A viral meme on Facebook makes several claims regarding the Keystone XL pipeline and implies that billionaire investor Warren Buffett may have unduly influenced the 2013 decision by the Obama administration (and by extension the 2021 decision of the Biden administration) to not permit construction. The gist of the meme is that Buffett makes huge profits by transporting Canadian crude via rail and the Keystone XL pipeline threatened those profits. The meme goes on to say that Buffett’s well-known political contributions to Democratic party candidates bought him the influence to have the pipeline quashed.
After examining each claim made by the meme, I have determined that those points material to making the case against Buffett are mostly false or misleading and that his potential business losses to the Keystone pipeline are overstated or non-existent. The key claim that the Obama/Biden administration blocked the pipeline on his behalf is therefore false as well.
Below I have broken down each claim and provided supporting evidence for my conclusions.
Thank you to Facebook followers Tim for supplying this meme and Jacque for requesting a fact check about the Keystone XL pipeline!
CLAIM 1: BNSF owns all of the rail lines that connect to western Canada
Fact Check Rating: False
BNSF’s primary competitor, Union Pacific, also has connections to western Canada from the United States. UP is also engaged in moving crude oil from Alberta to refineries in the United States.
Sources
https://www.up.com/aboutup/reference/maps/system_map/index.htm
https://www.bnsf.com/ship-with-bnsf/maps-and-shipping-locations/rail-network-maps.page
https://www.up.com/investors/attachments/presentations/2012/investors-day/whited.pdf
CLAIM 2: BNSF hauls over 80% of the crude oil from Canada to the midwest and Texas.
Fact Check Rating: False
The vast majority of petroleum exported from Canada to the United States is transported by pipeline. According to the Canadian government, in 2019 3.18 million barrels per day was exported via pipeline, versus only 0.28M via railroad and 0.26M via marine transport.
Sources
CLAIM 3: BNSF charges $30/barrel to haul crude oil vs. $10/barrel cost of Keystone XL pipeline, according to State Department estimates.
Fact Check Rating: Mostly True/Mixed
The Canadian tar sands industry says that the cost-per-barrel to transport crude-by-rail is approximately $30, which is not solely the cost charged by BNSF or UP, as there are also costs to transport the oil within Canada as well as fees to cross the border and other costs. In a 2013 report, the US State Department did estimate that the Keystone XL pipeline would cost approximately $10/barrel to transport crude oil to the US.
Sources
https://2012-keystonepipeline-xl.state.gov//index.htm
CLAIM 4: BNSF is owned by Berkshire Hathaway, whose chairman is Warren Buffett.
Fact Check Rating: True
BNSF became a wholly-owned subsidiary of Berkshire Hathaway in 2010. Berkshire Hathaway’s chairman and CEO is Warren Buffett.
Sources
https://www.bnsf.com/about-bnsf/financial-information/
https://berkshirehathaway.com/
https://en.wikipedia.org/wiki/Berkshire_Hathaway
CLAIM 5: Buffett gives extensively to Democratic party candidates and causes including President Obama.
Fact Check Rating: Mostly True
Warren Buffet is famous for donating large amounts of his personal fortune to various causes and is a signatory of the Giving Pledge, along with other billionaires such as Bill Gates. He is openly a supporter of the Democratic Party and has given relatively large sums to candidates such as Barack Obama and Hillary Clinton. His company, Berkshire Hathaway, however, has made political contributions to Democrats and Republicans alike, which is a common, if controversial, strategy employed by many US corporations.
Sources
https://www.opensecrets.org/orgs/berkshire-hathaway/summary?id=D000021757
https://www.influencewatch.org/person/warren-buffett/
CLAIM 6: Buffett stands to lose $2B per year if the pipeline is constructed.
Fact Check Rating: Likely False
Many mainstream financial experts have examined the potential impact on crude-by-rail profits if the Keystone XL pipeline were to be built or remain unbuilt. The consensus is that key stakeholders in crude-by-rail are unlikely to see significant gains or losses either way because the current share of oil transported by rail is very low even without the additional capacity that would have been provided by the Keystone pipeline. Furthermore, BNSF is reported to transport a relatively small amount of Canadian tar sands oil as a portion of its revenue, and could even have seen an increase in profits following the construction of Keystone due to other products they transport that support tar sands oil production other than the crude itself.
Sources
https://www.fool.com/investing/general/2013/05/29/warren-buffett-doesnt-care-about-keystone-xl.aspx
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