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SUNDAY, NOVEMBER 22, 2009
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 ANALYSIS 
7

Buffett's Railroad Buy Is a (Smart) Bet on Coal

Growth in US economy will boost electricity demand

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(Newser) – Berkshire Hathaway’s acquisition of railroad operator Burlington North Santa Fe is really a "huge bet" by Warren Buffett on the coal industry, writes Steve Gelsi. Burlington hauls more coal than anything else, and the material accounted for a quarter of its third-quarter revenue. Buffett already is heavily invested in coal—"of the largest 15 US electricity generators, Berkshire Hathaway holds the portfolio with the largest carbon footprint."

The wager is characteristically smart, writes Gelsi at MarketWatch. Coal still provides nearly half of America’s electricity, and 34 new coal plants have either been approved or are under construction. The nation's GDP is expected to grow between 2%-3% in 2010, and the resulting increase in demand for electricity would raise coal consumption between 5% and 7%.

Burlington Northern Santa Fe locomotives are seen in a rail yard in Kansas City, Kan. Tuesday, Nov. 3, 2009.
Burlington Northern Santa Fe locomotives are seen in a rail yard in Kansas City, Kan. Tuesday, Nov. 3, 2009.   (AP Photo/Charlie Riedel)
A Burlington Northern Santa Fe train passes through Crawford, Texas, Tuesday, Jan. 13, 2009.
A Burlington Northern Santa Fe train passes through Crawford, Texas, Tuesday, Jan. 13, 2009.   (AP Photo/Tony Gutierrez)
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7 comments
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dontlikenobody
Nov 3, 09 6:11 PM CST
Well, gee, thank God it'll be Clean Coal!! My lungs feel better already. Reply
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+2
Jayster999
Nov 3, 09 6:21 PM CST
We should go nuclear. France did it years ago and has benefited from some of the cleanest, cheapest energy around. Reply
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+3
IN RESPONSE:
Altoecko
Nov 3, 09 8:44 PM CST
Exactly! As long as we take care of the waste Nuclear is the best generator there is. Coal has just as much waste as Nuclear does but it's nearly 4 times harder to take care of. Then there's sequestration that does nothing but put it under ground to deal with it later.
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0
IN RESPONSE:
JoeQ
Nov 4, 09 12:33 AM CST
Most of the easily refined uranium comes from Canada and we would be in competition with China for it.
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0
Netstorm2k9
Nov 3, 09 6:28 PM CST
Have invested heavily in solar power decades ago, when the tech first emerged. It'd be cheap and plentiful now, and the decades of research funded by heavy investment would have given us improvements in methods and materials so that it would be almost expensive to use hydrocarbons. Reply
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+1

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