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Warren Buffett American Growth

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The railroad in the United States assisted with its growth and expansion from sea to shining sea. However, with the advent of the personal vehicle, trucks, and aviation, the railroad began to decline (Gallamore & Meyer, 2014). Therefore, one might question why Warren Buffett purchased Burlington Northern Santa Fe Railroad for $26.5 billion dollars. However, years after the $26.5 billion dollars was spent, no one would question the investment as its revenue has since risen 57% and has become a main source of income for Warren Buffett’s company, Berkshire Hathaway (Buhayar, 2014). There are a few reasons how Warren Buffett saw this growth coming and capitalized. Mr. Buffett has throughout his years of life seen a steady growth in our nation.…show more content…
Growing up in Omaha, Nebraska Warren Buffett childhood home was shared with a major United States railroad company, the Union Pacific (Reed, 2010). Thus, Warren Buffett grew up seeing a railroad company and its benefits. This is something that a more recently born child would not have seen. They would have seen highways filled with truck and airplanes taking people and goods around the world vice rail (Gallamore & Meyer, 2014). Warren Buffett as a child of a rail town has a unique perspective on the railroad system. Likewise, during his lifetime he has seen an economic growth rate of 2.5% and a population growth rate of 1.5% each year (Reed, 2010). As this growth rate has remained constant through Warren Buffett’s life, his unique perspective on rail signaled to him that the developing nation will need goods and that rail will be the venue to deliver it (Reed, 2010). Therefore, Warren Buffets move from insurance toward railroad is sage experience betting on the future of America’s steady economic…show more content…
Refined oil is the number one product within the United States (Reed, 2010). Furthermore, the means to shipping oil around the country is rail (O’Malley, 2014). Thus, Warren Buffets purchase of the Burlington Northern Santa Fe Railroad company makes sense. This can be explained by the fact that according to Warren Buffett, the shipment of oil via rail is a cheaper, positive alternative to pipelines (O’Malley, 2014). Warren Buffett’s purchase of Burlington Northern Santa Fe Railroad shows that Mr. Buffett believes that as hauling via truck becomes more costly due to rising oil prices, a cheap rail system will be preferred (Foroohar, 2012). The reason that rail is a cheap means of shipment is simple, rail uses less fuel to travel. This is evident in the fact that a rail system can haul one ton of goods 500 miles on just one gallon of fuel (O’Malley, 2014). One would be hard pressed to find a trucking company that could boast the same. Thus, as fuel prices rise, rail would become more viable. Warren Buffett has personally been quoted stating this by mentioning that energy prices will rise within the United States, allowing his railroad venture to grow more over time (Foroohar, 2012). Furthermore, as pipelines remain controversial and a slow means of shipping oil, rail can solve the problem via expediting oil shipments around the country (O’Malley,
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