Pieces of the $7 billion Keystone XL pipeline waiting to be assembled.

The Truth About Keystone XL: Few Jobs, No Energy Security

ICTMN Staff
1/20/12

Those in favor of the Keystone XL pipeline project, which the State Department rejected on Wednesday, have made two grand claims: (1) The pipeline will create jobs. (2) It will lessen U.S. dependence on foreign oil, especially from unsavory regimes like Saudi Arabia and Venezuela. Advertisements by ExxonMobil, for instance, push “energy security and economic growth.” Energy Secretary Steven Chu has also suggested that petroleum from oil sands would help in that regard. “It’s certainly true that having Canada as a supplier for our oil is much more comforting than to have other countries supply our oil,” he said in an interview with EnergyNow.com.

Athabasca Oil Sands Photo Essay

Increasingly, however, skeptics came to question these assertions. In a September 2011 report, Pipe Dreams? Jobs Gained, Jobs Lost by the Construction of Keystone XL, the Cornell University Global Labor Institute wrote, “It is our assessment—based on the publicly available data—that the construction of [Keystone XL] will create far fewer jobs in the U.S. than its proponents have claimed and may actually destroy more jobs than it generates.” Job estimates, the report says, are based on flawed or inflated numbers supplied by the oil industry. The Cornell report also says that Keystone XL would “almost certainly be constructed by temporary labor working with steel made in Canada and India.”

The difference in jobs forecasts is staggering. An article at FoxNews.com recalls Keystone's initial estimate, from 2008, of "'a peak workforce of approximately 3,500 to 4,200 construction personnel' in temporary jobs building the pipeline." By 2011, TransCanada's estimate had expanded to 20,000 jobs: 13,000 in construction and 7,000 in manufacturing. Or had it? The "20,000 jobs" figure cited is highly misleading. TransCanada was measuring not jobs as we know them but "person-years" of employment—a person-year is defined as an amount of work that would employ one person for one year. A further report commissioned by TransCanada said that Keystone XL would create 118,000 person-years of work factoring in "spin-off" employment—employment that crops up around the building of the pipeline, say, restaurants and services. This figure again was wrongly simplified as 118,000 jobs or spin-off jobs, and was widely used in official responses to Tuesday's announcement. For some, though, 118,000 jobs wasn't enough—an expanded estimate of 250,000 jobs (is that jobs, or person-years? Does it matter at this point?) was publicized, and repeated.

(These are just the broad strokes on the number-fudging—for more detail, read the breakdowns at the Washington Post and Huffington Post.)

When you compare that number to the State Department's estimate of 5,000 to 6,000 two-year jobs (which isn't in disagreement with TransCanada's earlier estimates), it's hard to imagine that the numbers could keep growing without any basis in fact. And yet they do: A post at the industry-sponsored Energy Tomorrow blog touts "20,000 [jobs] in the pipeline’s construction phase and up to a half-million more over time." (Emphasis added.)

As for U.S. energy security, The New York Times is similarly dubious about methodology: “What pipeline advocates…fail to mention is that much of the tar sands oil that would be refined on the Gulf Coast is destined for export,” said an October 2 editorial. “Six companies have already contracted for three quarters of the oil. Five are foreign, and the business model of the one American company—Valero—is geared toward export.”

And the export market, as we've reported before, is the growing market. Indeed, though conventional wisdom has long held that U.S. demand for imported oil will always rise, figures indicate it has been declining for the past two years—and will continue to do so. There is currently a glut of oil at the massive tank farm in Cushing, Oklahoma (a terminus of the existing Keystone pipeline) and the refined products that would be made from that oil—gasoline, diesel and jet fuel—fetch better prices overseas.

So while there may be much money in oil sands, those profits would be measured more in Canadian dollars and Euros than U.S. greenbacks.

Given the United States' problems with oil, it is tempting to see Canada as a friendly neighbor and Canadian oil as an ethical solution. But that just isn't the case. Oil from the Alberta Tar Sands is a valuable substance that, understandably, oil companies would like to refine and sell to the highest bidder. It's easy to see how the Keystone XL pipeline would be in Canada's national interest, or in the interest of the six companies that wish to refine tar sands crude in the Gulf (in tax-free trade zones, no less). But peer through the smokescreens of jobs and energy security, and it's hard to see how Keystone XL, in enabling Canada to sell its oil to the rest of the world, is in the national interest of the United States.

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