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Sep 292011

By Barbara Kessler
Green Right Now

A Cornell University study has found that the controversial Keystone XL tar sands pipeline may employ far fewer American workers than promised by the pipeline’s operator.

Though touted as employing 20,000 construction and manufacturing workers, the project may only employ 2,500-4,650 temporary direct construction workers in the U.S. along the pipeline’s route from Alberta to Texas, according to the report “Pipe Dreams: Jobs Lost, Jobs Gained by the Construction of Keystone XL” by Cornell’s Global Labor Institute.

The lower figure is the number of jobs that pipeline operator TransCanada estimates it will employ in documents submitted to the U.S. State Department, which were among many documents and filings analyzed by the Cornell team.

From the Cornell report:

The number of jobs that could be created by the construction of KXL is by no means insignificant. But the overall impact of these jobs should not be overstated. TransCanada’s submission to Canada’s National Energy Board (NEB) led to the Board stating: The Board finds that the socio-economic impacts of the Keystone XL Project
will be of a temporary nature and limited to the relatively short duration of
pipeline construction without significant long term effect on the surrounding communities.

The Cornell researchers also found that the number of workers hired in communities near the 1,700-mile pipeline could be much lower than anticipated, perhaps only 10-15 percent of total workers hired. They cite information supplied to the U.S. State Department, which must approve the pipeline because it will cross an international border:

Based on data provided by TransCanada to the State Department, only between 506 and 1,387 workers would be hired locally.17 A state-by-state breakdown indicates that KXL will create between 93 and 257 jobs for residents in Montana; 121-333 jobs in South Dakota; 90-248 jobs in Nebraska; 6-18 jobs in Kansas; 41-113 jobs in Oklahoma; and 156-470 jobs in Texas.

“Pipe Dreams” traces the discrepancies between the publicly touted employment benefit of the pipeline and the one documented to the State Department in part to a study done for TransCanada known as the Perryman Study. That study greatly overestimates the pipeline’s economic impact, according to the Global Labor Institute analysis.

The Perryman study inflates the numbers by lumping together job estimates for both the American and Canadian sides of the construction project and by including a previous portion of the pipeline that’s already been constructed, according to the researchers.

When the money already spent and the money that will be spent within Canada are subtracted from the Keystone XL pipeline budget, the promised $ 7 billion project dwindles by about half. From the Cornell report:

 TransCanada’s claim that KXL is a $7 billion stimulus to the US economy is misleading on three levels. First, $1.6 billion will be spent on the Canadian portion of the pipeline, drawing largely on Canadian material and labor inputs. Second, at least $1.8 billion of the $7 billion has already been spent, mostly on design, permitting, and material inputs. Third, in addition to the $1.8 billion already spent, another $1.3 billion of KXL costs may already be committed. These committed costs may be incurred regardless of whether the project is actually constructed. Therefore, we calculate that the actual spending relevant to the US economy, and the figure from which US new job creation projections should be calculated, is around $3 to $4 billion, not $7 billion.

The Perryman study also suggests that much of the manufacturing of the pipeline would occur in the U.S., but the Cornell research casts doubt on that claim as well.

The manufacturing jobs appear to evaporate under scrutiny of TransCanada’s past practices and current steel ordering operations. TransCanada has already contracted with companies in India and Russia to manufacture steel pipe for Keystone XL, and has been shipping in pipes from India that appear to be destined for Keystone XL, according to a variety of documents cited by the Cornell study.

Although the pipe will be processed and finished in the U.S. plants, its importation greatly reduces the benefit to American workers.

All in all, the claims made by KXL proponents that the project will generate thousands of manufacturing jobs are unsubstantiated and misleading. If a significant proportion of the pipe is fabricated outside the US, this further decreases positive US employment impacts. Even the steel pipe fabricated within the US is made from imported steel, which further decreases positive US employment impacts. Furthermore, the evidence also suggests that only final processing work is likely to be done in the US, and that other pipe components are also being imported. This further reduces any potential US manufacturing jobs impacts.

The proposed Keystone XL pipeline is awaiting official approval from the U.S. State Department and the White House. Opponents have urged President Obama to reject the project because it will ferry an especially dirty type of oil to market from Alberta to Port Arthur, Texas. Tar sands oil is essentially strip mined from the earth, destroying forests and producing three times the carbon pollution as regular crude oil extraction.

Climate change activist Dr. James Hansen has said that putting the tar sands bitumen from Alberta on the world market could be “game over” for fighting climate change because it will prolong human reliance on dirty fossil fuels.

Proponents of Keystone, however, say that the project will provide much needed employment and they maintain that the risks of the tar sands operations are overstated.

Those in favor of Keystone XL also warn that Canada will extract the tar sands oil even if the U.S. turns down the pipeline, sending the fuel west toward Asian markets. They also say that tar sands oil could help make the U.S. more energy independent. But Keystone critics say that’s not so for two reasons: The oil can and likely will be sold on the world market, and even if the U.S. bought all of it, the net gain would be less than 5 percent of the oil America currently consumes.

The Cornell study actually addresses some of these arguments, though they’re not strictly labor-related, offering this note on the claim that tar sands oils will help resolve U.S. oil dependence issues:

This paper is primarily concerned about jobs, but the findings below also shine light on another claim made by the industry—that KXL will get the US further on the road to energy independence. The idea of energy independence clearly resonates with the American public, and the paid advertisements depicting Canadian Tar Sands as
the source of “ethical oil” (and therefore a better option than oil from dictatorships like Saudi Arabia) plays to that sentiment. But KXL is a global project driven by global oil interests. Tar Sands development has attracted investment capital from oil multinationals—with Chinese corporations’ stake getting bigger all the time. If approved, KXL will be almost certainly be constructed by temporary labor working with steel made in Canada and India. Much of the Tar Sands oil will be refined in Port Arthur, Texas, where the refinery is half-owned by Saudi Aramco, the state-owned oil company of Saudi Arabia. And a good portion of the oil that will gush down the KXL will, according to some studies, probably end up being finally consumed beyond the territorial United States.

“Pipe Dreams” concludes that America would be better off focusing on non-polluting green jobs, which are higher paying and offer a better return of jobs for the money invested. The study cites research by the Political Economy Research Institute (PERI) at the University of Massachusetts showing that the oil industry generates only about one fourth of the number of jobs created by equivalent green investments.

“Green infrastructure programs create more jobs per dollar spent because they are less capital intensive, are more labor intensive, and stimulate domestic industries and services.”



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