As most readers are aware, President Obama is doing everything he can to indirectly kill the Keystone XL Pipeline project, which was to bring millions of barrels of oil from Canada's tar sands region into the United States, creating jobs and growing our North American energy supply. Canadian leaders are now talking up an alternative pipeline to their western ports to ship all that oil to China. That may not be so easy though, as such a pipeline would be very expensive, having to cross the Canadian Rockies, and it faces its own enormous environmental opposition.
However, there is a quick and easy, but not so cheap, solution at hand: railroads. Railroads are often called on to transport oil when pipeline capacity is maxed out. Much of the giant Bakken Field in the North Dakota is now being rail served while waiting for new pipelines to be built. Shipping oil by rail costs more than a pipeline, but is more flexible, allowing shipments to wherever oil is priced the highest, and can be started almost immediately, compared to a pipeline which can take years to permit and build.
BNSF Railway is the major oil player in North Dakota, and its extensive lines into Canada make it the logical choice to ship most of the Canadian oil when all the alternatives are ruled out. Railroads typically charge several thousand dollars just to ship one tank car from the Dakotas to the Gulf, which move in 100 car unit trains. Canada could potentially supply many dozens of these trains daily if it totally committed to rail shipments, providing many new billions of revenue for BNSF.
Oh, by the way, you may know the guy who just bought BNSF, Warren Buffett. Is it just luck, or smarts, or something else?
Frank Friday is an attorney in Louisville, KY.