KeystoneXL Kops Update- Buffet's BNSF Railroad Stands To Benefit From Keystone Veto; IL Congresswoman- 20,000 Jobs Projected "Not that Many"

BNSF freight train cresting the Cascade Range in Washington state. Photo- Mike Bjork

According to a recent report in Bloomberg, Warren Buffet's BNSF Railroad and parent company Berkshire Hathaway [NYSE: BRK-A] stand to gain more traffic and revenue after President Obama declined approval of the proposed KeystoneXL pipeline from Canadian firm TransCanada [NYSE: TRP/TSX: TRP] that would transport oil from Alberta' Abathasca Tar Sands to Gulf Coast refineries.

A BNSF spokeswoman stated that if the KeystoneXL Pipeline "doesn't happen, we're here to haul".

With modest expansion, railroads can handle all new oil produced in western Canada through 2030, according to an analysis of the Keystone proposal by the U.S. State Department.

The rail option, though costlier, would lessen the environmental impact, such as a loss of wetlands and agricultural productivity, compared to the pipeline, according to the State Department analysis. Greenhouse gas emissions, however, would be worse.

Investors such as John Stephenson, who helps manage $2.7 billion for First Asset Management Inc. in Toronto said he anticipated the project would move forward next year. Pipeline shipping costs remain lower than rail, and a lack of readily available tanker cars may create a bottleneck.

The availability of tank cars may create a temporary “hiccup” in transport capacity, according to Tony Hatch, an independent railroad analyst in New York. Rail cars are “a pretty hot commodity,” as a result of demand from oil producers in North Dakota, he said.

Rail car production is already at a three-year high as manufacturers such as Greenbrier Cos Inc. [NYSE: GBX] and American Railcar Industries Inc. [NASDAQ: ARII] expand to meet demand for sand used in oil and gas exploration, according to Steve Barger, an analyst at Keybanc Capital Markets Inc. in Cleveland, citing Railway Supply Institute statistics.

Oil and natural gas moving to refineries by train is hardly a novel concept. Between 1983 and 1997, the Southern Pacific Railroad ran a daily 70+ car train from the oil fields around Bakersfield, CA over the Tehachapi mountains to the refineries in Long Beach, CA. The train- sometimes known as the Oil Can- ceased its daily run after a pipeline over the mountains was completed in the late 1990s. Over in Big Sky Country, the Montana Rail Link runs a daily 126-mile gas train between Missoula and Thompson Falls, MT to bypass a section of Conoco-Phillips' [NYSE: COP] Yellowstone Pipeline after a section of the gasoline pipeline in the Flathead Indian Reservation was shut down following a 1993 spill.

However, both of the aforementioned measures described were primarily stopgaps and seemingly inadequate for the scale and distances involved with the Abathasca Oil Sands. With a dedicated pipeline, TransCanada wouldn't have to worry about the tank cars sitting idle in a rail yard somewhere, crew changes every 200 or so miles or moving empty tank cars back to the oil fields.

To the south of the Abathasca oil sands, both BNSF and Canadian Pacific have been working to improve capacity and track speed on some of their North Dakota lines in order to better serve the Bakken Oil Shale that straddles the US/Canada border. In addition to the traffic generated from the Bakken shale, it would also be worth pointing out that BNSF would've also benefited if the pipeline was approved, as it is virtually the only Class 1 carrier that runs through the projected KeystoneXL pipeline route and almost certainly would've been called upon to deliver much-needed equipment and supplies for the construction and maintenance of KeystoneXL.

In a rather curious development, the original story on Buffet and BNSF disappeared from Bloomberg's website on January 24th, the same day as President Obama's State of the Union Address. The San Francisco Chronicle website had a version of the Bloomberg article up on their page, but by Thursday morning the original article was back on the Bloomberg page.

Obama mentioned numerous times that Buffet's secretary pays a higher tax rate than her billionaire employer while in his repeated calls for higher taxes. Buffet's secretary was present for Tuesday night's State of the Union address, sitting with first lady Michelle Obama. However, that little bit of political theater could backfire now that it's been learned that Buffet's secrtary could make anywhere from $200,000 to $500,000 annually. It's entirely possible that a sympathetic Bloomberg could've temporarily spiked the article to avoid any bad publicity while one of Buffet's employees was going to be used as a class-warfare prop from the President during Tuesday's state of the Union.

OMG! ThEh st00pid! It burns! IT BUUUUUUUUUUUUUUUURNS!!!!!

OTHER KEYSTONE-XL NEWS: In an interview with Chicago's WLS radio, Congresswoman Jan Schakowski [D IL-9] told host Don Wade that the projected 20,000 jobs lost due to the KeystoneXL veto "..is really not that many jobs".

It was a brief snippet, to be sure, and I thought that perhaps with the benefit of some context, the Congresswoman was merely saying that she was skeptical that the project would create 20,000 jobs [I ardently support the project but even I find that number a little optimistic- NANESB!]. So I found a longer snippet, and not only does the suburban Chicago democrat say exactly I thought she said, she goes on to promote the Obama Administration's massively failed Green Jobs agenda and blames Republicans for Obama's veto, even though most Republican Congressmen, Senators and governors support the project.

"Twenty thousand jobs is really not that many jobs and investing in green technologies will produce that and more. But I'll tell you what, you know it seems to me that the Republicans would rather have an issue than a pipeline" [emphasis mine- NANESB!]

The Illinois Democrat, who was also marching with Occupy Chicago and the Communist Party USA in late 2011 was probably unaware of two more 'green energy' companies touted by President Obama and the recipient of stimulus funds have either filed for bankruptcy or begun massive layoffs this week [To be fair, it's not like Solyndra or Evergreen solar made much headlines or anything- NANESB!].

Lest anybody thinks I'm being harsh or cherry-picking quotes from Schakowski, you're more than welcome to listen to the archived interview here.