Mr. Buffet, Mr. Soros: Please Stop Investing in Filthy Fossil Fuels

Warren Buffet and George Soros -- two of the world's wealthiest people -- are well known for their embrace of the Democratic party. Buffet endorsed Obama, and Soros bankrolled a failed effort to defeat Bush II in 2004 -- long before W. had earned his dismal approval ratings.

So what are we to make of their mercantile embrace of the filthiest fossil fuels -- dirty coal and tar sands?

Bloomberg News is reporting that Soros bought 2.9 million shares of Arch Coal during the last quarter. Arch is the second-largest US coal producer, and it's shares today are trading at $13.24. That gives Soros a $40 million stake in the company and makes him a 2% owner.

The reason?

"'Coal is the best commodity to get into right now,' said Daniel Rice, manager of BlackRock Advisors Inc.'s $1.5 billion Global Resources Fund in Boston, which is among the largest holders of Peabody and Arch. 'It's a lot less sensitive to downturns because it's needed for basic power generation, and demand is growing.'"

And in October, Buffet told a $25,000-a-plate dinner audience in Toronto that he's become interested in investing in the tar sands.

"Buffett, who has made substantial resource investments this decade, after a history of avoiding them, is now interested in the Alberta oil sands. His rationale is that it is a known resource, says Hull, who manages money for clients of Berkshire Securities Inc., recently acquired by Manulife Financial Corp."

In contrast to speculative drilling, oil-sands projects are mining operations where the size of the reserves is known. One can calculate with relative certainty the breakeven requirements over 10 years. And production costs tend to drop as the extraction and processing technology improves."

Buffet grabbed headlines in August when he took a tour of a tar sands operation together with Bill Gates.

"Two of the world's richest people, Microsoft Corp. founder Bill Gates and his friend, American investment magnate Warren Buffett, quietly flew into northeastern Alberta on Monday, where they took in the oilsands, apparently with awe."

Seems like that visit might now be translating into investments.

Buffet earned admiration for his willingness to invest $5 billion in Goldman Sachs to restore confidence in collapsing financial markets at the end of September. That investment has lost 46% of its value, and the value of Berkshire Hathaway, his fabled company, has tumbled 36% since October 1st. He's now under the gun to offer details on his investments in derivatives, too.

Buffet and Soros are men who could be showing us the way out of an endless fossil future, deploying their capital wisely to clean effect. Instead, it looks like these men are showing us the opportunistic face of business-as-usual and the cheap and dirty road to even more riches.

Somebody please call a time-out.

See Also

Alberta Tar Sands to Poison U.S. Great Lakes Region, Too

Tar Sands: If You Have Tears, Prepare To Shed Them Now

Comments

[nudger]

Good catch. If you look at Berkshire Hathaway's reputation from the bottom up - i.e. based on the companies it owns, it's much much worse across the board than the popular brand image built around Warren Buffett's persona. Check it out:
http://vanno.com/company/berkshire-hathaway