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Don't Believe the Fantasy Job Claims on Keystone XL: It's Not in Our Best Interest

Nicole Lederer's picture
Environmental Entrepreneurs
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  • Jan 14, 2012
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Groups like the U.S. Chamber of Commerce and the Business Roundtable say they speak for the country’s business interests.

When it comes to the Keystone XL pipeline, they most definitely do not.

In his “State of American Business speech,” U.S. Chamber president Tom Donohue once again trotted out his fantasy claims about the importance to our economy of this foreign pipeline scheme.  

 Mr. Donohue painted the pipeline as a savior for America’s economy, saying it would put “20,000 Americans to work right away and up to 250,000 over the life of the project.” Business Roundtable president John Engler is making similarly false claims.

ButTransCanada, the company that wants to build the export line, acknowledges in a CNN interview here it will only create a few hundred permanent jobs in the United States. The State Department’s analysis (see the department’s EIS, p. 3.10-80 here) shows that only 20 – that’s right, 20 – full-time U.S. jobs will be created after construction is finished.

Another piece of fantasy that Mr. Donahue advances is that the Keystone Pipeline will provide our country with more energy security, and that we’ll have access to oil from our friendly neighbor to the north.

The truth about this project is that a Canadian company wants to run this pipeline through the heartland of the United States for the purpose of transporting the toxic sludge known as tar sands bitumen to Gulf of Mexico refineries.  From there, the majority of this product is destined for the global oil market, where we’ll have no more access to it than we do to oil pumped in the Middle East.

And the cherry on top of this proposition is that for very few jobs and no increased access to oil, we get to assume the liability of this project and its negative impact on our land, water and atmosphere. 

What a deal.

There are other big risks as well.  Remaining dependent on oil – and yes in this case it is foreign oil – keeps our economy hostage to other countries. Remember, most of the oil that runs through this pipeline will end up on the world market where it is just as likely to end up in China as it is in Cleveland. It won’t reduce our gas prices here one bit.

And then there are the lost opportunity costs. As long as we keep supporting ways to prolong our dependence on oil, the farther we fall behind on innovation of new energy sources and on building a more sustainable economy based on clean, renewable energy.

Instead of putting our support behind a Canadian company that just wants the right of way to move its product down the heart of our country, we should be putting more support behind the innovative U.S. companies that are trying to develop clean, domestic renewable energy we can harness right here in the United States.

You won’t hear this from the oil lobby, but the renewable energy industry is where the real jobs are. It is the brightest spot in our economy. The number of jobs in the solar industry alone doubled last year, and are expected to grow by another 26 percent in the current year. Try to find another industry growing at that rate.

Contrast that with the oil and gas industry. Despite raking in $546 billion in profits in the past five years, the oil and gas industry laid off more than 11,000 American workers – even while simultaneously charging record prices at the pump.

It’s time to move forward toward real energy security and a cleaner, renewable energy economy in the United States that will foster real American innovation and create real American jobs.

Keystone XL is against the best interest of our country.

 

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Geoffrey Styles's picture
Geoffrey Styles on Jan 13, 2012

Nicole,

I’m afraid you’re mistaken on almost every count:

1. If only permanent jobs, rather than construction jobs, mattered, then the green jobs rationale for much of the renewable energy investment in this country other than manufacturing would also collapse.  I’ve read many such analyses, and nearly all of them count the same kind of “temporary” jobs that this project does–temporary being very much in the eye of the beholder if you’re an out-of-work welder, pipefitter, or other skilled trade.  We can’t have it both ways.  If only permanent US jobs count, then wind turbines, solar arrays, and ethanol plants don’t produce many, either.

2. “the majority of this product is destined for the global oil market”  This assertion doesn’t hold up if you understand how the oil market works.  Sure, some of the oil sands crude might end up being exported, as might a small portion of the products refined from it.  However, the majority of this crude would end up being processed in Gulf Coast refineries, displacing imports from less stable suppliers like Venezuela, barrel for barrel.  That’s because the Gulf Coast region currently imports around 5 million barrels per day–a multiple of what Keystone XL would carry–and represents one of the world’s largest refining centers with the complexity necessary to run this kind of crude.  And the output of those refineries provides crucial energy supplies far beyond the Gulf Coast, into the Southeast, mid-Atlantic states, and all the way up to the New York Market.

3. “It won’t reduce our gas prices here one bit.”  I agree. However, I haven’t heard cheaper gasoline used as a justification for the project.  Oil prices, which constitute the main component of gasoline prices, are set globally.  The issue here is replacing less reliable sources of supply, not providing below-market supplies.

4. “Remaining dependent on oil – and yes in this case it is foreign oil – keeps our economy hostage to other countries.”  The fact is that we are dependent on oil and will remain so for many years, because no single renewable or combination of renewables and EVs is presently capable of scaling up any time soon to displace the 18 million barrels per day of oil that we use daily–the equivalent of around 40 times US corn ethanol production.  I’m optimistic for the longer term, but for now, we cannot pretend we are close to being able to turn our backs on oil, so it matters whose oil we depend on.  I’ll take Canada over many of the other choices any day.

Finally, it’s erroneous to present projects like this as though they represented an either/or proposition vs. renewables.  Biofuels aren’t threatened by Keystone XL, because they are protected by a very aggressive federal mandate they can’t yet meet.  And renewables that produce electricity aren’t threatened, because oil generates less than 1% of our electricity today. 

Rajat Sen's picture
Rajat Sen on Jan 13, 2012

Thank you Geoffrey for you thoughtful comments. I agree completely

Paul O's picture
Paul O on Jan 14, 2012

I most certainly, point by point, approve of this rejoinder.

ed frantz's picture
ed frantz on Jan 14, 2012

Dear Nicole,  I am a bit stunned by your logic. If you look at the amount of gas this country is using each year.  you will see that we are reducing it by approx 1% per year. That is a good thing. Most of this is due to newer vehicles getting better gas mileage . 250 million vehicles on the road. Every year 10 million get junked and 10 million vehicles that get sometimes twice the mileage replace them. So, every gallon we do not use can be exported ( mostly to mexico ) to offset out trade balance. The more we export, the more jobs are created in Texas, the more taxes the government receives the more we reduce our deficet . I am a tea party patriot and like my friends, we all want more electric cars, biofuels, wind and solar because it will reduce our need in the US and the more we can export

Dan Yurman's picture
Dan Yurman on Jan 16, 2012

The author writes . . .

<begin snip>

The truth about this project is that a Canadian company wants to run this pipeline through the heartland of the United States for the purpose of transporting the toxic sludge known as tar sands bitumen to Gulf of Mexico refineries.

<end snip>

There are some realities of the pipeline business that need to be brought into the dialog.

Bitumin, which you call “toxic sludge,” cannot be transported by pipelines.  The oil that would come through the Keystone pipeline from the Alberta tar sands has to have a viscosity necessary to allow it to flow continuously over thousands of miles and through multiple pumping stations. The producers process the bitumen there to get it to flow. Otherwise, it would never wind up with buyers.

Pipeline owners have huge incentives not to allow leaks to occur because of the cost of the lost oil and the subsequent cleanup costs wipe out profits.

With regard to jobs, for any pipeline project is important to make a distinction between construction jobs and permanent jobs.  The big numbers are on the construction side.  Permanent jobs are relatively small in number since pumping stations are highly automated. 

Finally, the U.S. needs two things to achieve energy independence. The first is more oil, and the second is more oil refining capacity.  Like it or not the transportation segment in terms of energy consumption will be using refined oil products for a long time.  Every time a refinery shuts down, and there is no replacement capacity, it insures that the U.S. will import more gasoline, diesel and airline fuel, etc.

Unless you want to see $10/gallon gasoline, which is where Japan is headed, I suggest more attention be devoted to figuring out how to make the Keystone Pipeline a workable project instead of a political football in the 2012 presidential election.

None of these points implies in any way that air pollution controls aren’t relevant or needed for this or any other extractive industry that requires processing once the product is taken out of the ground.

 


Geoffrey Styles's picture
Geoffrey Styles on Jan 16, 2012

Dan has his put his finger on what has been wrong with this artificial controversy from the start: I can understand the critiques of those worried about the incremental greenhouse gas emissions (a relatively small increase in the whole value chain, but not zero) and the preservation of wetlands and aquifers.  What I can’t understand is an administration that has lost control of the issue to such a degree, and that has failed to approach it publicly from the start with a focus on how the project could be improved to address as many of these concerns as possible without rendering it uneconomical.  Moreover, anyone worried about the additional urgency the Congress has attached to the necessary decision should recall that the project’s application was sitting in the administration’s inbox when it took office in 2009.   

Paul Ebert's picture
Paul Ebert on Jan 21, 2012

Isn’t the point of this article that the 200,000 jobs being so loudly proclaimed by the industry and their political supporters is a blatant lie?  Yet, each of you (GoodGreenGuru excepted) seem to want to sidestep the issue.  I appreciate some of the points being made, but given that the debate has been framed and, no doubt, the political battle will continue to be waged on the basis of this fallacy, it seems to me that this is the primary obstacle to meaningful debate.

Nicole Lederer's picture
Nicole Lederer on Jan 21, 2012

Thank you for these comments and the opportunity to respond.

On job creation, the important point is backers of this pipeline continue to make wildly exaggerated claims about job creation. Given the national profile of this issue, the public deserves to know that less than 100 permanent and less than 6,000 construction jobs will be created from this pipeline – a fraction of the 100,000+ jobs that the Chamber of Commerce and others claim Keystone XL will create.

Temporary and permanent jobs matter. But is Keystone XL really a major job creator? No. Does it make sense that politicians and the oil industry point to Keystone XL as the major opportunity to get America back on track? No.

We focus on clean energy jobs because that is where significant job creation is taking place. Keep in mind that more than 2.7 million people are working in the U.S. clean economy right now – more than the entire fossil fuel industry put together. In just a six week period in September and October 2011, E2 identified the creation of 32,000 clean energy jobs – construction and permanent – by 100 companies including manufacturing plants, power generation project, renewable energy, and energy-efficiency retrofits. While job creation from Keystone XL would not have a significant impact on long-term employment in the U.S., there are real opportunities to create tens of thousands of jobs by focusing on a clean energy economy.

Moreover, Keystone XL wouldn’t have brought more oil into the United States. . Right now Canada can’t fill the existing pipelines that cross the border – there isn’t any oil to put into another pipeline like Keystone XL. The final review of the project by State Department found that there would be little difference in U.S. crude supply over the next decade whether or not Keystone XL was built.

The primary purpose of this pipeline is for export. True, we don’t know precisely how much of Keystone XL oil will be exported. But the Canadian government and Keystone XL shippers haven’t made any secret over the fact this pipeline is designed for export. The tar sands industry has been desperate to find a way to get their product overseas and Keystone XL has been their choice. The key point is proponents of the pipeline say the pipeline will offer the U.S. energy security when in fact it was never designed to meet U.S. energy needs.

And incidentally, Keystone XL will increase oil prices in the Midwest. Oil prices may be set globally but pipeline operator TransCanada has admitted that the pipeline would increase the price of Canadian oil in the United States which for Midwesterners could mean higher gas prices. Again, this is by admission by the pipeline company.

Finally, it is absolutely clear that being dependent on foreign oil holds us hostage. This is a message from military generals who understand that increasing our dependency on Canadian oil will do nothing to insulate us against the uncertainties of the global oil market.

And while clean renewable energy is the end goal, we can significantly reduce our oil consumption by simply putting more efficient engines in more efficient vehicles. In fact, the U.S. can reduce its oil use by 5.7 million bpd in the next twenty years through technologies that exist today. Our nation has already reduced our dependency on oil with the Obama administration’s introduction of vehicle emissions standards – a measure that will save us 1.7 million bpd by 2030.

The comment about bitumen not being transported on pipelines really strikes at the heart of many of the safety concerns with Keystone XL. The industry used to process bitumen into synthetic crude oil before sending it on the pipeline system. However, tar sands producers have now begun putting raw bitumen diluted by natural gas liquids on pipelines – a practice that has caught many people, including pipeline regulators, unaware. The diluted bitumen is still a thick toxic sludge that is unlike synthetic crude or the lighter crude oils. This raises increased safety concerns – the diluted bitumen spill in Kalamazoo, Michigan has been a disaster with a $700 million price tag due to the increased challenges of cleaning diluted bitumen.

The argument that pipeline operators have incentives to prevent accidents is frequently used, but the fact of the matter is accidents do happen all too frequently. TransCanada’s first Keystone line spilled more than 21,000 gallons in 14 leaks during its first year of operation. While pipeline operators may not want accidents on their pipelines; when they’re forced to choose between expensive safety measures and saving money, company decision maker face strong pressures to make the wrong choice. A federal investigation of the San Bruno natural gas pipeline explosion, which killed eight people found that the disaster was the result of a pipeline company exploiting weaknesses in a lax system of oversight.

It’s one thing to make a fair assessment of the risks of spills along a certain path – it’s quite another to pretend that risk doesn’t exist. Finally, I want to emphasize a key point about how this pipeline is not in the best interest of Americans. In addition to it being an export pipeline that will raise oil prices in the Midwest and not meet U.S. energy security, there are serious concerns about pipeline safety, the transport of tar sands, and green house gas emissions.

In the end, the decision to deny the pipeline was the right one, and not just for the health and safety of the American people.

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