'Thank You, Warren.' 'No, Thank You, Mr. President!'
The "tar-sands" oil from Canada, and the crude from the Bakken and Three Forks formations in North Dakota, will be extracted regardless of the ultimate fate of the Keystone XL pipeline, but should the pipeline not be built, nearly all of the transport infrastructure for moving this oil will belong to one man: Warren Buffett.
A report on Bloomberg News outlining the benefits expected to accrue for the Omaha-based billionaire from the denial of the Keystone XL permit has received a great deal of play, appearing as a lead story on The Drudge Report, on Glenn Beck's news site "The Blaze," and in commentaries around the internet on sites such as Human Events.
In early October of 2011, I wrote an article for American Thinker about precisely this subject. I gave an extensive interview about the article to Alan Butler, host of the popular Atlanta radio show "Butler on Business." About a month later, a piece covering some of the same ground appeared in Investor's Business Daily, followed now with the Bloomberg story referenced above.
As gratified as I am to see this important story growing legs among other national media, I think it is very important to add one essential element to the discussion -- one that has been overlooked by other journalists covering this subject. Warren Buffett is not simply a "right-place-right-time" beneficiary of a happy circumstance that could conceivably multiply his wealth dramatically. He's not just another captain of industry trading on unfettered access to the president of the United States. I believe that he has orchestrated the whole darned thing.
From my first article:
So what happens if the pipeline is never built? Well, to fully explore that, it is instructive to look at the players in this game. One can find the usual suspects among the hysterical left: Hollywood environmentalists such as Daryl Hannah and progressive agenda-driven scientists like global-warming alarmist James Hansen of NASA. These, however, are merely the "useful idiots" in the process, and not the actual players. I mentioned BOLD Nebraska earlier. This group is funded almost entirely by Dick Holland, who has been a close friend and business associate of Warren Buffett since the 1960s.
Holland was an original investor in Buffett's Berkshire Hathaway, and the two have remained close friends ever since. Buffett and Holland also share a similar political philosophy, both being liberal Democrats, with Holland giving exclusively to the Democratic Party. So why does this matter? It potentially answers a few questions about the recent behavior of Buffett and Obama, and perhaps the real reason behind the Nebraska-centric animus toward the pipeline.
A year after the election of Obama, Warren Buffett bought a giant railroad, the Burlington Northern Santa Fe. The BNSF has more than 32,000 miles of track and right-of-way in this nation, running from the west coast and through the agricultural heartland of America. It is also hauls coal from the mines in Montana and Wyoming and is the railroad with the best existing north-south infrastructure. In fact, it's quite well-situated to perform precisely the task for which TransCanada has proposed to build a pipeline.
It was something of a head-scratcher for many in the investment game when Buffett bought the BNSF in 2009. At the time, there was little apparent upside in an aging railroad with dim prospects. I believe that this purchase was made with the demise of the KXL in mind. It was not long after that the chief opponent of the pipeline, BOLD Nebraska, came into being with a founding donation from Dick Holland. Not surprisingly, Nebraska is the state where the environmentalist left chose to plant their battle flag against the KXL. Again, from my previous work:
The opposition, led most loudly by a group called BOLD Nebraska, claims a catastrophic risk of contamination to the Ogallala aquifer should the pipeline suffer a breach. The aquifer underlies virtually all of Nebraska, and several other states, and supplies drinking water and irrigation to millions of people. It is understandable that reasonable people would express concern over potential hazards to such a valuable resource, and it is this reasonable concern that BOLD Nebraska is exploiting with a combination of half-truths, innuendo, and outright lies.
The fiction of wholesale contamination was broadcast throughout the State of Nebraska using a slick, very well-produced advertising campaign appearing in every form of media in the state. While a few spots were sponsored by fellow-travelers in the environmental movement, the vast majority were placed and paid for by BOLD Nebraska, a small group with very deep pockets. Jane Fleming Kleeb, the leader of BOLD, has thanked those pockets for making BOLD Nebraska possible. The recipient of those thanks? Dick Holland.
Mr. Holland has a remarkable amount of wealth residing in shares of Berkshire Hathaway, Buffett's investment firm. Holland was an original partner of Buffett. Considering the long, close relationship between the two wealthy businessmen, both lifelong residents of Omaha, and the financial ties between them, it strains credulity to think that there existed no coordination between them in the conduct of the KXL opposition, from which they would both benefit handsomely.
It has been noted that the president would likely alienate one of his two reliable bases of support by deciding one way or the other on the pipeline. The environmentalists are immovable opponents of the project, while unions are irrepressible supporters of the jobs it would create. With his denial of the pipeline, Obama stands to lose a great deal of campaign money from the construction and manufacturing unions, but with the advent this election cycle of the "super-PAC," those missing contributions can be more than made up by a pair of über-wealthy supporters from Omaha.
This story is about crony capitalism. It is about using the power of government to reward wealthy individuals for support, while the wealthy individuals use the power of government to clear the field of viable competition.
When this is all over, the money banked, and the deals consummated, the story will be sanitized for public consumption, perhaps aided by Buffett's recent purchase of the only major newspaper in Nebraska, the Omaha World Herald. When it is all over, the citizens of Nebraska will have been spitefully used by their most prominent citizen. The state will have spent millions for nothing, and been torn apart by a stage-managed battle with a rigged conclusion.
There is a way forward. The Congress is not powerless in this fight; the Constitution gives congressmen the enumerated power of regulating commerce. Typically, the Congress has demurred in favor of the executive branch when such decisions involve a foreign nation, but the case can and has been made that Congress has the power to approve this project despite the president's reluctance.
There is a bill from Nebraska Congressman Lee Terry, (R-NE) -- who has been a driving force behind the construction of this pipeline from the beginning -- to take the decision process away from the Department of State and more appropriately vest it in the Federal Energy Regulatory Commission (FERC), where it will likely be approved. Of course, this will set off a constitutional fight of epic scope as Obama seeks to keep his hands on the wheel, but given the amount of bipartisan support for this project in Congress, the bill has a good chance of advancing. Consider this article my contribution of grist for that mill.
Joe Herring writes from Omaha, NE and invites readers to his website, readmorejoe.com.