Warren Buffett’s company, Berkshire Hathaway, announced in a Securities and Exchange Commission regulatory filing that it has purchased $524 million in Suncor stock during the last quarter. Suncor, a Canadian oil company, derives most of its current oil production from Alberta’s oil sands. Its plans for future expansion are in the oil sands there as well.
In a sense, Buffett may have thrown himself into a hot environmental debate. The prevention of oil sands expansion is one of the most significant reasons that environmentalists are urging President Barack Obama to reject the Keystone XL pipeline, which is a controversial project valued at $5.3 billion that is set to carry oil from Alberta, Canada, down to the Gulf Coast.
According to reports, oil from the oil sands region is believed to emit 17 percent more greenhouse gases than traditional crude. The difference is said to be primarily because of the energy that is required to separate the oil from the sand. Oil sand proponents argue the oil will make it to the market, regardless of whether the pipeline is constructed because the other pipelines or rail can be used for transport. Up until this point, the Obama administration had believed the argument. Now an intense campaign is underway by environmentalists urging the administration to change its mind and stop the Keystone.
Now a major player in the debate, Buffett and his investment are being criticized. Aside from the politics, Buffett bought the stock to help ensure a steady supply of oil for his BNSF railroad to transport. Oil currently accounts for about 4 percent of the railway’s freight, but that is expected to double during the next few years.
Suncor is considered to be well run and owns large tracts of oil sands resources from which the oil production, despite the objections of the environmental groups, will continue to grow. Oil sands producers have been in a bind recently, as reports indicate that difficulty moving the oil out of Alberta has caused a buildup of it in the middle of the continent. The end result was depressed oil prices and stock prices of companies that are in that particular space, including Suncor.
Suncor, founded in Montreal, Canada, in 1917, is a Canadian integrated energy company that is now based in Calgary, Alberta. Ranked as 134 on the Forbes Global 2000 list, shares were up .71 percent or .24 cents to $34.18 at the close of business on Friday.
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