Thursday, October 06, 2011

COP: Warren Buffett, the Keystone Pipeline, and Crony Capitalism

Joe Herring

A decades-long crusade by the environmental left to convince us that oil is evil, unsustainable, and destroying our planet has yet to accomplish its goal of eliminating oil as a fuel, but it has succeeded in making oil damned expensive. However, new technologies for the extraction and transport of previously unrecoverable oil promise to reverse that trend.

One such project is the TransCanada Keystone XL pipeline, which will transport bitumen from the oil sands of Alberta to the refineries and ports along the Gulf coast. It will also feature a spur that will pick up oil from the vast Bakken oil formation in North Dakota. The benefit to our economy and energy security is obvious.

I live in Nebraska, one of the states that will be host to a segment of the pipeline. We have witnessed a remarkably contentious debate locally regarding the construction of the Keystone XL, revealing some rather disturbing attitudes regarding truth and its role in public discourse. I suppose it was naïve to think that the wild-eyed excesses of the radical leftist environmental movement would find little purchase in the commonsense plains of Nebraska, but the insupportable claims and charges being tossed about by the anti-pipeline crowd have proven that green insanity can take root even in our generally sensible state. The opposition, led most loudly by a group called BOLD Nebraska, claims a catastrophic risk of contamination to the Ogallala aquifer should the pipeline suffer a breach. The aquifer underlies virtually all of Nebraska, and several other states, and supplies drinking water and irrigation to millions of people. It is understandable that reasonable people would express concern over potential hazards to such a valuable resource, and it is this reasonable concern that BOLD Nebraska is exploiting with a combination of half-truths, innuendo, and outright lies.

As required by law, an Environmental Impact Statement (EIS) has been prepared for this project. The science reflected in the statement is sound, and it illustrates a comprehensive examination of the project's effects, likely risks, and reasonable alternatives. The EIS arrives at a conclusion supported by recognized scientific method and was conducted by top experts in their fields. The proposed route for the Keystone XL pipeline is, in fact, the safest of the available routes.

The reality of the geology and hydrology underlying the proposed pipeline route precludes any wholesale contamination of the aquifer. To understand why, it is important to understand what an aquifer is -- and what it isn't. It is a geological formation that is structured in such a way as to hold water in quantity. It is not an "underground lake." It is a vast filter system consisting of layer upon layer of sedimentary rock, silt, clay, and sand that in Nebraska lies much closer to the surface on the western portion of the aquifer than on the eastern portion.

For this reason, the water flow within the aquifer is easterly, making it a physical impossibility for any oil leaked along the proposed route to flow "uphill" to the 75%-80% of the aquifer that lies to the west of the pipeline. Additionally, both the oil and the chemical additives that make it easier to pump are lighter than water and would not emulsify. Leaked oil will simply migrate toward the nearest substrate, remaining localized.

This is according to Professor James Goeke, a hydro-geologist who retired from the University of Nebraska earlier this year after a forty-year career of studying the Ogallala aquifer and the Sand Hills region that overlies it. He is the foremost expert on the aquifer, and he informs us that the geological structure of the formation precludes any possibility that oil could travel for more than a few hundred feet in any direction before encountering substrate. Quite simply, the aquifer and the land above it are not in any real danger from this project.

Given that the science clearly shows the that pipeline opposition is persisting in perpetuating a demonstrable falsehood, it is reasonable to question the opposition's motives. According to their own website postings and editorializing in newspapers across the nation, their ultimate aim is not to reroute the pipeline, but rather to halt its construction now and forever. The thinking is, if the pipeline is halted, then the oil will stay in the ground, thereby protecting the earth from the ravages of such a "filthy fuel." Their tactic is to suggest a simple rerouting around the aquifer for the sake of safety.

The environmentalists well know that changing the route at this stage will result in the invalidation of the existing EIS (the real aim of the protests), thereby creating a need to begin the entire process anew. This time, leftists are confident that they will be able to demagogue and politicize that process sufficiently to preclude another approval, resulting in the exercise of a "green veto" despite the clear conclusions of sound science.

So what happens if the pipeline is never built? Well, to fully explore that, it is instructive to look at the players in this game. One can find the usual suspects among the hysterical left: Hollywood environmentalists such as Daryl Hannah and progressive agenda-driven scientists like global-warming alarmist James Hansen of NASA. These, however, are merely the "useful idiots" in the process, and not the actual players. I mentioned BOLD Nebraska earlier. This group is funded almost entirely by Dick Holland, who has been a close friend and business associate of Warren Buffett since the 1960s.

Holland was an original investor in Buffett's Berkshire Hathaway, and the two have remained close friends ever since. Buffett and Holland also share a similar political philosophy, both being liberal Democrats, with Holland giving exclusively to the Democratic Party. So why does this matter? It potentially answers a few questions about the recent behavior of Buffett and Obama, and perhaps the real reason behind the Nebraska-centric animus toward the pipeline.

A year after the election of Obama, Warren Buffett bought a giant railroad, the Burlington Northern Santa Fe. The BNSF has more than 32,000 miles of track and right-of-way in this nation, running from the west coast and through the agricultural heartland of America. It is also hauls coal from the mines in Montana and Wyoming and is the railroad with the best existing north-south infrastructure. In fact, it's quite well-situated to perform precisely the task for which TransCanada has proposed to build a pipeline.

Should the pipeline fail, the oil will still be extracted, but it will then be transported by rail, and Mr. Buffett, thanks to the efforts of his friend Mr. Holland, will be uniquely situated to derive a fortune from that business, as well as enhance the value of his holdings in Conoco-Phillips petroleum. Is it possible that Warren Buffett's assistance to Obama in both policy and public relations lately may be his way of trying to tip the regulatory scales in his favor? After all, nothing says "I love you" to a Democrat better than a public plea for more taxes.

In any case, the opposition to the pipeline is not only tainted, but intellectually and scientifically bankrupt. BOLD Nebraska are correct when they screech that there is an agenda being served here, but it is not big oil, environmentalism, or even green energy; it appears to be garden-variety crony capitalism, an Obama administration specialty.

The author writes from Omaha, NE and welcomes comments at his website www.readmorejoe.com

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