Will Warren Buffett Really Make Billions Off The Keystone Pipeline’s Demise? It’s Complicated

More recently, rail executives themselves have said they expect to see crude-by-rail shipments increase because of Biden’s executive order.

The Verdict

None of this means Warren Buffett had anything to do with Biden’s decision to spike the Keystone Pipeline. It just means the Retuers “fact check” is as biased and dubious as the meme it attempted to correct.

Buffett does stand to profit from the cancelation of the Keystone pipeline and perhaps a great deal. BNSF remains a money machine at Berkshire Hathaway, and it’s preposterous to think that canceling a pipeline that was expected to deliver 300 million barrels of crude each year will not result in increased rail transport of crude (even if other pipelines pick up much of the slack.)

These potential profits stand to benefit from the fact that shipping oil by train doesn’t operate under the same price restraints as oil pipelines, which are regulated much like utilities by the federal government.

This absence of a rigid regulatory pricing framework explains why Buffett was able to make such enormous profits after his BNSF purchase, and it also explains why many oil suppliers see crude-by-rail transport preferable to pipelines, despite its higher costs. (As the video below shows, suppliers are willing to pay higher short term costs for greater shipping flexibility.)

As for Buffett, on one hand he has shown he possesses the lobbying chops to avoid many of the federal regulations that plague his competitors and other parts of the transportations sector. On the other hand, one should be careful about levying accusations not grounded in facts, and it’s worth noting that publicly Buffett has actually voiced support for the Keystone XL pipeline, saying it was “good for the country.”

Ultimately, we don’t know why the Keystone Pipeline was shut down. Biden’s executive order offers little explanation beyond platitudes, such as claims that the pipeline “would undermine US climate leadership.”

And perhaps that’s the answer. The Keystone XL may have simply become a symbol of dirty, nasty oil, which meant it had to go—even if there’s little dispute that spiking the pipeline increases pollution and energy costs and puts more lives at risk.

On the other hand, it’s not unreasonable to suspect that unproductive entrepreneurship may have played a role. When attempting to solve a mystery, police often start with a simple questionCui bono? Incentives matter, as any economist will tell you.

Whatever the answer, the real lesson of the Keystone XL pipeline is that when politicians make decisions instead of entrepreneurs acting within the marketplace, everyone loses.

Well, almost everyone.

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Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune. ...

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