Over the past several years, the Obama Administration has consistently cited the need for increased “infrastructure investment” as a selling point for spending hundreds of billions in taxpayers’ money. In 2009, congress granted the president’s wishes and passed the American Recovery and Reinvestment Act, which was meant to quickly create American jobs and improve the nation’s infrastructure. Despite this $831 billion bill, President Obama continues to call for more government “investment” in our infrastructure. As recently as his proposed 2013 budget, President Obama asked congress to spend an additional $800 billion for job creation and infrastructure investment. Unfortunately for the president, his budget inspired a rare wave of bipartisanship and the budget was rejected on a vote of 414-0.
Unfortunately, the president’s massive spending bills have failed to jump start our economy. The nation’s unemployment rate remains above 8% and the labor participation rate is at the lowest level in over 30 years. In other words, not since 1981 have we seen a greater percentage of Americans who are so discouraged about their chances of finding a job that they have simply stopped looking for work.
In the midst of the depressing economic situation we are in, a Canadian company named TransCanada Corporation proposed to spend billions of private dollars to build an oil pipeline from Alberta, Canada to the Gulf Coast of the United States. As our nation’s debt passes 100% of its GDP and quickly approaches $16 trillion, I would have expected the administration to jump at the chance to allow a private company to “invest” in our infrastructure, create American jobs, and strengthen our domestic energy sector.
Of course, when the option arose, the Obama Administration turned its back on American workers and taxpayers, rejected the Keystone XL Pipeline proposal, and appeased his environmentalist base and his famous billionaire backer, Warren Buffett.
What does Warren Buffett have to do with any of this, you may ask? Let me explain.
While the proposed Keystone XL pipeline would originate in Alberta, Canada, it would also transport oil from Montana and the booming oil fields of North Dakota. Without the pipeline, the vast amounts of new oil being discovered in North Dakota must be brought to market in a different way. According to Tony Clark, chairman of the North Dakota Public Service Commission, “Pipelines are by far the safest and most efficient way to transport oil, but we are left with a limited number of options if pipelines are off the table.”
The main option left on the table is transporting oil on railroads. As reported in a CBS News Report in January 2012, approximately 25% of North Dakota’s oil is currently transported on railroads, with that figure set to increase exponentially due to the shortage of pipelines as production in the area increases. Unfortunately for Americans suffering from a stagnant economy and high gas prices, it is approximately $3 per barrel more expensive to transport oil on rail than it is to use pipelines. Fortunately for Warren Buffett, his company Berkshire Hathaway happens to be the sole owner of the BNSF Railroad, the 2nd largest railroad in the United States. Even more fortunately for Warren Buffet, according to Justin Kringstad, director of the North Dakota Pipeline Authority, the BNSF Railroad transports about 75% of the oil that leaves North Dakota on railroads.
Put simply, President Obama has rejected a private investment in our infrastructure that will reduce oil prices, increase our energy independence, and put between 6,000 and 20,000 Americans to work. With ordinary Americans suffering from this decision, President Obama’s trusted advisor and most famous billionaire backer, Warren Buffett, will continue to profit as producers must use his railroads to bring North American energy to the market. At the same time, Buffett has lent his famous name to what Obama calls the “Buffett Rule”, a 30% minimum tax rate on individuals making more than $1 million. As Charles Krauthammer recently pointed out, the “Buffett Rule” has essentially no merit, and would not raise enough revenue in 250 years to cover Obama’s 2011 deficit. Is there any coincidence that Buffet would lend his famous name to this ridiculous policy after getting his desired pipeline decision? I think not.