#KeystoneXL pipeline: a wholly misleading article from CNNMoney

Sigh! From CNNMoney:

Keystone XL pipeline would only create 35 permanent jobs

by Matt Egan | March 24, 2017: 11:43 AM ET

President Trump hailed the State Department’s approval of the controversial Keystone XL pipeline as a big win for American workers.

“It’s a great day for American jobs,” Trump said from the Oval Office on Friday after the State Department issued a permit allowing the pipeline proposed by TransCanada to go forward.

“Today, we take one more step towards putting the jobs, wages and economic security of American citizens first,” the president said.

TransCanada(TRP) CEO Russell Girling, standing next to Trump, said Keystone XL will “create thousands of jobs.”

The construction of the pipeline would indeed create thousands of jobs. But they will be temporary. The Alberta-to-Nebraska pipeline would create about 3,900 jobs if it was built in one year, according to a State Department report. That number would drop to 1,950 jobs if Keystone takes two years to build.

The report also estimated that only 35 permanent employees would be needed in addition to 15 temporary contractors to operate Keystone.

So, the Keystone XL isn’t expected to be a boom for the job market by any stretch.

There’s more at the original, much of it about the objections of environmentalists. However, going apparently unnoticed is the fact that the Canadian oil sands will be used, are already being used, and it’s only a question of whether it they will be refined in the United States, or elsewhere.

The bigger problem with Mr Egan’s article is that he avoids the nature of construction jobs. Yes, the construction jobs in building the pipeline will be temporary, but unless you are building a medieval cathedral,¹ all construction jobs are temporary. That’s the nature of the industry: you start a project, but once you complete it, it’s on to the next job. Those 3,900 or 1,950 or however many construction jobs on the pipeline mean work for those workers, until it’s on to the next job.

This, to me, is a very significant problem with the media stories about Keystone XL.² The media are attempting to persuade the public that the construction jobs are really nothing, by ignoring the nature of construction work.

From Forbes:

Analysts also look at “spin-off” jobs, which are jobs that are created in related industries as a result of the new pipeline. These include sectors like refining, manufacturing, petroleum transportation and petroleum-dependent manufacturing. These jobs rely on too many variables to accurately predict and even measure after the fact. In 2010, TransCanada, the company behind Keystone XL, commissioned the Perryman Group to examine the long-term economic impact of the pipeline. Their study predicted that anywhere from 250,348 to 553,235 spin-off jobs would be created. The study was largely predicated on the assertion that the pipeline would stabilize oil prices. However, there is no evidence, historical or otherwise, that pipelines serve to stabilize the price of oil, a global commodity.

A quarter-to-half million spin-off jobs? That seems high to me, and even TransCanada projected only 118,000 spin-off jobs, but nevertheless, there will be other jobs created, in refining, in construction or additions to refineries, in maintenance, in food service for the workers, in everything that is part of economic development. Ellen Wald, in another Forbes article, comparing the proposed Keystone XL jobs to what actually happened in the building of the Alaska pipeline, noted that “the state of Alaska now claims that the oil industry as a whole has created approximately 60,000 spin-off jobs within Alaska.”

Dr Wald noted that employment projections are difficult, and have frequently been inaccurate, but one thing has been clear: past pipeline projects have led to job creation, and more than just on the pipelines themselves. If the Keystone XL pipeline wound up with creating only the 60,000 spin-off jobs that Alaska claims have resulted from the oil industry there, I wouldn’t consider the fact that TransCanada’s 118,000 wasn’t met a failure; I’d be pleased that there were 60,000 new jobs!

These are the kinds of things the CNNMoney article neglected to consider, and in that failing, created an erroneous impression for their readers.
Cross-posted on The First Street Journal.
¹ – The Duomo il Milano took from 1386 to 1965 to its official completion, but work continues on it today.
² – I’ve seen these arguments made by the pipeline opponents for years. That’s why I knew the argument was bogus.