Comments on: All-American hero Buffett has a $26.6b rails bet http://www.crikey.com.au/2009/11/04/all-american-hero-buffett-has-a-26-6b-rails-bet/ now with extra source Sun, 12 Feb 2012 02:48:10 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Malcolm Street http://www.crikey.com.au/2009/11/04/all-american-hero-buffett-has-a-26-6b-rails-bet/#comment-44091 Malcolm Street Wed, 04 Nov 2009 10:48:17 +0000 http://www.crikey.com.au/2009/11/04/all-american-hero-buffett-has-a-26-6b-rails-bet/#comment-44091 There's another potential bit of synergy in buying a railway that supplies power stations. Electrification of long distance railways is rare in the US (outside the North-East) - if oil goes through the roof he has the option of electrifying the railway to run (indirectly) on coal. I assume he'd be in a position to negotiate a preferential electricity rate for his railway from power suppliers. This could give him a massive advantage over road transport in an expensive oil world. From what I understand CCS technology is less efficient than conventional coal-fired power, which would mean that if the power stations went CCS *more* coal would be needed. Lastly, if the oil price goes high enough, there's the possibility of coal-oil conversion. It's a very, very smart move (I'm tempted to say genius), seeing opportunities where others haven't, taking the long view and generally being typically Buffet. There’s another potential bit of synergy in buying a railway that supplies power stations. Electrification of long distance railways is rare in the US (outside the North-East) - if oil goes through the roof he has the option of electrifying the railway to run (indirectly) on coal. I assume he’d be in a position to negotiate a preferential electricity rate for his railway from power suppliers. This could give him a massive advantage over road transport in an expensive oil world.

From what I understand CCS technology is less efficient than conventional coal-fired power, which would mean that if the power stations went CCS *more* coal would be needed.

Lastly, if the oil price goes high enough, there’s the possibility of coal-oil conversion.

It’s a very, very smart move (I’m tempted to say genius), seeing opportunities where others haven’t, taking the long view and generally being typically Buffet.

]]>