1 Explosive Risk Warren Buffett Should Be Worried Abouthttp://www.fool.com/investing/general/2013/07/12/1-explosive-risk-that-warren-buffett-should-be-wor.aspx Matt DiLallo
July 12, 2013
Crude oil shipments by railroad have grown by a staggering 28,000% over the past five years. That growth has been a great profit driver for railway companies, and Warren Buffett's Berkshire Hathaway (NYSE: BRK-B) (NYSE: BRK-A) which controls Burlington Northern. Those profits, however, could be at risk in light of the tragic railway disaster in Canada which involved crude oil being shipped by train.
The Lac Megantic disaster, which has caused the deaths of at least two dozen, could be the event that brings railway shipments of crude to a screeching halt. It's an event that has many other towns, both smaller and larger, wondering if it could happen there, too. That's a big risk to Buffett because it could shut down shipments of oil at Burlington Northern which are estimated to double to about a million barrels of oil by the end of next year.
Comparing safety records
The fact remains that we've seen an increase in incidents by rail this year. This past March, a Canadian Pacific (NYSE: CP) train hauling crude oil derailed and spilled about 30,000 gallons of crude oil in Minnesota. That was the first major spill since the crude-by-rail boom started taking off just three years ago. Now, just a few months later, a worse disaster has cast a real dark cloud over the industry.
The real risk