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Berkshire Hathaway Investing More Into Energy 'As Far As the Eye Can See,' Says Buffett

Berkshire Hathaway Inc., which owns stakes in North American pipelines, railroads, utilities and oil and gas producers, plans to double its U.S. investments in renewables and continue to take bets on oil and gas reserves, pipelines and transport, Chairman Warren Buffett said this week.

Speaking Monday at the Edison Electric Institute's annual convention in Las Vegas, the Oracle of Omaha said the investment firm has "poured billions and billions and billions in retained earnings and several billion of additional equity" into the energy business, “and we're going to keep doing that as far as the eye can see."

To date, the firm has invested close to $15 billion into the renewables market. "There’s another $15 billion ready to go, as far as I'm concerned."

Buffett, whose firm has its fingers in every facet of the North American energy business, is a bit wary of all of the proposals to export North American natural gas. Even with a surge in onshore output, oil and gas reserves won't last forever, he told the audience.

The United States should "think about the centuries to come. You still should treat [oil and gas] as if it's finite. I would just as soon the rest of the world use the resources of the rest of the world than use ours over time. I love the idea of being self-sufficient. I don't think, when you've got a national treasure, that you should go around looking for ways to export it when you know it's finite."

What he likes about the renewables niche is the tax benefit as the United States strives to reduce carbon dioxide emissions, the 83-year-old said. Solar and wind utilities provide a solid way to preserve wealth, he said.

Buffett, a supporter of President Obama, said the debate regarding renewables is over. He noted that the president had paraphrased President Lincoln when citing the need for making a move toward reducing harmful emissions.

"'With public opinion, I can do anything. Without it, I can do nothing.' You've got to be there when it's being formed. You are not going to change it later on," Buffett said. "It's enormously important for the industry to address public opinion," which he said is strongly supportive of distributed generation.

Berkshire Hathaway Energy, a newly named umbrella for the long list of energy investments, covers all the bases in North America's energy patch (see Daily GPIApril 30).

In the past year Berkshire has acquired about 40 million more shares worth about $3.7 billion in ExxonMobil Corp. (see Daily GPINov. 15, 2013). It also has about 8.9 million shares in National Oilwell Varco and owns stock in other producers that include ConocoPhillips. Berkshire last year also acquired a major division of Phillips 66, which improves flow rates on existing oil and gas pipelines (see Daily GPIDec. 31, 2013). And it's a major shareholder in oilsands giant Suncor Energy Inc.

Berkshire's BNSF Railway Co. is moving crude oil across North America and testing natural gas-fueled locomotive engines (see Daily GPIMarch 8, 2013).

In addition, the energy unit owns interstate pipelines Kern River Gas Transmission and Northern Natural Gas, as well as PacifiCorp, which operates utilities serving approximately 1.8 million customers in six western states. Last year the company bought Nevada utility NV Energy Inc. for $5.6 billion (see Daily GPIMay 31, 2013). All together, Berkshire has more than 34,000 MW of generating capacity that are owned or under contract -- with renewables accounting for about 25% of the capacity.

Owning utilities won't make you rich, he joked. But they will keep you rich. "Well, so far, we've stayed rich." He noted that Berkshire had "never taken a dollar" out of its former MidAmerican utility business, now part of the energy unit. "I think that's the best demonstration about how we feel about the utility business..."

Buffett is in support of the controversial Keystone XL oil pipeline that would carry oilsands output to Gulf Coast markets.

"I'm very happy Canada has tremendous reserves," he said. "I'd rather be in our hemisphere than in a hemisphere with an unfriendly government. I'm for the pipeline. I have no problem with that at all." However, "we've got problems with carbon and we have to address them...The idea that you would take a wonderful, friendly country that one way or another is going to sell the oil it develops and in effect, snub them, I don't think it makes any sense."

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