Buffett says coal’s decline in U.S. to be gradual, yet permanent

Bloomberg News
July 25, 2013
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Coal use in the United States will continue to fall, though the slide will be gradual as electric utilities switch to cleaner alternatives over “years and years,” billionaire Warren Buffett said at an event in Carmel this week.

“Coal will gradually decline in importance, and of course when natural gas prices get low enough, you have a big switch over,” Buffett said July 22, according to a recording posted online by WFYI-FM, a public radio station in Indianapolis.

“Coal plants are producing about 38 percent of all the electricity in the United States now,” Buffett said. “You can’t scrap that. That takes years and years and years to replace. It will be happening gradually.”

Buffett was in Indiana to open a Geico Corp. call center in Carmel, north of Indianapolis. The insurance company is owned by Buffett’s Omaha, Neb.-based Berkshire Hathaway Inc., as is the utility MidAmerican Energy Co. Berkshire also owns companies that use and transport coal.

Buffett didn’t immediately respond to a message left with an assistant.

Hydraulic fracturing for natural gas in shale formations has increased supplies and lowered prices for the fuel, and decreased coal’s share of electricity generation. In 2007, coal accounted for 49 percent of U.S. power production. Natural gas futures have rebounded from record lows in 2012 and are up more than 9 percent this year.

MidAmerican Energy, based in Des Moines, Iowa, generated about 45 percent of it electricity from coal at the end of 2012.

The utility has since announced plans to stop burning coal at five Iowa electric generating plants in an agreement with the Sierra Club, a San Francisco-based environmental group that had threatened to sue over the plants’ emissions.

In May, the company said it would invest $1.9 billion to build more wind farms in the state.

Berkshire also owns the rail line Burlington Northern Santa Fe Corp., which ships coal from the Powder River Basin in Wyoming.

“If there was no coal moving we would not find a lot of use for some of the tracks we have,” Buffett said at Berkshire’s annual meeting in May. Should natural gas prices increase, coal use will probably go back up, he said.

Meanwhile, BNSF will continue to benefit from the rising production of oil in North Dakota, Buffett said. About 75 percent of the crude is transported by rail lines, according to the state.

“I think there will be a lot of rail usage for a lot longer,” Buffett said.


  • Cynicism?
    Sarcastic, definitely. Cynical? No... Cynical would be promoting the idea that we can and ought to continue burning hydrocarbons as fast as we can dig them out of the ground. Cynical would be claiming absurdly low generation capacities for commercial windmills. Cynical would be advocating further implementation of nuclear technologies that create poisonous materials requiring safeguarding for thousands of years - far longer that any human institution has every lasted. However, I'm sure that the environmental community appreciates your sincere concern about their reputation.
  • Oh, the cynicism
    Comments like this are exactly what give environmentalism a bad name. I'm pretty sure anyone who breathes, has children who breathe, etc., wants cleaner air. But we all also demand 24/7 electricity, and wind and solar (especially in the Midwest) aren't going to provide it until battery technology makes a quantum leap. We could use nuclear, but ironically the Sierra Club is anti-that, too. So we'll mar the landscape by putting up hundreds more gawd-awful-looking wind turbines that only satiate our need for electricity (at a measley .5 kw/hour, most of the time) when the wind blows. You want to be able to turn on your laptop in 2013 (and foreseeable future) and write a cynical note like that? Better hope there's a power source that's reliable on the other end of the grid.
    • Burn Baby Burn
      The important thing is to continue burning hydrocarbons as fast as possible, starting with those that are the most convenient for us to obtain. There is no need to worry about environmental impacts or leaving anything useful behind for those who follow us. Burn it all, burn it now, and forget about future generations. They'll figure something out.

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