Coal Play, or Right-of-Way?

A friend of mine once told me that Union Pacific Railroad was the second largest US landowner, second to the US Government.  I might have heard that Ted Turner now is number two, but my point is this;

Warren Buffet’s Berkshire Hathaway has just purchased Santa Fe Burlington Northern Railroad.  I listened as the tv stock analysts speculated on the future of rail transport, coal and how the premium paid is way high. 

Don’t forget,  Berkshire owns Mid American Energy, currently run by a Buffet successor favorite, David Sokol.

What Berkshire and Mr. Buffet just purchased isn’t just a railroad.  It is right-of-way ownership that connects every piece of land adjacent to the railroad to a network of electrical transmission facilities that currently use coal delivered by Burlington Santa Fe across its rail and sidings.  Those facilities already have right of way to businesses and consumers of electric energy. 

Now take Mid American Energy or, for that matter, any wind farm or solar farm adjacent to the rail line and you have a single lease to clear the way to market for your green energy generating facility, not on the rail, but buried next to it or on lines hanging above it.  Boone Pickens outlined plans a few years ago to build the world’s largest wind farm in Pampa, Texas.  He opined at the time as to the difficulty in connecting that electricity to consumers.  The Santa Fe Railroad runs right through Pampa.

So, for now, maybe it is about coal.  But as coal loses its glow, later, and not in the far distant, but just a little later, it is about an incredible stroke of genius that simplifies and solves the single greatest challenge of wind and solar farms…..transmission. 

If it isn’t the plan, maybe it should be.  One question that may have to be addressed is whether or not it is in the public interest to concentrate generation and carriage of future energy into so few hands.  It could create a new generation of robber barons.  That aside, I think I’ll buy my grandchildren some Berkshire stock (post split, of course).