The Truth Hurts? Obama's Stark Jobs Estimate for Keystone XL Pipeline
President Barack Obama called it: The number of permanent, long-term jobs that will be created as a result of the Keystone XL pipeline will be minimal, he said in a July 24 interview with The New York Times and again at a jobs-policy speech in Tennessee on July 30.
“Republicans have said that this would be a big jobs generator. There is no evidence that that’s true,” Obama told The New York Times. “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 an economy of 150 million working people…. That is a blip relative to the need.”
On Tuesday July 30 he downgraded that estimate even further, implying that the pipeline would create a maximum of 50 or so jobs, Fox News reported. On the surface it seemed to low-ball the much higher estimates given by TransCanada, the company that would build the $7 billion, 1,700-mile-long dual pipeline through several states from the oil sands of Alberta, Canada to the Gulf of Mexico. Although it would take that smaller number of people to maintain the pipeline, getting to that point would create potentially thousands of jobs, Fox News pointed out.
Obama’s pronouncements set the U.S. media into a fact-checking frenzy. What about the 42,100 jobs that could result from the economic development—3,900 construction jobs, with tens of thousands more resulting from the ripple effect—over the one to two years it would take to build the pipeline?
The discrepancy seems to be on what one’s definition of “job” is. Is it a two-year construction job that leaves someone out of work once the pipeline is built? Is it a rash of services such as sandwich joints to feed those hungry workers? Or should only the ones that would provide long-term employment be counted among the benefits of such an enormous project?
The executive summary of the State Department’s preliminary environmental assessment report, released on March 1, did indeed put the number at “35 permanent and 15 temporary jobs, primarily for routine inspections, maintenance, and repairs,” and added, “Based on this estimate, routine operation of the proposed pipeline would have negligible socioeconomic impacts.”
Those temporary construction jobs and ripple-effect economic development—which economists admit is going to be a fuzzy estimate no matter what, until it materializes or doesn’t—count as jobs to those who would like the pipeline to go forward. For the opponents, it is not enough to build economic development hopes on, especially since, as Obama also pointed out in The New York Times interview, the oil won’t necessarily directly benefit the U.S. economy.
“So what we also know is, is that that oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States,” he said. “In fact, it might actually cause some gas prices in the Midwest to go up where currently they can’t ship some of that oil to world markets.”
Nevertheless, the numbers alone, regardless of what they represented, were enough to cause major media outlets to cry foul.
“The president correctly characterized the project's overall effect on U.S. employment but underestimated the number of jobs it would create,” the Associated Press said in its fact-check analysis.
“When we had looked at this before, we concluded that all such estimates are subject to guesswork, but the most mainstream estimate appeared to come from the State Department—5,000 to 6,000 construction jobs per year,” the Washington Post said in its parallel analysis, quoting earlier State Department figures. “Interestingly TransCanada, which would build the pipeline, had a very similar estimate for the two-year project—13,000 jobs, or 6,500 per year.”
Even more interesting may be something the Post did not touch on: Environmental Resources Management Inc. (ERM), one of the firms hired to conduct the State Department’s environmental assessment, has close ties with TransCanada on another pipeline project, according to the watchdog group Friends of the Earth. Moreover, ERM and its subsidiary Oasis Environmental are directly involved with several oil sands companies, according to Environment News Service.
“Friends of the Earth’s review of Environmental Resources Management’s business connections found that, in fact, ERM and TransCanada have worked together at least since 2011 on another pipeline—the Alaska Pipeline Project, a partnership between ExxonMobil and TransCanada designed to connect Alaska’s North Slope natural gas resources to new markets,” Environment News Service reported on July 11.
“In fact, ERM’s own publicly available documents show that the firm has business with over a dozen companies with operating stakes in the Alberta tar sands,” Friends of the Earth noted in its report, according to the news service.
In the end, Obama brought his own place in the discussion back to carbon release and greenhouse gases, as he had earlier in the year at a speech on climate change.
“There is a potential benefit for us integrating further with a reliable ally to the north our energy supplies,” Obama said of partnering with Canada for energy needs. “But I meant what I said; I'm going to evaluate this based on whether or not this is going to significantly contribute to carbon in our atmosphere. And there is no doubt that Canada at the source in those tar sands could potentially be doing more to mitigate carbon release.”
Canada notoriously pulled out of the greenhouse-gas-limiting Kyoto Protocol at the end of 2011 during climate-change talks in Durban.