the explosion. Four days ago, another train carrying fracked oil exploded, this time in the North Dakota town of Casselton. The BNSF Railway train, owned by Warren Buffett’s Berkshire Hathaway, apparently collided with another BNSF train, causing 18 tanker cars of the 106-car oil train to blow up.



Explosion’s cause, and effect

As the 2,400 evacuated residents of Casselton began returning to their homes over the past 48 hours, the NTSB was already deep into its investigation about what caused the derailment and subsequent explosion. Investigators have found a broken axle, but don’t know if it caused the accident or was a result of it. In reality, it appears a north-bound BNSF train derailed seconds before a south-bound BNSF train loaded with fracked oil passed it. Instead of harmlessly passing, it struck the derailed train, causing both trains to leave their tracks and crash. Again, the NTSB is still investigating and that is only speculation by those involved.

Inspectors have announced that they’ve finished their inspection of the tracks and switching mechanisms and everything appeared to be functioning properly at the time of the explosion. As reported by ABC News, NTSB’s Robert Sumwalt confirmed the agency is looking at the probability that the trains collided. “We believe it to be a very short window," the outlet reported him saying of the time the grain and oil trains would have passed each other and the time of the crash, "Not a matter of minutes but something probably less than a minute. We think it was very quick."

Investors and environmentalists

The latest round of exploding trains has created another battlefield for those who support fracking and those who oppose it. If recent history is any indication, Warren Buffett’s massive investment into the US oil fracking industry shows the Obama administration plans to move full speed ahead with the expansion of fracking across America. If the resulting earthquakes and flaming tap water haven’t stopped fracking by now, a few exploding trains surely won’t either.

But Buffett’s switch from railroads to pipelines literally hours after his own train blew up from carrying fracked oil suggests that transporting the highly volatile product via rail may not be as feasible as once thought. And since Buffett seems to only invest on insider information, it also suggests President Obama will push through all the pending and stalled pipeline projects crisscrossing the US in preparation for moving billions of gallons of just-fracked oil. In his view, he won’t have any choice but to remove all obstacles from the various pipeline projects. The alternative is to bring America’s fracking boom to a screeching halt. And the President’s corporate backers, most notably Warren Buffett, won’t allow that.

For additional information, check out DeSmogBlog.

 

Related Whiteout Press articles:

Warren Buffett – the Devil in the Details

Naming Names: Obama Contributors and the Stimulus Scandal

Democrats and Media caught on Fracking Payroll

States knew Fracking causes Earthquakes

 

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