Warren Buffett's Inscrutable Mind

[RRUserious]

Till recently, while reading Fortune Magazine, I didn't know that Berkshire Hathaway had bought Burlington Northern. As a result, the freight traffic that snarls Amtrak in North Dakota is generating money for Buffett's fund. What would threaten that flow of money would be what would delight Amtrak lovers, namely, the building of the pipeline to take away the transportation of crude oil.

Curious, then, that Huffington Post says the pipeline should go ahead. Its a mixed up situation. Amtrak is definitely an environmental force in America (as is freight rail). The Keystone pipeline is not, at least not in any direct way. So by putting his considerable influence behind the pipeline, it would seem like Buffett as an individual is recommending future reduction of Berkshire Hathaway's shareholders' profits in order to reduce the oil traffic of Burlington Northern. I don't know how to net this out.

Another way to reduce Burlington Northern would be to not NEED the Bakken oil. If I were a billionaire with genuine environmental concerns, I would say "leave the oil in the ground". And that's why I find Buffett inscrutable. He has some vision of green technology that is too convoluted for me.

 

[Rail Freak]

May be, that there is enough oil for both to succeed!?

But I do find it interesting that Buffet & crew had "The Vision" to jump in when they did!

 

[The Davy Crockett]

Or Berkshire Hathaway has holdings, or owns companies that will profit from the pipeline. :wacko:

BNSF is only one small piece of the pie.

 

[leemell]

May be, that there is enough oil for both to succeed!?But I do find it interesting that Buffet & crew had "The Vision" to jump in when they did!

Probably both. The current estimates of oil there at the current production rates say it will produce for 35-40 years. It had been said that this field is the most significant find in 30-40 years. It likely will have the US exporting oil.

 

[MrFSS]

May be, that there is enough oil for both to succeed!?But I do find it interesting that Buffet & crew had "The Vision" to jump in when they did!

Probably both. The current estimates of oil there at the current production rates say it will produce for 35-40 years. It had been said that this field is the most significant find in 30-40 years. It likely will have the US exporting oil.

Wonder if we could join OPEC??

 

[VentureForth]

My understanding was that it was Buffet who initially opposed the pipeline, encouraging Nebraska lawmakers to institute environmental impact as a concern. Sorry to folks in Nebraska, but if a pipeline burst in your state, would anyone notice?<br /><br />Think about it. Buffet lives in Nebraska. He opposes the pipeline. Buys BNSF. Why? He has a train that will transport a LOT of oil anywhere from the North to either the Gulf or California.

 

[leemell]

May be, that there is enough oil for both to succeed!?But I do find it interesting that Buffet & crew had "The Vision" to jump in when they did!

Probably both. The current estimates of oil there at the current production rates say it will produce for 35-40 years. It had been said that this field is the most significant find in 30-40 years. It likely will have the US exporting oil.

Wonder if we could join OPEC??

What a great idea!

 

[afigg]

Probably both. The current estimates of oil there at the current production rates say it will produce for 35-40 years. It had been said that this field is the most significant find in 30-40 years. It likely will have the US exporting oil.

Since this is not an oil forum, I will leave it at that there are many who hold the opinion that the production increases from the Bakken tight oil field have only a few more years to run before it goes into a production decline. A fracked oil well declines pretty steeply in production year over year. To maintain production rates as they move to the poorer parts of the field will require ever more drilling rigs and fracking operations at increasing costs with less oil to show for it. The Bakken boom may have only a couple of more years before it levels off. Which could be good news for the Empire Builder in the long run as the tracks will have gotten a lot of improvement and capacity upgrades during the upswing of the boom.

As for Warren Buffet, Berkshire Hathaway is a very large holding company with a diverse range of companies. Warren Buffet is playing on a much larger and complex playing field than any of us.

 

[RRUserious]

I suppose buried in the layers of investments BH has, there could be some that will gain more than any loss of business for BN. He hasn't had the success he had without big thinking.

 

[montana mike]

As mentioned in another thread, the BNSF people are building the infrastructure to support the Bakken fields for at least 70 years--this right from the guys who are working directly on this project--one of the most massive in that company's history (keep in mind only about 20% of the planned wells have even been finished in western ND--the rest won't be complete for another 5-10 years). Also, there is so much oil to be transported that the pipeline, if ever built--unlikely at least over the next three years--would not be able to carry even most of the oil that is being pumped. Current estimates by both ND and the oil firms working the fields are that by 2020 the Bakken area will be producing more than 2.5 times the designed capacity of this pipeline. So for Mr. Buffett and BNSF it's a win-win! Those very long energy trains will be a fixture of the hi-line for decades to come--this not my opinion, but from BNSF and even the governors of both MT and ND.

Note: While the ND portion of the Bakken has been underway now for several years the MT portion is just beginning. A similar amount of energy will be produced from those far eastern counties in Montana. Until recently these areas contained more coyotes than people. While some of the infrastructure currently being built in the Williston area will be able to support the MT efforts, the economic impact on these largely rural areas in MT will be enormous.

 

[RRUserious]

And I assume that the financing is from Wall Street at the ridiculously low rates now set by the Fed. All of which will feed unreal profits back to Mr. Buffett at the same time Empire Builder trains will have a zero ontime record. Aint high finance sweet?

 

[Bob Dylan]

What is left out of the stories about the Pipeline is that the Refined Products from the Canadian OIl (which is Dirty, that's why Canada doesnt want to refine it themselves!) will be Shipped Overseas (mainly China!!!) from Houston, not used here! Warren Buffet is a Financial Genius (he could have bought UP if hed wanted but BNSF is a better RR) and also an Old fashioned Patriot that feels that Good Fortune should be shared with everyone unlike the current Corporate Greedheads that are making Billions while workers suffer!

 

[RRUserious]

What is left out of the stories about the Pipeline is that the Refined Products from the Canadian OIl (which is Dirty, that's why Canada doesnt want to refine it themselves!) will be Shipped Overseas (mainly China!!!) from Houston, not used here! Warren Buffet is a Financial Genius (he could have bought UP if hed wanted but BNSF is a better RR) and also an Old fashioned Patriot that feels that Good Fortune should be shared with everyone unlike the current Corporate Greedheads that are making Billions while workers suffer!

Love your sense of humor. Chinese pollution does contribute to the planet's overall store, but it hits Chinese first and hardest. Since the Chinese have been doing jobs that Americans did once, I'm not exactly one to weep bitter tears for Chinese. They are human, but so were the people whose families become impoverished by being shuffled into service jobs.

 

[montana mike]

And I assume that the financing is from Wall Street at the ridiculously low rates now set by the Fed. All of which will feed unreal profits back to Mr. Buffett at the same time Empire Builder trains will have a zero ontime record. Aint high finance sweet?

In Mr. Buffett's situation Berkshire Hathaway is "self-financing" most of the entire infrastructure. If one looks at their financials they are awash in cash. Remember, most of what BH owns are financial/insurance firms anyway.,which generate lots of cash.

)

 

[montana mike]

I think the Chinese took the matter into their own hands earlier this year by purchasing the Canadian energy firm NEXEN, which will now be moving a substantial amount of that dirty tar sand goo thru Canadian pipelines and trains to Vancouver, where it will be loaded on board the world's largest tankers (also owned and built by the Chinese-most very large ships are now built in China) which will go back and forth between Canada and China.

My Canadian friends say it isn't so much they don't want to refine the Tar sands oil, they can and do now for their own needs, but they have very limited capacity right now and the Chinese have made them an offer they can't refuse by purchasing one of their energy firms.

:-(

 

[RRUserious]

And I assume that the financing is from Wall Street at the ridiculously low rates now set by the Fed. All of which will feed unreal profits back to Mr. Buffett at the same time Empire Builder trains will have a zero ontime record. Aint high finance sweet?

In Mr. Buffett's situation Berkshire Hathaway is "self-financing" most of the entire infrastructure. If one looks at their financials they are awash in cash. Remember, most of what BH owns are financial/insurance firms anyway.,which generate lots of cash.

)

BH has a cash store of $48 billion. But that doesn't mean he's wasting it on this project.

 

[montana mike]

And I assume that the financing is from Wall Street at the ridiculously low rates now set by the Fed. All of which will feed unreal profits back to Mr. Buffett at the same time Empire Builder trains will have a zero ontime record. Aint high finance sweet?

In Mr. Buffett's situation Berkshire Hathaway is "self-financing" most of the entire infrastructure. If one looks at their financials they are awash in cash. Remember, most of what BH owns are financial/insurance firms anyway.,which generate lots of cash.

)

BH has a cash store of $48 billion. But that doesn't mean he's wasting it on this project.

Well, he isn't borrowing it from Goldman Sachs or the feds, so it's mostly on hist nickel according to the BNSF people here in MT. I would think they are telling the truth.

 

[dlagrua]

Before anyone makes a decision about oil, trains and a pipeline; bear in mind that a large part of the Amtrak system runs on oil (diesel fuel) The commuter corridors that run on electricity get some of it from coal burning power plants. It seems fossil fuels will be with us for many years to come. Energy is a problem that we cannot run away from, but Amtrak to its credit, runs a system that is as green as possible right now..

 

[jis]

Many much maligned airlines are actually much more aggressive than Amtrak at reducing per seat-mile fule consumption as fast as they can because it all shows up in the bottom line. They do so by aggressively introducing new aircraft with more fuel efficient engines as well as retrofitting older aircraft with efficiency enhancements like fancy winglets etc.

Yes, we cannot run away from the energy situation. We have to however, have a plan of reducing fossil fuel usage without crashing the economy.

I will start believing that railroads are actually interested in going green when they start considering electrification. Until then they are at par with airlines in trying to get as much efficiency as possible out of fossil fuel units, so as to have ti show up in their bottom line, nothing more.

For Amtrak has no metric that tracks specific energy usage and no goals to optimize it against any balanced scorecard involving that metric. So whatever happens in the way of green is just plain dumb luck, and is not a managed activity.

 

[leemell]

And I assume that the financing is from Wall Street at the ridiculously low rates now set by the Fed. All of which will feed unreal profits back to Mr. Buffett at the same time Empire Builder trains will have a zero ontime record. Aint high finance sweet?

In Mr. Buffett's situation Berkshire Hathaway is "self-financing" most of the entire infrastructure. If one looks at their financials they are awash in cash. Remember, most of what BH owns are financial/insurance firms anyway.,which generate lots of cash.

)

In good financial times.

 

[leemell]

Before anyone makes a decision about oil, trains and a pipeline; bear in mind that a large part of the Amtrak system runs on oil (diesel fuel) The commuter corridors that run on electricity get some of it from coal burning power plants. It seems fossil fuels will be with us for many years to come. Energy is a problem that we cannot run away from, but Amtrak to its credit, runs a system that is as green as possible right now..

A Caltech professor (whose name escapes me right now) did some global energy modeling. One of his findings is that if all the commercially available green energy were used to near their maximum today, we would still need a very significant portion of energy generated by fossil fuels. A long time indeed.

 

[RRUserious]

Models, especially meteorological, are often wildly erroneous. For instance, if conditions FORCED a global lowering of standard of living, how would the model factor that in? So, I've heard of "models" for 60 years and learned to take them with a grain of salt. Recently, Alan Greenspan had a "model" that said the banking collapse couldn't happen. After it DID happen, he said to Congress "we found a flaw". Well, thanks a lot Mr. Greenspan, couldn't you have raised that possibility around 2000?

 

[leemell]

The modeling in this case was mostly not to predict the future, but to take today sources and use of energy and maximize the amount of green energy and see how much could be replaced today.

 

[RRUserious]

Which I find a bit irrelevant since a change can never be "done today". All energy structures change over substantial periods of time. And lots of factors go through flux, so a person would have to map different paths based on different assumptions for various technologies. Think tanks often do projections over 10 and 20 years and are wildly off due to being unable to see important things that change. Who really foresaw the stalling of Japan's economy? In that case, investors in Japan had to consistently make certain preferenctial choices for the inflow of capital to the country. The choices they made finally stalled the economy. Same could easily happen to China. And the last decade in the USA is something only pessimists foresaw. And no one listened to them.

 

[montana mike]

But Mr. Buffett seems to have made some very good bets on the direction of our economy over the decades for sure!! Especially as it relates to BNSF and their business. Could indeed be "dumb luck", but in his case I highly doubt that.