Warren Buffett vs. the greens

31 Aug 2015 | Author: | No comments yet »

Berkshire Hathaway Builds Stake in Refiner Phillips 66.

Billionaire investor Warren Buffett’s company Berkshire Hathaway has amassed a stake worth nearly $4.5 billion in Phillips 66 more than a year after trading a chunk of its holding in the oil refiner for a chemical business investment. For Democrats, the world’s third-richest person is a champion who has advocated higher taxes for millionaires and donated money to put Hillary Clinton in the White House.OMAHA, Neb. (AP) – Warren Buffett will turn 85 on Sunday, but he’s shown no signs of slowing down or retiring from the Berkshire Hathaway conglomerate he built over five decades.

In late 2013, the Omaha, Neb., company agreed to trade about $1.4 billion of its Phillips 66 stock for one of the refiner’s businesses that makes additives to help crude oil flow through pipelines. A regulatory filing says Berkshire Hathaway Inc. has accumulated about 58 million shares, which amounts to more than 10 percent of the Houston company’s stock. But green-energy advocates are expressing increasing frustration with Buffett, whose sprawling business empire is opposing them on fronts including solar power, oil train safety and the Keystone XL oil pipeline.

This year, Buffett’s friends and family may have an especially hard time shopping for the billionaire because earlier this month he just announced the biggest deal of his career. The friction is evident in Nevada, where a Buffett-owned power utility, NV Energy, is fighting to hike the costs for residents to use rooftop solar panels — a push that’s similar to campaigns being promoted around the country by groups tied to conservative billionaires Charles and David Koch. Berkshire agreed to buy Precision Castparts for $32 billion, so if regulators and shareholders approve, the aerospace and industrial company will soon join Buffett’s firm.

Berkshire once held a huge stake in Houston-based Phillips 66 but shed around two-thirds of its stake in February previous year by swapping $1.35 billion worth of shares for a chemicals business that it folded into its Lubrizol arm. The latest wager comes amid a slump in crude prices, driven by concerns that a supply glut will persist. “Berkshire’s made a clear statement about how they view the oil business,” said Cliff Gallant, an analyst at Nomura Holdings Inc. “They seem to be taking the long view that demand for fuel is going to come back.” Concern over China’s growth roiled global financial markets earlier this week and created a buying opportunity for Berkshire. She denounced the utility’s solar push as an “extreme anti-consumer proposal.” Greens in regions like the Pacific Northwest, as well as the top Democrat on the Senate’s energy panel, are also criticizing Buffett-owned Berkshire Hathaway Energy for trying to weaken a 1978 federal incentive program for wind, solar and other renewable power. And Buffett supports approving Keystone, the long-delayed oil pipeline that has sparked a nationwide opposition movement by climate activists and angry protests in the Oracle of Omaha’s home state of Nebraska. He told CNBC in March that Keystone is probably “good for the country,” which would run afoul of the White House’s messaging if Obama ultimately kills the project as expected.

In an Aug. 14 S.E.C. filing detailing its United States stock holdings, Berkshire did not mention Phillips 66 — after previously reporting a stake of 7.5 million shares as of March 31 — but said it had disclosed some information confidentially to the regulator. The Republican National Committee is trying to turn Buffett into a Clinton problem, saying his activities show a stark conflict between the Democratic front-runner and one of her most visible backers. “Energy issues are another example of how Hillary Clinton is caught between her major donors and the grassroots,” RNC spokesman Michael Short said. “Environmentalists and the left are right to question whether they can trust Clinton when she and [the Clinton] foundation are busy taking money from those who don’t share their priorities.” Most Democrats hesitate to publicly criticize Buffett.

But privately, some green-minded Democrats acknowledge that Buffett’s business priorities often conflict with Clinton’s and Obama’s renewable energy agendas. Buffett can quietly buy a large amount of stock without worrying about investors piggybacking on what they may think to be the famed investor’s stamp of approval.

The mismatch points to another reality about Buffett: his reluctance to use his vast personal wealth to promote his personal political agenda, unlike liberal billionaire Tom Steyer and conservatives such as Sheldon Adelson and the Kochs. “Philosophically and politically [Buffett is] probably out there hoping to continue to promote greener energy,” said economist Charles Cicchetti, who used to work with Buffett’s companies and more recently consulted for the rooftop solar company SolarCity. “But there’s a gap between his brain and his [business] philosophy. The Securities and Exchange Commission sometimes allows companies to withhold information from the public to limit copycat investing while a firm is building or cutting a position. He doesn’t acquire utilities so they can enhance the public good.” In the Nevada rooftop solar dispute, Buffett’s company is largely on the same page as the Koch brothers in seeking to cut incentives and impose extra fees on residents who use their solar panels to sell excess electricity back to the power grid — a move that greens warn would make installing the panels unaffordable for many people.

Obama alluded to the controversy in his keynote speech at Monday’s energy summit, excoriating utilities that stand in the way of rooftop solar power and other clean energy innovations. “So here, and across the country, this is about whether big polluters control the system, or whether consumers have freedom to choose cleaner, cheaper, more efficient energy; whether we protect old ways of doing business even when they’re not efficient, or we dream up new business models that bring new technologies into our homes and businesses, and new jobs into our communities,” the president said. Buffett has famously pledged to donate his vast fortune to philanthropic groups like the Bill and Melinda Gates Foundation, and he’s avoided bankrolling political candidates — even Clinton, whom he once called “one of my favorite women in the world.” He has publicly backed Clinton and predicted she will win the presidency next year, but he gave a relatively modest $25,000 last year to the Ready for Hillary super PAC (now the ReadyPAC), the committee’s self-imposed maximum, and donated $2,700 to Clinton’s campaign in April. Earlier this year, Buffett told CNN that he doesn’t plan to write “a huge check” for Clinton because he doesn’t believe that “elections should be decided by the super-rich.” “I like what she believes in and I think she’s extraordinarily able and energetic, for that matter, in pushing those beliefs. MidAmerican Energy is the largest regulated wind power owner in the country, operating 2,285 megawatts of capacity, or slightly more than the output of two big nuclear reactors. But that’s not what moves him.” Berkshire Hathaway’s BNSF Railway has lobbied the White House against some safety regulations meant to prevent explosive derailments by oil trains, and earlier this summer, Berkshire infuriated Washington state Sen.

Now you’re coming in here and trying to undo a very important law.” Rachel Shimshak, executive director of the Oregon-based advocacy group Renewable Northwest, said the push against the 1978 law is a sign of Berkshire Hathaway Energy-owned utility PacifiCorp’s reluctance to embrace more green power. “They’re hanging on to a lot of dirty plants,” she said. But people following the billionaire’s energy plays say they aren’t surprised about the disconnect between Buffett’s political leanings and business dealings. Buffett, they say, is running a corporation, not a political campaign. “He’s like any other powerful special interest entity in Washington, D.C., pursuing a narrow strategy to benefit his financial position without a real regard for larger, overarching policy goals or ideals,” said Tyson Slocum, the director of Public Citizen’s energy program, who has long criticized Berkshire. “It’s not evil.

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