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Berkshire Hathaway buys BNSF

Warren E. Buffett is officially a railroad tycoon, joining folks like Cornelius Vanderbilt and John D. Rockefeller.

For $34 billion dollars his investment company, Berkshire Hathaway, now will assume 100 percent control of the Burlington Northern Santa Fe Railroad (BNSF).

1 Buffett has been investing in railroads and railroad rolling stock for a couple of years now. First with minority investments in BNSF as well as Norfolk Southern Railroad. Now, he has declared himself “all in” regarding investment in what he considers Americas economic future.

Buffett is quoted as follows regarding what is now Berkshire Hathaway’s largest investment ever. Our country s future prosperity depends on its having an efficient and well-maintained rail system, said Warren E. Buffett, Berkshire Hathaway chairman and chief executive officer.

Conversely, America must grow and prosper for railroads to do well. Berkshire s $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry. Most important of all, however, it s an all-in wager on the economic future of the United States, said Mr.

Buffett. I love these bets. BNSF is the largest railroad in the western US.

They move the largest amount of coal, corn and wheat from the region. These are strategic energy commodities. Coal is used for fueling electrical generation plants as well as for export for the same use overseas.

Corn is a multi use product, providing both feedstock for animals as well as food for people. Further, corn is used as a raw product in the US for the production of ethanol. Buffett gets the concept that raw energy must move by rail.

Even potential energy sources like coal shale originate mostly from within the western footprint of the BNSF, so if major fields are developed and mined, the shale oil products will eventually hit the BNSF to move to market. Berkshire Hathaway bought control of a tank car manufacturing firm a year or so ago, so not only is Berkshire Hathaway involved in the locomotion of ethanol products, its also involved in providing leased movement capacity in the specialized equipment required. BNSF is also a major player in the operation of doublestack trains for the movement of intermodal containers.

This makes BNSF critical to the movement of international cargoes from the US West Coast to the heartland of America.

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References ^ Burlington Northern Santa Fe Railroad (BNSF). (www.bnsf.com)

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Berkshire Hathaway buys BNSF

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