homepage logo


Daily News Editorial

By Staff | Nov 6, 2009

Warren Buffett decided to buy the rest of Burlington Northern Santa Fe for $34 billion just because he wanted to be a nice guy and help out the economy, right?

Gee, sorry you hit your head so hard when you fell off that turnip truck.

In all actuality, Buffett’s decision to broker the biggest deal ever for Berkshire Hathaway is profit, just plain and simple.

Does that mean it’s not environmentally sound?

Not in your life.

Buying a railroad at this point in time is nothing short of shrewd and brilliant, particularly considering the environmental mandates that will shortly be coming down the track. And here’s why.

If you consider the ratio of fuel use for tonnage hauled, railroads have it over trucking hands down. Not to mention the fact that railroads maintain their own infrastructure. We can hardly say that about highways which are paid for with fuel taxes and other taxing sources.

We’re already seeing the conflict on the horizon in the international community regarding climate change discussions. Representatives from some African nations walked out of U.N. climate talks in Barcelona, Spain, Tuesday due to the reluctance of wealthier nations to commit to substantially reducing carbon. That’s completely understandable. We expect every nation to put a cap on carbon emissions, but the point is that we’ve had the chance to develop while many other nations haven’t. That makes an across-the-board cap a way of keeping other nations from developing.

Some Republicans this week also boycotted a committee debate on legislation curbing greenhouse gasses, something they said would stonewall an already precarious U.S. economy.

Buffett, though, sees a win-win for a longterm investment in the environment. Never known for following the crowd, Buffett has in fact made visionary investing his trademark. By investing in an established rail infrastructure, he stands to benefit from a change in government policy that could very likely favor rail subsidies over highways. It only makes sense, given the advantage of the fuel-to-tonnage ratio that rail has over highway transportation.

And there’s another intriguing possibility about rail too – mass transit.

While commuter trains are commonplace along the Eastern seaboard, they’re practically nonexistent in the Midwest and West, except for major cities. If you look at a map of the Burlington Northern Santa Fe infrastructure, which starts at Chicago and extends south and west, you’re also looking at an area that’s tremendously underserved by mass transit.

Look for Buffet to make a major investment in developing the rail infrastructure to accommodate commuter service. It only makes sense.

So what would this commuter system look like?

Undoubtedly, it would be a virtual office on wheels. Business people would be able to conduct conferences via satellite by rail as they travel from point to point. Certainly, virtual meetings on the Web have already cut down drastically on the need for most business meetings. But those meetings where the “deals are sealed” still require a face-to-face presence.

Also look for the new commuter service to take a cue from France and Japan and put high-speed rail into service. If you can go from Des Moines to Chicago in two to three hours, that’s actually probably less time than you would spend at the airport waiting through flight delays. Add even more time for bad weather.

It will be interesting to see how other investors take Buffett’s lead and see green investing as not only green for the environment, but also for their balance sheets.