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Post by ty454 on Nov 16, 2009 12:40:35 GMT -5
Because the BN's primary business is hauling coal. How do you figure gasoline into this equation - well, unless you expect the resurrection of the passenger rail business....?? If gas prices go up it puts upward pressure on Diesel because more crude is diverted to the more profitable refinement. When truck costs rise, rail benefits. During the fuel price run up last year, trucks virtually disappeared from the 95 corrider for the first time in my memory. The price of gas directly drives the price of diesel which drives the mix of rail freight vs. truck freight. I think BH might be making a prediction about fuel costs. There's hope for you yet, Jim. Edit - there's only a small window in ratio of gasoline:diesel that can be produced from a bbl of oil. They can't just decide to produce more gasoline because it's more profitable this week and then change their minds next week. It's more a function of the price of oil, and the demand of diesel vs. gasoline. Up until last year, diesel was more expensive than gas as trucking was in demand during the boom. Up until just recently however diesel prices have been lower than gasoline as trucking dropped off a cliff. This EIA link for children shows the general ratio: tonto.eia.doe.gov/kids/energy.cfm?page=oil_home-basics
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trash
Full Member
Posts: 205
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Post by trash on Nov 16, 2009 13:10:09 GMT -5
Oh great cuz were that dumb.
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Post by jimschmidt on Nov 16, 2009 13:29:57 GMT -5
There's hope for you yet, Jim. Not really.
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Post by arozanski on Nov 16, 2009 17:28:53 GMT -5
The one joy of the broken economy has been the lack of trucks on the highway. Not around here - they are planning an expansion of a local highway due to the large number of trucks using it (Rt100, near the Rt 78 intersection). We still have many warehouses pumping stuff out - from where, I am not sure. Buffets sees something coming down the pike, no other reason to do this. Maybe he knows something about the petroleum supply? Talk about a shipping monopoly - when diesel is too expensive for trucks, where are you going to turn?
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Post by baldheadeddork on Nov 16, 2009 23:49:26 GMT -5
One thing t'all missed is that he thinks COAL is where it's at for the future. Guess who hauls all that Wyoming and Montana coal east for all those power plants. It be the Bee Enn, dudes. That's not entirely true. Look at the map of the BNSF lines. They do move the coal out of eastern and northern Wyoming (including the huge Powder River coal basin), plus Montana and the Dakotas, but the fields in southern and western Wyoming - plus the much more valuable bituminous fields in Utah and Colorado - are on Union Pacific routes. The only thing I've found to back up the connection between Buffett, BNSF and coal is one unsourced blog post. I'd be happy to look at more, but from what I know about the railroads (we have CSX in our portfolio) the growth opportunity that everyone is looking at going forward is in domestic intermodal - putting semi trailers on trains. Related to that, there is also an expectation that the big west coast (BNSF, UP) and east coast (CSX, Norfolk Southern) will eventually pair off in a merger or cooperative agreement to offer seamless transcontinental service.
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Post by flylooper on Nov 17, 2009 10:23:26 GMT -5
Merger? That would throw this country back to 1869, for crimminy sakes. A total regional monopoly. I wouldn't put it past Washington to look the other way on something like that, given their last 30 year track record, but it would be a definite throwback to the days of the robber barons like Stanford, Hill and Vanderbilt. BHD, have you ever ridden across the country? I have - twice, so far. Every one of the trains I saw heading east.....every single one...was pulled by string of a BN locomotives. Including, I'm sure, any trains heading to Indianapolis. I remember thinking to myself, I'd like to be the guy that sells the BN its rolling stock. Coal *had* to have an influence on Buffet's decision. Coal, to some extent, is recession proof. People need energy regardless of the economy. Intermodal (truck-train-truck and ship-truck-train-truck, is very much dependent on imports in the port cities. Now I'm not discounting that Buffet sees a resurgence in imports and is acting on that vision, but for now, it's a come bet. In fact, he stated as much as his reason for buying the railroad.
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Post by jimschmidt on Nov 17, 2009 12:24:24 GMT -5
I looked. I didn't find. Here's the quote from your article: "It's a very effective way of moving goods. I basically believe this country will prosper and you'll have more people moving more goods 10 and 20 and 30 years from now, and the rails should benefit."
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Post by jeromeoneil on Nov 17, 2009 12:37:54 GMT -5
Here's a thought related to fuel. Trains run on diesel, too. They move a lot more stuff for a galon of fuel, but the bottom line is that if fuel costs can kill trucking, they can kill rail, too.
So Buffet has more money than God. The country is trying to get moved to a "green" power grid, which means wind and solar. The states where that will probably flourish are those flyover states where the winds and the weather are somewhat predictable. They're also the states that will be crisscrossed by rail.
So, perhaps he's thinking 10 or 20 years down the line, he'll have a fully modernized electric rail system to play with.
And that would rock.
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Post by jimschmidt on Nov 17, 2009 15:57:57 GMT -5
Wind powered rail would surely rock. The efficiencies of rail freight are such that I suspect it'll be the last diesel user to go. Most fuel is used starting. Going moves large amounts of weight for not much expense.
On the high end, the US branch of Canadian Pacific averages 517 ton-miles per gallon.
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Post by jeromeoneil on Nov 17, 2009 16:01:59 GMT -5
So, diesel to overcome inertia, and green electric to maintain it. That's innovation.
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Post by jimschmidt on Nov 17, 2009 16:08:50 GMT -5
So, diesel to overcome inertia, and green electric to maintain it. That's innovation. No, I think you were right. Today Diesel drives electric motors which move wheels. Your plan just cuts to the chase.
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Post by ty454 on Nov 17, 2009 16:30:43 GMT -5
Here's a thought related to fuel. Trains run on diesel, too. They move a lot more stuff for a galon of fuel, but the bottom line is that if fuel costs can kill trucking, they can kill rail, too. So Buffet has more money than God. The country is trying to get moved to a "green" power grid, which means wind and solar. The states where that will probably flourish are those flyover states where the winds and the weather are somewhat predictable. They're also the states that will be crisscrossed by rail. So, perhaps he's thinking 10 or 20 years down the line, he'll have a fully modernized electric rail system to play with. And that would rock. That's exactly what I said. The existing trains aren't worth much in the long-term scheme of things. It will need to be electrified, and having the right-of-way access to the rail network is the biggest hurdle. As long as they have the land rights it'll be much eqsier and quicker to electrify the rail vs. having to buy up huge slabs of private and public land to install new rail networks. It's also what I said we should have spent our stimulus dollars on. Not BS piddly crap and various corporate bailouts. However, I think Jim is right regarding Diesel usage. Once the government and media absolutely are no longer able deny that oil production has entered its inexorable decline, I imagine you'll start to see rationing and prioritizing. It's not much a step to imagine the government basically mandating that intracontinental trucking basically cease and instead rail be used. That alone would save all sorts of fuel. The problem, as the Hirsch report pointed out years ago, is that we need decades to make this transition. It needs to happen now. Instead the whole problem is being ignored, or even denied. But that's another topic.
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Post by jimschmidt on Nov 17, 2009 19:56:24 GMT -5
Which leads to the macro problem. Our success as a country has always been based on being in the lead. Since Reagan ushered in the era of can't do, we've systematically squandered our edge and as we've lost it, we've also seen a rise in denial about losing it.
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Post by ty454 on Nov 17, 2009 20:17:33 GMT -5
Which leads to the macro problem. Our success as a country has always been based on being in the lead. Since Reagan ushered in the era of can't do, we've systematically squandered our edge and as we've lost it, we've also seen a rise in denial about losing it. Don't be silly Jim, everyone knows there are 187 Saudi Arabias worth of oil hidden in South Dakota. Enviro wackos just won't let us develop it.....drill baby drill!!!
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Post by flylooper on Nov 17, 2009 20:28:58 GMT -5
I looked. I didn't find. Here's the quote from your article: "It's a very effective way of moving goods. I basically believe this country will prosper and you'll have more people moving more goods 10 and 20 and 30 years from now, and the rails should benefit."
I picked up on this and attributed it to Buffet. We apologize for the inaccuracy. "And even if recovery is not economically straightforward, of course it hauls cheap imported goods from Asia to points all over the United States from the Pacific ports - like Los Angeles - where they land."
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