The Keystone Pipeline: The Mirage of Jobs

by Sofia Plagakis, 12/22/2011

Last week, Congressional Republicans slipped provisions into a payroll tax bill that would try to force the President to make an early decision on the controversial Keystone XL pipeline project. Under the bill, President Obama would face a 60-day deadline to rule on the project, which has not yet received the legally required economic, environmental and safety reviews.

Though Congressional Republicans claim the project would create jobs, the Keystone XL is not the job-creation panacea it's being made out to be. In fact, the Keystone project could actually cost taxpayers jobs.

The $7 billion Keystone XL would transport tar sands, which are more corrosive than crude oil, from Alberta, Canada, through America's heartland to Texas. Thousands of communities face the prospect of having a major new pipeline flowing under their homes and businesses with all the risk of leaks and explosions that come with it. The Keystone oil pipeline project is opposed by many public interest organizations, but is supported by industry groups and many Republican lawmakers.

The Job Creation Myth

The pipeline company, TransCanada, says the project could create 20,000 "direct" jobs, most of them temporary. However, the oil company's numbers are grossly inflated.

The job estimate is based on a poorly documented and unsubstantiated study commissioned by the oil company itself, referred to as the Perryman Group study. The study inflates the job estimate by calculating jobs on a yearly basis, not the total number created as a result of the pipeline. For instance, employing 10,000 people for two years would equal 20,000 jobs by the company's count. Additionally, the estimate includes non-U.S. jobs created in Canada, "where about a third of the $7 billion pipeline would be constructed."

The oil company's 20,000 job estimate is inconsistent with government and academic studies. The State Department, the lead federal agency on the pipeline project, estimates that the project would bring 5,000 to 6,000 temporary construction jobs. An independent assessment by Cornell University's Global Labor Institute found that the Keystone XL would create between 2,500-4,650 temporary positions for two years, with only about 50 new permanent pipeline jobs in the United States.

The Keystone Pipeline Could Cost Jobs

The Keystone XL, according to the Cornell study, could actually kill more jobs than are created in the long run. Any jobs created by the project could be outweighed by the pipeline's hidden costs that slow job growth or cost jobs in other sectors: higher gas prices for Midwest consumers, toxic oil spills, and damages to local agriculture and tourism. For instance, TransCanada has already admitted that the project would increase gas prices for Americans by driving up the price of heavy crude in the region. The project could cost Midwesterners 10 to 20 cents more per gallon for gas and diesel fuel. The higher fuel prices for consumers in the Midwest would kill thousands of trucking and tourism jobs.

The history of pipelines also shows that spills are unavoidable. In 2010, pipeline spills and explosions in the United States killed 22 people, released more than 170,000 barrels of petroleum, and caused $1 billion dollars in damage. In its first year of operation, over thirty spills have occurred with the Keystone pipeline (Phase 1 and 2) in Canada and the United States, despite claims that the Keystone XL meets "world-class safety and environmental standards."

Conclusion

The highly exaggerated estimates from industry need to be exposed and the long-term potential costs of this project must be carefully weighed. Federal officials are taking the time they need to gather information and appropriately examine trade-offs regarding gas costs, water safety concerns, and public health risks from spills. We need to support scientific and expert evaluation of the evidence before rushing into a project that will have significant and long-lasting impacts on the country.

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