Warren Buffet: Going Long on CO2

Yesterday, Warren Buffet‘s Berkshire Hathaway increased its stake in Exxon Mobil, buying some 1.28 million shares in the Texas oil and gas company. The stake was valued at about $87.6 million at the end of the third quarter.

Albeit much smaller, the investment followed Buffet’s $44 billion acquisition of railroad giant Burlington Northern Santa Fe (BNSF). On BNSF he said the acquisition was a bet on America’s future. It was also a bet on CO2 as BNSF is the country’s biggest coal hauler.

We posed the question before and in light of yesterday’s news, we will ask it again: Is Warren Buffet going long on CO2?

Berkshire Hathaway owns MidAmerican Energy, a utility with coal and gas generation and some wind power. Based on that investment, Buffet obviously believes in the long-term prospects of a carbon-based economy.

In general Buffet is known to take stake stakes in stocks that he believes are undervalued and poised for growth. He’s bullish on long-term demand for oil and gas, hence his investment in Exxon. That basic “buy low, sell high” investment strategy has done well for him and Berkshire Hathaway shareholders.

All in all Buffet is a pragmatist. He knows that wind or sun power alone will not support economic growth, in the way carbon-loaded energy does, even if he might believe in the necessity to cut carbon. His assessment is actually in line with the oil and gas industry, which for the most part back carbon reduction but forcefully argue that oil and gas remain the “energies of the future….” That what BP CEO Tony Hayward believes and Exxon CEO Rex Tillerson and in light of his recent investments, Warren Buffet.

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  • Matt

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