Buffett-Obama Chart

RAIL DELIVERY OF CRUDE OIL AND PETROLEUM PRODUCTS RISING 

This is what we call our Warren Buffett-President Obama chart. You’ll recall Buffett gave Obama a boost in ratings early in 2011 when he made his statement, bogus though it was, about his secretary paying more taxes than he did. Most of Buffet’s income came via capital gains, taxed at the capital gains rate of 15%, not the earned income rate. That’s the only way his secretary paid more income tax and even then it’s a bogus claim.

Obama later repaid the favor this fall when he canceled the Canadian pipeline project until after the election in 2012. Recall, too, that Buffett owns Burlington Northern Railroad. Buffett had a 22 percent stake in BNR unitl Novemeber, 2009 when he bought out the rest for around $34 billlion.

The pipeline, Keystone XL from Canada, was going to create thousands of jobs in the lower 48. The Obama administration has pretty much been a jobless one including all those now defunct jobs in the solar industry that somehow went bankrupt after wasting tons of OPM. So Mr. Obama must have owed Mr. Buffett big time.

Source: U.S. Energy Information Administration, based on the Association of American Railroads.

Note: Data are weekly average originations for each month, are not seasonally adjusted, and exclude U.S. operations of Canadian National Railways and Canadian Pacific Railway; one carload holds 30,000 gallons.

More U.S. crude oil is being shipped by rail, especially from North Dakota where a lack of pipelines has companies relying on tank cars to bring the state's soaring oil production to market. Pipelines remain the most popular transport option, carrying about two-thirds of U.S. oil and petroleum products, but rail is on the rise.


The Association of American Railroads (AAR) tracks combined rail movements of oil and refined petroleum products. In the first ten months of 2011, nearly 300,000 tank cars transported U.S. oil and petroleum products, up 9.1% from the same period in 2010, according to AAR. The growth in petroleum-by-rail shipments is much stronger than the 1.8% increase for all railroad cargo combined during the same period.

While AAR does not issue separate data on crude oil and product shipments via rail, it notes that anecdotal evidence indicates most of the growth in the crude oil and petroleum products category is likely due to crude shipments. Based on different sources of rail traffic data, the trade group said shipments of crude oil and liquefied natural gas accounted for about 2% of all carloads in 2008, 3% in 2009, 7% in 2010, and about 11% so far in 2011. One carload holds 30,000 gallons of oil.

BNR is the second largest railroad in the U.S. and as the chart illustrates with the darker lines BNR has a neavy presence in the North Dakota-Montana oil basin. Map of the Bakken Formation oil and gas play. The Bakken is below parts of northwestern North Dakota, northeastern Montana, southern Saskatchewan and southwestern Manitoba.

 

Now hiring: North Dakota oil boom creates thousands of jobs

Thu Oct 27, 2011 1:43 AM EDT
By Catherine Kim
and Jessica Hopper
Rock Center
Those hurt hard by the ailing economy are flocking to Williston, N.D., where an oil boom has turned a sleepy prairie town into a place producing thousands of jobs.
"There's opportunity here and that's what we all need is opportunity," said Williston Mayor Ward Koeser. "It's kind of been an oasis for the country. You know, there's a lot of jobs here, good paying jobs in the oil industry."

Williston is situated on the Bakken formation, an oil field that some say will produce the biggest boom in North America since the 1960s. Koeser said that his town currently has 2,000 to 3000 jobs and they haven't been able to fill the openings fast enough.

"A lot of jobs get filled every day, but it's like for every job you fill, another job and a half opens up," Koeser said.

A job on an oil rig can pay as much as six figures. The starting salary for truck drivers is around $80,000. While the nation's unemployment rate is 9.1 percent, Williston's unemployment rate is less than 1 percent.

Locals say job seekers from all 50 states are heading to the North Dakota town, becoming modern-day pioneers. The town's population has nearly doubled from 12,600 people to 23,000 people. Patrick Parker hitchhiked from Yuba City, Calif., to Williston. When NBC News spoke to him, he had just $12 in his pocket. Parker, a paving stone layer by trade, has been out of work for two years.

"One of my goals is to make my daughters proud of me," said an emotional Parker. "I want to make them proud because I worked a good job for 10 years and then for it to go away it's just, it just gets to me a little bit." Parker is one of a dozen people NBC News saw setting up camp or living in their cars in the parking lot of the local Wal-Mart. Williston's housing construction hasn't caught up with its rapid growth.

Parker said the town feels "like the old gold rush town."Oil was discovered in the this part of North Dakota 60 years ago, but it was only recently that oil producers have found a way to get at it more effectively. After drilling about two miles down, they drill horizontally for another two miles through the bed of rock where the oil is trapped. Using a technique called fracking - water, sand and chemicals are shot into the rock formation from that horizontal pipe to create cracks and fractures. From those openings, comes the oil. Those in the oil industry say the tight rock that traps the oil, also prevents it from escaping into the water table during the fracking process.

North Dakota is currently the fourth largest producer of oil in the United States, but that is projected to change soon. A spokesperson for North Dakota’s Mineral Resources Department said that oil production in the state is expected to surpass Alaska and California by 2015 which means North Dakota will be the second largest oil producer in the country soon.Along with the bounty from the oil boom, come some stresses and strains. A sewage system that's running at full tilt, truck traffic congestion, an influx in 911 calls-those are just a few of the headaches that keep Mayor Koeser up at night.

There is such a large influx of people that thousands are staying in 'man camps'- shipping containers converted into housing units for the workers new to town. When more teachers were hired to deal with the rising number of students, an apartment building had to be built to house the new teachers, Koeser said.
"When we have as many people come here everyday looking for work, where are they going to live," Koeser asked. "How are we going to get water to them and sewer to them and a road to them and power to them and all those sorts of issues. Yeah, it's putting a tremendous amount of pressure on the infrastructure."

Of all the stresses, the biggest strain on the community is truck traffic, the mayor said.
"That's really stressing us, the traffic, a lot of accidents," said Koeser. "In a small community, you're used to getting from one side of town to the other in just a few minutes, that's no longer the case."
The number of accidents in September were double the amount the same time a year ago, the Williston Herald reported.

The surplus of people living in the town coupled with the traffic accidents has led to a drastic rise in calls to 911. Koeser said that the police receive at least 10,000 more calls a year than in pre oil boom times.
"Now keep in mind, you've got, you know, probably 9,000 men living in man camps around the city, not in the city limits, but living around the city and what do they do at night when they're done with work? They come to town and find a bar and want to have a good time, and sometimes get in trouble," Koeser said.
But that means more jobs: the town is adding six new policeman and three dispatchers this year, the mayor said.

Even with the headaches, Koeser said he and Williston's other residents are lucky that the town has become an oasis for job seekers.

What Does Buffett’s Purchase of Burlington Northern Say About Commodities and the Dollar?
Posted By admin On November 5, 2009 @ 11:00 am In Commentators,Commodities,Logistics |
Every story I have seen on Warren Buffet’s purchase of Burlington Northern for $26.3b earlier this week contains a different take on “why” Berkshire Hathaway did the deal. Of course we at MetalMiner have our own $.02 (which we have included), but thought you may appreciate glancing through all the possible reasons for “why this deal.”

Top 6 Reasons Warren Buffett (Berkshire Hathaway) Bought Burlington Northern:

1. Perhaps Mr. Buffett has forgotten his own rules of investing? This article discusses how he violates his own rules [1] for “buying cigar butts” and not splitting his own stock
2. A very popular argument [2] put forth as to the rationale behind the purchase goes like this: Buffett believes the US economy is poised to come roaring back fueling the need for the movement of goods across our vast country
3. Some believe he had too much cash on hand, $37b to be exact, something Buffett himself says limits his ability to make money [3]
4. Buffett believes that crumbling roads and failing infrastructure along with increased environmental pressures around carbon emissions represent a boon to rail [4]
5. Buffett is signaling where he thinks dollars [5] will get spent (e.g. on commodities), “Instead of turning to gold, Buffett sees Burlington Northern as a growth vehicle to earn more on the billions in cash Berkshire has on its books carrying coal, wheat and other resources across the nation.”
6. Or, my personal favorite, is Buffett buying the railroad because, “This is all happening because my father didn’t buy me a train set as a kid,” Mr. Buffett joked in an interview [6].
The Times article suggested that the deal made sense, even using Buffett’s own investing maxims: only buy what you understand, buy at bargain prices and move quickly. Unlike the Times article, though, we would argue the deal was not “a bargain” and subscribe to the Wall Street Journal point of view. Burlington Northern was no “cigar butt.”
What’s our take? The purchase likely involves several of these rationales. But when Warren Buffett does the biggest deal of his career and it happens to involve trains to carry commodities, do we have any doubt as to where the Sage from Omaha thinks metal markets will move?
Cornelius Vanderbilt must be chuckling in his grave.

Buffett for years has been known as the Omaha Scold, but given what we now know about the facts and his support of Obama, the Omaha Hypocrite might be more appropriate.