Obama Donor Set To Profit From Keystone Demise
Posted 05:50 PM ET
Billionaire hedge fund manager Steyer: Kinder Morgan, yes, but Keystone, no? Getty Images View Enlarged Image
Energy Policy: A billionaire hedge fund manager and Barack Obama donor is pushing the president to stop the pipeline that would compete with one he's invested in. That pipeline could send Canadian oil to China.
Environmental activist Tom Steyer donated as much as he could to get Massachusetts Rep. Ed Markey elected to the Senate in the recent special election to fill the seat vacated by now-Secretary of State John Kerry. He wanted another senator who's opposed to completing the Keystone XL pipeline that he says would be an environmental plague on the planet.
A few days before President Obama said that Keystone XL would be built only if it could be shown to have no net effect on greenhouse gas emissions, Steyer, a major contributor to Obama's campaigns, urged the president to kill the project.
"We really cannot afford 40 to 50 years of development of a humongous oil reserve that's twice as bad — soup to nuts — as normal crude," Steyer told a gathering at the National Press Club, referring to Canada's extraction of crude from its oil sands in Alberta.
Steyer has mounted an extensive campaign to kill Keystone, yet he owes his personal fortune to a lifetime of investments in oil, gas and pipeline companies. He stands to reap another financial reward through the extensive investments his hedge fund, Farallon Capital Management, has made over the last 27 years in fossil fuel companies. These include holdings that could benefit from the blocking of the Keystone pipeline.
Farallon has made millions for its investors, and left Steyer with a net worth estimated by Forbes at $1.4 billion. One of Farallon's biggest holdings is in U.S. pipeline company Kinder Morgan, which has plans to expand a major competitor to Keystone — the TransMountain pipeline.
Steyer has also lobbied against Northern Gateway, which would carry oil from Edmonton to Kitimat, British Columbia, on Canada's west coast. Curiously, he is not opposed to TransMountain, which Kinder Morgan has sought approval to expand.
If that expansion is approved, TransMountain will be the only available outlet for Alberta crude. If Keystone XL is killed, it will leave TransMountain as the only game in town for transporting oil directly from the oil sands to export terminals, up to 900,000 barrels a day. And most of that oil will be shipped west to China.
Steyer stepped down as Farallon's CEO late last year to focus on political and environmental activism. In his newfound fervor to go "green," he says he's directed the fund to divest him of all positions in oil and coal, including Kinder Morgan. But it appears that process is painstakingly slow. Meanwhile, his holdings increase in value as Keystone remains in limbo.
Steyer would not be the first Obama donor to profit from the president's energy policies. Obama's favorite one-percenter, Warren Buffett, made a good investment when he bought Burlington Northern Santa Fe in 2010 for $26.5 billion. With the explosive development of the Bakken shale formation centered in North Dakota, its oil riches are shipped south on Buffett's railroad in dangerous tank cars.
Last year's spike in oil production from shale caused a 46% increase in petroleum shipments for Burlington. For 2013, Burlington forecast a 40% increase in crude shipments. The Keystone XL pipeline would put a hole in Buffett's bottom line.
According to the Energy Policy Research Foundation, TransCanada was "looking to expand the Keystone XL capability by offering Bakken oil producers located in Montana and North Dakota a chance to link into the pipeline and send their crude to the Gulf Coast refineries for the first time."
As Al Gore has found out, saving the earth can also "green" your bank account.