Friday, October 11, 2013

Please, just throw me a (pipe)line

The Keystone XL Pipeline was originally proposed in 2008.  The pipeline transports tar sand oil from Alberta, Canada to a refinery on the Gulf Coast.  The most controversial aspect of the pipeline is the Norther route, which goes from Hardisty, Alberta to Steele City, Nebraska.  The reason for the controversy is that the pipeline goes through the environmentally sensitive Nebraska sandhills and the Ogalla aquifer.  Because the pipeline crosses a border, it has to be approved by the President.  President Barack Obama has not approved of the Northern route despite repeated efforts by Republican lawmakers to approve the controversial section of the pipeline.

To many, the Keystone Pipeline, represents government overreach and how the government stifles job creation through regulation.  The Perryman Group, a company commissioned by TransCanada, the same company that proposed the pipeline, issued an economic analysis.  Not surprisingly, the analysis was in favor of the pipeline.  The Perryman Group found that 20,000 jobs would be created by the construction of the entire pipeline, including the southern leg which has already been approved.  According to the report, 4,000 construction jobs would be created by the pipeline from Oklahoma to Texas.  There would be 9,000 construction jobs created by the Northern route.  Finally, there would be 7,000 manufacturing jobs to help create the pipeline.

The job numbers look great until you start digging into those numbers.  The majority of those jobs are construction jobs which would be temporary jobs.  TransCanada's Chief Executive Russ Girling helped to dispute some of these numbers.  He emphasized to the Washington Post that the construction jobs are one person, one year.  This means that if the construction jobs last longer than one year, than the total number of jobs would shrink.  The Washington Post also found that TransCanada has already spent $1.9 billion on pipe metal and other equipment, so the job numbers are likely to shrink even more.  There is no guarantee that the manufacturing jobs will be American jobs, as TransCanada has announced that they will purchase $1.7 billion worth of steel from a Russian-owned mill in Canada.  The United States State Department filed an initial report that a more realistic job number would be 5,000-6,000 jobs.

The biggest argument for the pipeline is that it will reduce our dependence on foreign oil.  Foreign oil imports to the United States has decreased for several years now.  Proponents of the pipeline suggest that the pipeline will reduce dependence on OPEC countries but that has also been in decline since 2010, and in total decline since 2007.  Meanwhile, imports from Canada have been on the rise since 2007, according to the U.S. Energy Information Administration.  Despite these trends, there is more capacity that can be used in cross-border pipelines from Canada to the United States.  According to the U.S. State Department, the pipelines could transport one million more barrels of oil per day.  Even if the Keystone pipeline is built, the surplus would be reduced to 300,000 barrels per day until 2020.  While energy independence is a worthwhile goal, building an additional pipeline from Canada to the United States will likely not help in this endeavor.

That is, if we can even assume that the oil transported via Keystone will be sold domestically.  Republican leaders and Conservative news sources have repeatedly said that the pipeline will help reduce American gas prices or that by rejecting the pipeline, Canada will sell this oil to China or our enemies.  Opponents of the bill have been quick to point out that much of the oil is likely to be exported without guarantees.  Congressman Rush Holt proposed House Amendment 75 which would require all oil and fuel transported through Keystone XL to be sold domestically.  House Republicans, who fearmongered their way to support from everyday people who feared that the pipeline's rejection would fuel our enemies, rejected the amendment.

The Keystone XL Pipeline has a multitude of problems.  The jobs numbers have been inflated by a study commissioned by the company who profits the most from having it succeed.  Dependence on foreign oil, which has already been on the decline, will continue to stay about the same.  The oil and fuel that, we've been told, will help reduce our prices at the pump, have no guarantees that they will be sold domestically.  The construction of the Keystone XL Pipeline should be a pipe dream.

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