Keystone XL pipeline: Good for Big Oil, bad for the economy
[We’re] probably looking at…from Montana to Houston, I don’t know, [job creation] in the hundreds...” (Robert Jones, TransCanada’s Vice President for Keystone Pipelines, CNN, November 11, 2011)
Interesting quote. TransCanada and its allies can’t seem to keep their numbers straight for the proposed tar sands Keystone XL pipeline. Just the day before, the company released a press statement predicting 20,000 pipeline and 118,000 “spin-off” jobs. In September of 2010, they claimed 13,000 jobs. Two months prior to that, a “study” they commissioned was released predicting 250,000 to over half a million jobs (p. 33). The Republican Party claims over 100,000. All of these estimates contradict the statement by the company’s own Vice President, even those at the lower end.
Analysts who aren’t trying to make money off the pipeline conclude that it would create far fewer jobs. Researchers at Cornell University project as few as 2,500 jobs, and the State Department up to 6,000 (p.ES-22). Notably, most projections are for short-term jobs associated with construction—something proponents don’t always make clear. (There’s nothing wrong with short-term jobs, any would be welcome, but their temporary nature shouldn’t be in the fine print). According to the State Department, as few as 20 jobs will be permanent (p. 3.10-80) (excluding “induced” jobs created from wages spent by these workers). (Click here for a good summary explaining the differences across industry and independent analyses, by the Columbia Journalism Review).
So what is going on here?
After failing to convince their own country’s citizens that the pipeline would be good for them, Big Oil and its Congressional protectors have launched what can only be characterized as an aggressive disinformation campaign to build the pipeline. Preying on the fears of America’s unemployed and economically insecure, they are trying to sell it as a national jobs plan and a way to increase national security by reducing dependence on foreign oil.
It’s a cruel hoax. Canadians didn’t fall for it, and neither should we.
The proposed project would construct a 1,700 mile conduit from Alberta, Canada for the world’s dirtiest and most corrosive form of oil (tar sands) right through the heart of America’s farmland —threatening not only the bread basket of the US, but also the world. It promises little to potentially negative economic returns for Americans.
Maybe that’s why President Obama made the bold decision to reject TransCanada’s permit application. With Citizens United giving the oil industry (even more) unlimited influence, and the American Petroleum Institute’s blatant threat to the President to approve Keystone XL or face “huge political consequences,” Obama’s courage shouldn’t be underestimated.
Here’s the truth about the pipeline:
* It will create only a very modest number of jobs. While these jobs are important and could certainly help some workers, industry has grossly overstated its case.
* It might destroy more jobs than it creates:
- By TransCanada’s own account, Keystone XL is expected to increase oil prices in the Midwest (building a pipeline to the Gulf Coast will eliminate an excess supply of the oil in the Midwest, pushing up prices). As part of its permit application to the Canadian government, TransCanada said (p.21) annual oil company revenues are expected to increase as a result by $2 to nearly $4 billion. In turn, our farmers could see an increase in fuel costs of $2.6 billion dollars or more over 2009 levels…Higher oil prices might be good for the oil industry, but they will increase the cost of living and doing business in the Midwest, negatively impacting its economy and potentially increasing unemployment.
- Pipeline leaks and spills into aquifers and water ways threaten the livelihoods of a quarter of a million farmers, and businesses providing outdoor recreation and other tourism services. Public health is also threatened, as already evidenced from a major tar sands spill in 2010 along a different pipeline (more below).
* Finally, the pipeline will not reduce our oil dependence or increase national security. The price of TransCanada’s oil will be determined by surging global demand for oil, and OPEC’s monopolistic production decisions that limit the world’s oil supply and increase its price (the cartel (OPEC) has almost 80 percent of the world’s known oil reserves). For all the rhetoric about energy independence and controlling the price of oil, Keystone XL’s marginal contribution to global production won’t amount to a hill of beans.
There is one source of potential long-term job creation about which oil industry has remained silent: jobs created to clean up inevitable spills and leaks. So far, TransCanada has experienced major problems with the section of the Keystone project already completed. In its first year of operation, its so-called safe “state-of-the-art” pipeline has already leaked 35 times, (21 times in Canada, 14 in the U.S--p. 3.13-11). According to the University of Nebraska, approximately 91 major spills can be expected over the 50-year lifetime of the pipeline. Clean up jobs will last longer than that…
There is also the potential for a major disaster. In 2010, the largest tar sands spill in U.S. history devastated the Kalamazoo River with over 800,000 gallons of oil at a price tag of over $700 million. We’re still cleaning it up, a year and a half later.
A worst-case spill from Keystone XL could cause widespread groundwater and river contamination. Any resulting clean up expenditures will strain public budgets, diverting limited resources away from productive investments that generate long term job growth, such as infrastructure, education, and clean energy.
Finally, there’s public health and the environment. The $700 million figure cited above was just for cleaning up. According to a November 2010 report (p.12) from the Michigan Department of Community Health, almost 60 percent of people surveyed who lived near the Kalamazoo spill experienced at least one adverse health effect following it, including respiratory, gastrointestinal and neurological symptoms (compared to a baseline of less than 5% in a community 15 miles upstream of the spill). Ethics aside, sick people do not make a healthy economy. Nor do the droughts, forest fires, extreme weather, smog pollution, and other impacts associated with climate change: extracting tar sands oil generates three times as much global warming pollution (in addition to generating other pollutants) as does conventional oil.
We should take heed of Canadians' oppostion to transporting Alberta's dirty oil through their own land for their own oil; they are no fools. They know TransCanada’s Keystone XL tar sands pipeline is a terrible project: it promises few if any jobs, puts existing jobs at risk, and threatens water supplies, public health, and the environment. They know the oil industry has one objective and one objective only: to increase profits. It is not to bestow a new supply of cheap oil on the US or reduce unemployment. As PT Barnum famously said, “There’s a sucker born every minute.” Let’s make sure we’re not one of them.
(Updated 2/3/2012 to add climate change impacts).
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