Before the 2012 election one of the hottest political footballs was whether the US was going to allow the TransCanada Corporation to build a pipeline to haul Crude Oil to refineries in the US. The Republicans claimed if the pipeline weren’t built the energy needs of the US would be severely compromised.
On the other hand the ecologists claimed if the pipeline was built the amount of damage to the ecological systems could take hundreds of years to repair. They wanted to take several more years to study what the effects would be on the environment before they could put any stamp of approval on the project.
The truth probably lies somewhere in between. Business stresses if they don’t get what they want a financial calamite will surely ensure and the environmentalists are always going to take the opposite view of business, no matter what the issue.
So what happened to the pipeline? It seems no one cares anymore!
As usual Warren Buffett was right, the railroads can do a very good job of hauling Crude Oil, in fact they may even do it better and cheaper. TransCanada designed the pipeline to carry at least 850,000 barrels of Oil a day from the Canadian shale fields to the refineries on the Gulf of Mexico. Right now existing pipelines, plus the increase in rail traffic, is doing the job. The big winner in all of this beside Warren Buffett is Enbridge Inc., a company that is already carrying Crude Oil in their own pipeline.
The reason Enbridge Inc. won is because they can expand without the permission of the US government agencies. They have the right to expand existing routes and no one can stop them. In addition the shale findings in the US have the county awash with high quality crude oil for the first time in sixty years.
So when will the Keystone pipeline become relevant again?
That is anybody’s guess, but a couple of things are for sure, big business is never going to put all its eggs in one basket and it is almost always wrong to bet against Warren Buffett!
Keep those stops tight.
Todd “Bubba” Horwitz