A Two Part Installment on the Proposed Keystone XL Pipeline Part One: Jobs and Security

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After successful careers in such divergent fields as biochemistry & immunology (at UIUC and UT-Austin) and organizational development in corporate America, Marilyn Leger now travels the U.S., Caribbean and Europe by houseboat soaking up history, exploring cultures, sampling foods (and wines!) and, most importantly, getting to know people.  This has also given her the opportunity to study, research and write on environmental and political issues.

“Everyone is entitled to their own opinions, but they are not entitled to their own facts.” — Senator Daniel Patrick Moynihan

In May 2012, TransCanada submitted a revised application for the Keystone XL pipeline.  They included some concessions to environmental concerns and left the majority of the proposal intact. The 1,700 mile-long pipeline would start in Alberta, Canada, and cross six U.S. states (Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas) ending at Port Arthur and other export sites along the Gulf of Mexico.  It would add up to 35 million gallons of tar-sands oil per year to existing capacity. U.S. approval depends on establishing “national interest,” and consent from each of the affected states. State requirements go from almost non-existent to stringent.

TransCanada identifies two substantial benefits to implementation: economic stimulation and energy security–in other words, jobs, and oil from a friendly neighbor.  These benefits are (almost) all we hear about this issue. Many want to believe, want simple answers, but life is complex.  Let’s look at the claims more closely.

The Perryman study contracted by TransCanada claimed the pipeline would generate 20,000 direct construction and manufacturing jobs with an investment of $7 billion. This study included all phases of the pipeline project including those already in place. It also stretches the term “direct” to a very imaginative limit.  Later, TransCanada offered the  more realistic range of 6,000 to 6,500.  This represents person-years of employment– a single job lasting two years is considered two jobs. Upon completion, approximately 20 permanent pipeline operation jobs would be created. The authors also claimed that concomitant lower gas prices would generate an additional 250,000 jobs long term.  They provide no foundation for this projection. These misleading numbers have been repeated ad infinitum, evidently under the belief that if you say something long enough it will become “truth.”

Cornell University’s Global Labor Institute (CUGL) presents a less glowing picture. Researchers determined that total investment would be closer to $3 to $4 billion creating only 2,500 to 4,650 construction jobs of one to two year duration. How about manufacturing jobs? Fifty percent more of the steel pipe needed has already been manufactured, in India, in anticipation of approval!

Not only are the job numbers inflated, jobs and production in other areas would be negatively affected during the pipeline construction. Construction disrupts the agricultural season by scraping, flattening, trenching and compacting the soil.  This would have to be remedied before crops could be replanted.  The situation would be particularly disadvantageous for organic farmers, many of whom would lose their certification because of potential risks, and all of whom would need extra time to restore their land through natural processes.

Investing in renewable and clean energy creates jobs.  For every $1 million invested, 16.7 jobs are created. By contrast, $1 million invested in fossil fuels generates 5.3 jobs. Another fossil fuel, Coal, currently provides 49 percent of the nation’s electricity, and employs about 80,000 people in mining. Wind currently generates 1 percent of the nation’s electricity, and it already employs about 85,000 people. For further evidence, Compare TransCanada’s numbers to projections for a one-year extension of a federal solar grant program: according the Solar Energy Industries Association, such an extension could create 37,000 jobs.  The number of Americans working in the solar industry has doubled since 2009 to 100,000. CUGL reports that the U.S. is now the world’s leading investor in renewable energy and leads in wind power generation.

Energy Security — Independence/Dependence

While there are multiple sources for energy, the dominant conversation has focused almost entirely on oil.  This fosters a sense of scarcity. Availability of energy from renewable sources has doubled since 2008, and with the approval of 29 onshore renewable energy projects — 16 solar projects, five wind farms and eight geothermal facilities — will continue to grow.

Turning our attention to non-renewables, what do we find? Canadian tar sands do contain 178 billion barrels of useable oil. Do we need it? A March 2012, White House report on energy highlights that:

  • Domestic oil production has increased over the last three years, in 2011 reaching its highest level since 2003 [while imports have been reduced] by 1 million barrels a day;
  • Since 2009 the U.S. has led the world in production of natural gas;
  • Overall oil consumption in the U.S. decreased over the last four years; and,
  • Fuel economy standards requiring 54.5 miles per gallon for automobiles by 2025 will continue to this reduction, as will investment to support [proposed] manufacture of one million plug-in hybrid and electric vehicles, research into use of natural gas for transportation, and establishing commercial bio-refineries.

Energy Security – Oil Dependence
Much has been made of our dependence on volatile (and often anti-U.S.) sources for oil. In reality, we currently get only 13% of our oil from Saudi Arabia and Iraq, and none from Iran. As far as threats go, military experts have warned that the Keystone XL pipeline perpetuates our dependence, and thus, our insecurity. The only way to reduce our reliance on volatile markets is to reduce our reliance on oil.

The fuel economy rules mentioned previously offer hope in this area. The required average of 54.5 miles per gallon would reduce U.S. dependence on oil by 1.7 million barrels per day. That’s twice what Keystone XL would carry at full capacity… [and] nearly 7 million barrels per day [could be saved] by 2030.

Dependence on oil also contributes to a much greater potential loss–the lost opportunities born of complacency and lack of growth.  Investing in Keystone XL ties us into tar-sands oil for the next 50 years. This large investment in construction and new technology requires the continued “feeding” of that technology to justify the cost of development. Continued investment also contributes to a complacency about oil supplies and relieves the sense of urgency on the part of the public and the government to develop alternative, renewable sources of energy. Approving the pipeline would not spell the end for development of renewable energy sources, however, it would exact a costly toll. The pipeline is a “conduit to the past.”

Energy Security — Export
Some alarmists say, “If we don’t take the oil, it will be shipped to China.”   Though there is a contingency plan for such a scenario, it is not a plan that can be quickly implemented and it would be politically and economically costly for all concerned. Having said that, Gulf coast refineries are focused on expanding their export markets. With the combination of stable to reduced oil demand plus increased domestic production from shale oil and Canadian oil flowing in through two recent pipelines, U.S. producers are experiencing a glut. Under the proposed plan, Texas-based Valero Energy Corporation has locked in at least 20% of the pipeline’s capacity with an explicit strategy on export. Valero’s refinery is in a Foreign Trade Zone, and thus, its exports are tax-free. Valero is only one of six companies with long-term, binding agreements with TransCanada. In truth, the oil market is a global market.  Price hikes are due more to increasing demand in lesser-developed countries than to restrictions in availability.  Further, supplies of oil anywhere affect supplies everywhere. Other than transportation, it doesn’t matter where tar sands oil ends up.  The only way to reduce dependence on imported oil is to reduce dependence on all oil. Given all of this, concerns over where the oil might go appear to be a red herring.

The Next Installment: Environmental Issues

Concerns about jobs and energy security are only part of the picture.  No one in the government nor at TransCanada has sufficiently addressed issues about the environment except to give unsubstantiated assurances that there is no impact expected.  We’ll explore those questions in the next installment.

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