Railroad Makeovers

Warren Buffet’s on board. Should you ride the rails, too?

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Here’s a sign of the times: Since early last year, investor/economic prophet Warren Buffett has been putting his money into railroads. His firm, Berkshire Hathaway, now owns about 70 million shares of three major freight lines—2 million of Norfolk Southern, 4.5 million of Union Pacific, and a staggering 64 million of Burlington Northern Santa Fe—worth a combined total of almost $7 billion. Bill Gates is on board with an investment of $1.7 billion in the Canada National Railway Company. Why now? For starters, there’s the growing demand for oil alternatives like coal and grain, both of which are shipped on trains. Freight cars also use 65 percent less fuel than long-haul trucks. “It became clear to me the competitive dynamics in the railroad business had changed from when I last thought about them,” Buffett told cnbc last year.

Thanks to the cash influx, rails are getting a makeover. Union Pacific is spending billions to ease congestion on its busy Sunset Route from Los Angeles to El Paso with 760 miles of double tracks. The boom has yet to impact the passenger rail system, but all those miles of new track, which Amtrak shares, could mean improvements (read: fewer delays) are just around the bend.

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WE'LL BE BLUNT

It is astonishingly hard keeping a newsroom afloat these days, and we need to raise $253,000 in online donations quickly, by October 7.

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