No, the Oil Boom Isn’t Raising Power Bills—President Obama Is

An eye-catching headline at Bloomberg News is making the rounds: “Cheap Oil Jamming Rails Means Higher U.S. Power Bills.” The claim would be newsworthy if it had any basis in reality.

Here’s how the article begins:

U.S. electricity costs are poised to reach the highest level since 1999 because railroads are too clogged to deliver enough coal to power plants.

While the U.S. has the world’s biggest coal reserves, utilities are forecast by the government to end the year with the lowest stockpiles since 2005. With carriers including BNSF Railway jammed with record shipments of oil and grains, Xcel Energy Inc. (XEL) and other power producers say they can’t get the coal they need.

While this story may garner clicks, it won’t educate readers. Record-low coal stockpiles are a real concern that threaten to raise electricity prices and undermine grid reliability. But the author’s blame is misplaced: lack of pipeline capacity is the real culprit, not affordable oil.

Fortunately, there is an easy solution: build more pipelines. This would include Keystone XL, which if completed would carry about 800,000 barrels of oil per day. That would make more room on railcars for coal, alleviating congestion and averting potential shortages and rate hikes.

Unfortunately, we have a president who would rather play politics than do his job. The decision to approve Keystone is President Obama’s, but the environmental activists and wealthy investors who bankrolled his presidential campaigns oppose the pipeline.

For instance, one of the president’s most generous supporters, Warren Buffett, has a direct financial interest in blocking Keystone. Buffett’s holding company, Berkshire Hathaway, owns BNSF Railway, the company “jammed with record shipments of oil” because the president refuses to approve more pipelines. Buffett has hosted fundraisers and donated tens of thousands of dollars to President Obama’s campaigns, according to Federal Election Commission disclosures.

Perhaps as a token of his appreciation, the president has consigned Keystone to regulatory purgatory. The presidential permit “review” process has dragged on for more than six years—longer than it took the Allies to win World War II—despite numerous State Department reports concluding that Keystone will have negligible environmental impacts.

The Bloomberg story makes no mention of Keystone or Obama’s delays. It doesn’t even acknowledge that there are other ways to transport oil other than by rail. Instead, readers are left with the mistaken belief that we have to choose between affordable gasoline and affordable electricity. But we really can have both—if President Obama and his wealthy benefactors would stop standing in the way.