The Keystone pipeline will NOT create 20,000 new jobs

“Millions of Americans are desperate for jobs, and no single project promises more of them than the proposed Keystone XL Pipeline, which would run from Canada to the Gulf Coast…. As the largest shovel-ready infrastructure project in the U.S., Keystone XL was expected to create 20,000 new jobs right away.”

– U.S. Sen. Dick Lugar and
Senate Minority Leader
Mitch McConnell

And that, of course, is false, and Lugar and McConnell have good reason to know it is false. The Keystone XL Pipeline, the centerpiece of the latest standoff in Washington, will not produce 20,000 shovel-ready jobs. Even TransCanada, the company pushing the pipeline’s construction, now acknowledges that it is false.

The number that the company likes to throw around is now 13,000 direct construction jobs, but that too is misleading. When challenged, the company acknowledges that it is counting what you might call “job years.” In other words, TransCanada believes the project will produce 6,500 jobs that last for two years.

Six thousand five hundred jobs is a far cry from 20,000. And even the 6,500-job estimate is much too high. According to an independent assessment by Cornell University’s School of Industrial and Labor Relations, the project would produce between 2,500 and 4,650 construction jobs, and could even end up costing the country jobs, for reasons that we’ll get to below.

TransCanada is basing its job estimates on a report that it commissioned from the Perryman Group. However, the Perryman Group has refused to release important data behind its estimate, claiming it to be proprietary information. The folks at Cornell nevertheless took what data Perryman did make available and found several major, fundamental flaws in its approach.

For example, a $1 billion portion of the Keystone XL pipeline has already been built and is up and operating. The Perryman study nonetheless pretends that section of the project is still on the drawing boards and, when built, will provide thousands of new jobs.

In addition, Keystone supporters ignore the fact that large quantities of Canadian tar-sands oil are already being imported into the United States and are being refined and used in the American Midwest. As the Cornell study points out:

“According to TransCanada, KXL will increase the price of heavy crude oil in the Midwest by almost $2 to $4 billion annually, and escalating for several years. It will do this by diverting major volumes of tar sands oil now supplying the 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, adding up to $5 billion to the annual US fuel bill.”

As the Cornell study concludes, those higher fuel prices for the Midwest could cost that region thousands of jobs. So while the pipeline construction would certainly help the Canadian tar-sands investors — many of them Chinese — get a higher price for their product by moving it to the Gulf, it could prove to be a wash or even a net negative in terms of jobs for American workers.

As the Cornell study concludes:

“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 numbers, the supporters of KXL approval are doing an injustice to the American public in that expectations are raised for jobs that simply cannot be met. These numbers — hundreds of thousands of jobs! — then get packaged as if KXL were a major jobs program capable of registering some kind of significant impact on unemployment levels and the overall economy. This is plainly untrue.”

– Jay Bookman