Friday, January 06, 2012

Countdown Is On For Keystone XL; But How Many Jobs?

Jan 5: On December 23, 2011, President Obama signed into law a bill requiring approval of the Keystone XL pipeline within 60 days unless he determines the pipeline would not serve the national interest. On January 4, the U.S. House Energy and Commerce Committee posted its new Keystone XL clock to track how much time has passed since the day the President signed the bill demanding action on the project that they say will "create tens of thousands of jobs and significantly increase America's energy security."
The President reluctantly agreed to the Keystone XL provision that was attached by Republicans to the payroll tax reduction bill which he supported [See WIMS 12/16/11]. Earlier, the President said he would veto any Keystone XL amendments to the bill and had delayed the Keystone XL decision until further environmental review could be made to satisfy major concerns raised by the Nebraska Governor and environmental groups [See WIMS 12/8/11]. The delay was expected to extend well into 2013, while the various agencies examined in-depth alternative routes that would avoid the Sand Hills area of Nebraska. [See WIMS 11/14/11 & WIMS 11/11/11].
    Energy and Commerce Committee Chairman Fred Upton (R-MI) said, "The clock is now ticking, and soon, President Obama must finally make a decision on the long-awaited Keystone XL pipeline. After waiting more than three years for this pipeline while the country faces prolonged unemployment, the American people are fed up with the president's inaction on a project that can quickly create jobs. The president is now required by law to approve the project unless he believes it is not in the national interest, and with millions of Americans still out of work this New Year, our national interest would clearly be well served when the president says yes to tens of thousands of new shovel-ready jobs. Republicans and Democrats alike agree this is a win-win for America."
    During the heat of the highly controversial debate on the issue a principle argument has been the number of jobs created by the project. The State Department estimated the number of construction jobs at 5,000 to 6,000; however, as the debate has continued the number of jobs to be created by the project has increased to 20,000; to tens of thousands; to hundreds of thousands and has high as 250,000 or more. Most of the high-end estimates have been reported by TransCanada, the project developer.
    A recent study by the Cornell University Global Labor Institute entitled, Pipe Dreams? Jobs Gained, Jobs Lost by the Construction of Keystone XL, provides an in-depth look at the numbers and the uncertainty surrounding many of estimates. The 40-page paper indicates, "The purpose of this briefing paper is to examine claims made by TransCanada Corporation and the American Petroleum Institute that, if constructed, TransCanada's proposed Keystone XL (KXL) pipeline will generate enough employment to kick-start important sections of the US economy through the creation of tens of thousands -- perhaps even hundreds of thousands -- of good, well-paying jobs for American workers." The main points in the briefing paper are summarized as follows:
  • The industry's US jobs claims are linked to a $7 billion KXL project budget. However, the budget for KXL that will have a bearing on US jobs figures is dramatically lower—only around $3 to $4 billion. A lower project budget means fewer jobs.
  • The project will create no more than 2,500-4,650 temporary direct construction jobs for two years, according to TransCanada's own data supplied to the State Department.
  • The company's claim that KXL will create 20,000 direct construction and manufacturing jobs in the U.S is not substantiated.
  • There is strong evidence to suggest that a large portion of the primary material input for KXL -- steel pipe -- will not even be produced in the United States. A substantial amount of pipe has already been manufactured in advance of pipeline permit issuance.
  • The industry's claim that KXL will create 119,000 total jobs (direct, indirect, and induced) is based on a flawed and poorly documented study commissioned by TransCanada (The Perryman Group study). Perryman wrongly includes over $1 billion in spending and over 10,000 person-years of employment for a section of the Keystone project in Kansas and Oklahoma that is not part of KXL and has already been built.
  • KXL will not be a major source of US jobs, nor will it play any substantial role at all in putting Americans back to work.
  • KXL will divert Tar Sands oil now supplying Midwest refineries, so it can be sold at higher prices to the Gulf Coast and export markets. As a result, consumers in the Midwest could be paying 10 to 20 cents more per gallon for gasoline and diesel fuel. These additional costs (estimated to total $2–4 billion) will suppress other spending and will therefore cost jobs.
  • Pipeline spills incur costs and therefore kill jobs. Clean-up operations and permanent pipeline spill damage will divert public and private funds away from productive economic activity.
  • Rising carbon emissions and other pollutants from the heavy crude transported by Keystone XL will also incur increased health care costs. Emissions also increase both the risk and costs of further climate instability.
  • By helping to lock in US dependence on fossil fuels, Keystone XL will impede progress toward green and sustainable economic renewal and will have a chilling effect on green investments and green jobs creation. The green economy has already generated 2.7 million jobs in the US and could generate many more.
    The paper concludes, "Put simply, KXL's job creation potential is relatively small, and could be completely outweighed by the project's potential to destroy jobs through rising fuel costs, spill damage and clean up operations, air pollution and increased GHG emissions. As noted. . . it is unfortunate that the numbers generated by TransCanada, the industry, and the Perryman study have been subject to so little scrutiny, because they clearly inflate the projections for the numbers of direct, indirect, and long-term induced jobs that KXL might expect to create. What is being offered by the proponents is advocacy to build support for KXL, rather than serious research aimed to inform public debate and responsible decision making. By repeating inflated job numbers, the supporters of KXL."
    Access a release from House Energy and Commerce Committee GOP leadership (click here). Access the House Energy and Commerce Committee tracking clock and related information (click here). Access the complete Cornell paper (click here). Access a lengthy StarTribune/Washington Post article "Fact checker: Keystone pipeline jobs claims" (click here). Access a pro-industry article on the KXL project from the Washington Times (click here). Access legislative details for H.R.2055 (click here). [#Energy/Pipeline, #Energy/KXL]