The rumors had been circulating in Washington for weeks, but Bloomberg brought it above the waterline on Thursday: "At closed-door fundraisers held over the past few weeks, the president has been telling Democratic Party donors that he will unveil new climate proposals in July." Just to make certain no one missed her message, the Bloomberg reporter used the word "fundraiser" twice in the article and "donor" five times. She did not make any direct mention of President Obama's personal interest in or commitment to the issue.
In short, Mr. Obama is about to hammer the American energy industry, and he's doing it for money.
The real elephant in the room is the Keystone XL pipeline project intended to bring Canadian oil to American Gulf Coast refineries and the resulting products onto the international market. In fact, the title of the Bloomberg article cited above includes the words "Keystone foes." Mr. Obama has already delayed Keystone, once and a final decision is coming up.
While Keystone has received a lot of press attention, there are two interrelated aspects that have not yet come to the surface.
First, as reported by the Dickinson Press in North Dakota on May 15, Lynn Helms, the director of the North Dakota Department of Mineral Resources, told the House Committee on Science, Space and Technology that if Keystone is approved, as it comes south, the pipeline would also carry up to 100,000 barrels of sweet North Dakota crude to the American refineries, in addition to the heavier Canadian product. As North Dakota's rate of production increases, the state should be producing in excess of 800,000 barrels per day by the time Keystone passes through, taking at most an eighth of North Dakota's oil production.
Second, Mr. Helms also told the House committee that the North Dakota Department of Transportation estimates moving 100,000 barrels per day by pipeline instead of its current mode of transport would result in three to six fewer traffic deaths per year and up to 150 fewer traffic injuries. Three to six doesn't sound like a lot in comparison to the U.S. national traffic fatalities, but North Dakota has a small population and every death or injury avoided is important to families and loved ones, no matter where they are.
What is this "current mode of transport" out for North Dakota crude? Rail, a much more expensive mode of oil and gas transport than pipelines.
As production of oil and gas derived from shale began in South Texas' Eagle Ford formation and West Virginia and Pennsylvania's Marcellus Formation, drillers were able to tap into an existing pipeline distribution system that went back decades. The shale revolution initially overwhelmed the pipeline systems in both places, and a lot of Eagle Ford shale gets shipped by rail today, but there are thousands of miles of pipelines in place and more are on the way.
When the shale revolution bomb got dropped on North Dakota, there were some pipelines but nothing in comparison to Texas, West Virginia or Pennsylvania. Even after Keystone, the overwhelming majority of North Dakota oil will still leave the state in tank cars for years to come.
What railroad? For the most part the Burlington, Northern and Santa Fe Railroad.
Who owns the Burlington, Northern and Santa Fe Railroad? The companies of the Berkshire Hathaway conglomerate, controlled by Warren Buffett of Omaha, Neb.
Mr. Buffett's rail-crude tie-ins don't end with the railroad. Berkshire Hathaway also owns Union Tank Car, one of the biggest makers of oil tank railcars.
How's the tank car business? Bloomberg reported in January, "People who want to ship oil can't get them," said Toby Kolstad, president of the consultant firm Rail Theory Forecasts LL, referring to railcars. "They're desperate to get anything to move crude oil."
Running Mr. Buffett's name through the Federal Election Commission data bank reveals page after page of contributions to Mr. Obama and every conceivable Democratic Party-affiliated organization, amounting to uncounted millions. Mr. Buffett has been contributing to the Democrats for a long time — decades — and it may be entirely coincidental that a lot of Buffett cash continued to the flow to the Obama money machine right when Mr. Obama delayed Keystone and continues to flow right when he may be blocking it permanently. There is no doubt, however, that every day Keystone is delayed, Berkshire Hathaway makes a lot of money. A chart of dollars out of Berkshire Hathaway and into the Democratic National Committee would look very ugly.
Finally, as Canada's ambassador to the United States, Gary Doer, said recently, "It isn't a matter of [whether this] oil comes to the United States. It's a matter of how." For now, it comes to the United States by rail.
William C. Triplett II is the former chief Republican counsel to the Senate Foreign Relations Committee.