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President Obama is right on Keystone XL tar sands pipeline job numbers

Anthony Swift

Posted July 30, 2013

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The President recently brought some sense to the claims being made by proponents of the Keystone XL tar sands pipeline. In the face of outlandish claims by supporters of the pipeline that Keystone XL amounted to a major national jobs generator, the President brought clarity to the issue by observing:  

“And my hope would be that any reporter who is looking at the facts would take the time to confirm that the most realistic estimates are this might create maybe 2,000 jobs during the construction of the pipeline -- which might take a year or two -- and then after that we’re talking about somewhere between 50 and 100 [chuckles] jobs in a economy of 150 million working people.” — President Obama, July 24, 2013 

The President’s numbers are right, and demonstrably so, as we shall show here. Therefore it was unfortunate to see the Washington Post Fact Checker column make several wrong turns to assign the President Pinocchios he did not deserve. The President's points are well taken - the benefits of Keystone XL tar sands have been overstated by its proponents while its impact on the climate would be significant

The gist of Washington Post Fact Checker’s criticism is based on their (incorrect) assumption that the President relied on an estimate by Cornell University Global Labor Institute rather than official State Department estimates, concluding that the president cited “a low-ball figure, generated by the pipeline’s opponent, but he should stick to using the official government estimate.” This misses the mark entirely – the President’s estimate is based firmly on State’s analysis, not Cornell’s. 

First, let’s clear a point on which President Obama, Washington Post Fact Checker, the State Department, and TransCanada agree. TransCanada plans to hire 50 total employees to operate Keystone XL. According to the State Department:

“Keystone states that there would be an estimated 50 total employees during the operational phase of the proposed Project. Of these, 35 would be permanent employees and 15 would be temporary contractors.” State Department, Draft Supplement Environmental Impact Statement (DSEIS), 4-10.24, March 1, 2013.

Onto the construction jobs associated with Keystone XL.  When it comes to the construction of Keystone XL, the President was pretty much spot on with his estimate that the pipeline might create 2,000 jobs over a year or two. In its August 2011 Final Environmental Impact Statement (FEIS), the State Department provided the construction job estimates associated with building Keystone XL with specificity.

Here’s the math from the State Department’s numbers:

  • The northern route of Keystone XL includes ten construction spreads (State Department FEIS, 3-10.54-55).
  • Each of these spreads would require between 500 to 600 workers between six to nine months to build (FEIS 3-10.54). 
  • If you do the math, ten segments, requiring five to six hundred worker six to nine months to complete, would generate between 2,500 to 5,500 person years of labor.
  • Of course, we still need to account for pump stations. According to State, the northern route has 19 pump stations which would each require 20 to 30 workers between 18 to 24 months to complete (FEIS 3-10.54). That adds an additional 570 to 1,140 person years of labor.
  •  Putting all of this together, building Keystone XL would generate between 3,070 and 6,640 person years of work, or somewhere between 1,535 and 3,340 jobs over two years. 

This makes the President’s statement that the construction of Keystone XL would create about two thousand jobs over one to two years well within the scope of the State Department’s analysis. It’s also consistent with State’s more recent estimate that the construction phase of the pipeline would generate 3,900 job years – or 1,950 jobs over two years:

“When expressed as average annual employment, this equates to approximately 3,900 jobs. This is based on the number of construction workers multiplied by the construction period in weeks divided by 52 weeks in a year.” (DSEIS 4-10.5-6)

Now, this language could be much clearer – and we hope it will be in State’s revised environmental impact statement. However, two factor show that States figure is referring to person years and not two year jobs. First, the 2011 Final EIS showed the northern route would require between 1,535 and 3,320 two year jobs and second, the 2013 DSEIS did not provide any indication that factors have emerged which have increased the need for construction workers for the northern route since the first review was done. This means that the construction of the northern route would create about 1,950 two year positions – which is what the President said.

Regarding the Washington Post’s core criticism that the President relied on the Cornell study rather than the State Department, this simply isn’t true. The Cornell study found that the construction of the entire pipeline would generate between 2,500 and 4,650 two year construction jobs. Cornell hasn’t updated its study since 2011 to evaluate just the northern route of the pipeline.

So given that 1) the President’s estimate falls squarely within the State Departments evaluation of the northern section of Keystone XL in its FEIS and its newer DSEIS and 2) it falls outside of the range of construction jobs for both the northern and southern route provided by the Cornell Institute, it simply doesn’t pass muster to assert that the President is relying on Cornell rather than the State Department. 

The Pinocchio Test

Washington Post Fact Checker appears to have made two errors of fact.

First, they assumed that the President used the Cornell study for his figures. President Obama didn’t. He used that State Department’s figures. The Cornell study also used the State Department’s figures (hence the similarity) but evaluate the employment impacts of the entire pipeline, north and south (hence why the President’s figure is lower the Cornell’s).

Second, Washington Post interpreted State Department’s 3,900 job figure to be “two year jobs” rather than the standard “person year.” In the Washington Post Fact Checker’s defense, State’s draft SEIS is both unclear and ambiguous on this point. We can only hope that State clarifies both the jobs and the climate impacts of Keystone XL in its next version. But the fact remains, the only reading of the DSEIS which is consistent with the analysis of the northern route in State’s 2011 review would interpret the figure as 3,900 “person years,” or 1,950 two year jobs - a figure entirely consistent with the President's statement.  

These errors of fact led the Washington Post to assume the President was picking job numbers when he was simply letting the American public know that the State Department had not determined Keystone XL was the national jobs creator that the project’s supporters were representing it to be.

Washington Post Fact Checker serves an important role in cutting through the rhetoric that often confounds these issues. They just got this one wrong. President Obama wasn't relying on Cornell in his statements, but rather on State Department figures. We’re going to have to insist that they take the two Pinocchios they gave the President back.

However, it's a near certainty that they'll have an opportunity to get them off their hands soon. And as for Keystone XL, the larger point is that the tar sands pipeline offers the U.S. few benefits and comes at a cost we can't afford. Keystone XL would substantially increase climate emissions at a time when the country needs to be reducing them and should be rejected. 

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Gerald QuindryJul 31 2013 08:01 AM

"The president's numbers are right, and demonstrably so..."

IMHO, the Pinocchios are properly assigned. The spin applied to the numbers can take you anywhere you want. If you oppose the pipeline, then counting only construction workers (2000) and only permanent employees (50-100) are the numbers to spout. If you support the pipeline, then you add in the thousands of secondary jobs that are created. Take one of those pump stations, for example. There are far more jobs created in equipment manufacturing than in actual construction. People are employed to manufacture the pumps, motors, valves, motor control centers, lighting, piping, pre-fab buildings, pipe wrap, insulation, heaters, air conditioners, wire, and communications equipment that those 20 to 30 workers will install. Some additional people had to design a system of pumps, motors, etc. to meet the requirements of the pump station. But secondary job creation is also subject to exaggeration. (Do you count the accountant for the fast food restaurant that is located near the pump station site? How about the pencil maker for the accountant?)

As is pointed out in the fact checker's column, there is no consistency in under-estimating the employment potential for the XL pipeline while over-estimating the employment from a government stimulus package. Neither number is a lie. But neither number has any value in assessing the value of a project. Both should be treated equally, with a couple of Pinocchios.

James StarksJul 31 2013 04:48 PM

Gerald Quindry, Taking your logic, then the 2 million jobs that infrastructure rebuilding would create would take the country to near-zero unemployment because of all the secondary jobs that would follow. Why don't you push for that? And we would have better roads, less broken water mains, fewer blackouts, less welfare and SNAP payments. That's too obvious, lets just pollute our aquifers, and send the oil that makes to the tax-free zone at the gulf out to China, who owns the oil going thru the pipeline, and make the oil companies billions more, while they raise our gas prices..

Gerald QuindryAug 4 2013 12:46 PM

James, I do suspect that the 2 million jobs figure already includes considerable allowance for secondary jobs. But, yes, I do support a program of repair and upgrading to our public infrastructure. That would include water and sewerage works, storm sewers, electrical grid, highways, schools, bridges and many other things. This long-term investment should be done continuously, but it is feasible to accelerate the programs during recessions, and ease off during high-employment, inflationary times.

The problem always seems to be maintaining control to select projects based, not on political considerations, but rather on actual need. Politicians prefer to reward supporters and punish opponents. They prefer the public visibility of a ribbon cutting of some shiny new project more than a bridge repair project that garners little attention.

But that has very little to do with allowing private investment to proceed with construction of a pipeline, and arguing about how many jobs will be created. It's not tax money we are talking about. The purpose of the pipeline is to make a profit by moving a commodity from a place of excess to a place where demand exists. That is the economic system in which we operate, and it works pretty well to allocate private resources and make sensible decisions about where to invest those private funds. Perfect or not, I really don't think you can suggest a better way.

You don't like oil sands projects, or the oil companies making billions? Then we need to operate in an environment of abundant resource, efficiently used. Not an environment of unforced shortage and irrational policy that supports -- even requires -- uneconomic and technically inferior alternatives.
1) Encourage the transition of electrical generation, long-haul trucking and rail transport to natural gas fuel
2) Encourage the production of domestic oil from areas where the weather is less challenging and environmental risks can better be monitored and managed. (e.g., existing oil fields where hydraulic fracturing and other technology advances can greatly increase production.)
3) Encourage similar programs internationally.

My point above is, that if the price of oil was $50 per barrel, instead of $100, nobody would be making costly and risky investments, trying to drill in the Arctic Ocean, in the deep water Gulf of Mexico, or to squeeze and/or cook bitumen out of strip-mined sand in Northern Canada.

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