Keystone XL: The Myth of Something More Than Just a Pipeline

When Keystone Pipeline owners TransCanada and ConocoPhillips filed an application to expand the pipeline under the name Keystone XL, not even the most prescient Washington policymakers could predict the firestorm that would soon envelop the proposal. Construction on Keystone XL, which would carry Canadian oil sands (also known as tar sands) to refineries on the Gulf Coast, has been delayed for nearly seven years as one owner dropped out, court battles multiplied, and presidential approval stalled. Suddenly, one company’s project was thrust into the national spotlight as environmental groups and landowners balked.

As TransCanada’s fight for presidential approval dragged on, it decided to break the southern portion of the pipeline into a separate project called the Gulf Coast Pipeline. Because the Gulf Coast Pipeline would not cross Canada, it did not need presidential approval. However, this meant that TransCanada had to send in a new application for the proposed northern portion (Figure 1), restarting the lengthy process and giving fresh momentum to the pipeline’s opponents.

As part of the process, the State Department must determine whether the project serves the “national interest” and prepare an environmental impact statement (EIS), which it did for both the initial and revised pipeline routes. Its final EIS for the northern route, released after numerous delays, was 2,000 pages long.

If the EIS’s length and the time it took the State Department to complete it are any indication, the Keystone XL pipeline has blossomed into one of the most talked about and politically charged issues in the U.S. The State Department has even devoted a section of its website to the proposal and all of the analysis the department has completed on it: http:// keystonepipeline-xl.state.gov/.

But does the pipeline really deserve all the controversy, or has it received undue attention? Among the many issues that Keystone XL has brought to the forefront, three aspects stand out: job creation, U.S. dependency on foreign oil, and the environment. In each of these areas, however, Democrats’ and Republicans’ claims fall far short of realistic estimates of the impact.

Jobs, jobs, and…jobs?

Republicans, in advocating for Keystone XL’s approval, often point to how much it would help an economy still only tentatively recovering from the recession. The biggest disagreement is over how many jobs Keystone XL would actually create. Supporters love to cite the State Department finding that the pipeline will create 42,000 jobs, while opponents counter that the department found that the pipeline would only create 35. In reality, both of these figures misrepresent exactly what the State Department found.

Since Keystone XL is primarily a construction project, most of the jobs created would be seasonal construction jobs lasting less than a year. In its EIS, the State Department decided to annualize these jobs (e.g., two jobs that would last six months are considered one job on an annual basis). Thus, the 42,000 figure is the number of jobs that Keystone XL would “support” for an average of one year. The word support is vital here: the number includes 26,000 jobs that Keystone XL would only indirectly contribute to; for example, by workers spending their wages. Some 600 of those jobs are in arts, entertainment, and recreation services—areas in which TransCanada surely does not need to hire to build the pipeline. Furthermore, the 16,000 direct jobs include some work, such as manufacturing, that has already been completed.

While these jobs are certainly important for the workers who would be employed in them, they are almost entirely temporary jobs that would last less than a year, and most of the indirect ones would not be new. Further, the State Department predicts that only 35 jobs would be permanent—the rest would last no more than two years. While the nature of construction is such that most jobs are bound to be temporary, 42,000 jobs lasting a single year would not substantially affect the United States jobs market. By comparison, last year the U.S. economy added 260,000 jobs per month on average. In such a context, claims by both Republicans and Democrats about how many jobs Keystone XL would create are starkly different from the reality and often misrepresent their scale and impact.

Energy Independence!…Will Not Come From Keystone XL

Another favorite claim by supporters of Keystone XL is that the project would “strengthen our energy security,” as House Speaker John Boehner (R-Ohio) put it. Given the constant turmoil and political disruption in the Middle East and many oil-exporting countries, procuring oil from Canada, the story goes, will reduce U.S. reliance on foreign oil supply.

Not even considering that Canada is itself a foreign country, this ignores the fact that events that disrupt the global supply of oil, such as a war erupting in the Middle East, affect oil prices everywhere. The price of oil in the U.S. will be based on the global price of crude, not which country the oil comes from. Further, the U.S. has already been getting less and less oil from other countries as the production of oil from hydraulic fracturing (“fracking”) has skyrocketed. Saying that the United States can decrease its reliance on foreign oil by building the pipeline distorts how the U.S. purchases oil.

Opponents, of course, take this point to the extreme, protesting that all of the Canadian oil is being piped through the United States and then exported to other countries. President Barack Obama says that the oil from the pipeline “is then entering into the world market, and it would be sold all around the world.” Estimates vary widely on exactly how much oil would be exported and how much would be sold in the United States, but certainly a great deal would still be sold domestically—about 50% to 62% would not be exported, based on current trends at the refineries and over a wide range of assumptions, according to a FactCheck.org column in USA Today. Keystone XL would not affect the price of oil in the United States to any noticeable extent, but that does not mean that all the oil would be exported.

At What Cost to the Environment?

For many of those opposed to the pipeline, the greatest threat is the detrimental effect it would have on the environment. Or so they say. It is true that oil sand extraction uses more energy and water than most other methods of obtaining power and causes more pollution and emission of greenhouse gases than the development of most crude oil. However, the oil sands will be extracted regardless of whether the pipeline is built—in fact, such extraction is happening at this very moment. That is why, as supporters are quick to point out, the State Department said in its final EIS that the pipeline would have “limited adverse environmental impacts.” That does not mean that oil sands extraction will not damage the environment, but stopping the pipeline will do little to end the extraction of those sands.

Many people are also worried about the dangerous consequences should a pipeline leak occur. While this is certainly possible despite any steps TransCanada takes to mitigate such a danger, the oil sands that are extracted now are transported by rail—a much riskier proposition, as trains that spill or explode can kill or injure dozens of people.

There are still environmental arguments for not approving the pipeline, such as the fear that oil sands extraction might increase with the lower transportation costs, but these are minor compared to the doomsday arguments that many opponents have leveled against the pipeline.

Doomed? Or Duped?

Republicans and Democrats have raced each other to turn the pipeline into the ultimate rallying point for their respective parties. The amount of time politicians have spent on this issue is staggering: a search of C-SPAN videos referencing Keystone yields over 250 results, while searches for trade promotion authority and the Trans-Pacific Partnership—two issues that have led to an outcry by House Democrats against President Obama’s trade policy—return significantly fewer. What is it about Keystone XL that has created such fervor?

To Republicans and Democrats alike, the fight over Keystone XL represents exactly the principles for which they stand. Many Democrats stare in horror as they see a large foreign corporation using eminent domain to take property from landowners in Nebraska and other states in order to build a pipeline that will carry climate-ruining tar sands to the coast to sell to other countries.

Many Republicans, however, aptly point out that the extraction of the oil sands will occur regardless of whether or not the Keystone XL pipeline is built. To them, the onerous process that TransCanada is forced to go through in order to obtain approval for the pipeline is demonstrative of the needless government interference that deters businesses from making investments in America and leaves citizens out of work.

In a sense, the fight over Keystone XL has always been symbolic. Both sides use it as a means to rail against the problems they see: climate change for opponents and overbearing government for supporters. It is a shame, however, that in the lofty rhetoric used and the politically charged battle created, rational solutions have been obscured and more important problems have been swept to the side.

If politicians stopped provoking each other, they might work to find a compromise regarding the pipeline. One idea, proposed by Michael Bloomberg, a former mayor of New York City with a penchant for practicality, is that Obama work with Canadian Prime Minister Stephen Harper to develop a bilateral climate deal in exchange for approving the pipeline. This could, Bloomberg argues, more than offset the polluting effects of the pipeline and leave everyone with a victory to claim. Although there are problems, not least of them whether Harper would be willing to negotiate, this is the kind of solution policymakers need to be looking for— and not just regarding Keystone XL.

As Bloomberg told the New York Times, “Keystone has become irrationally significant.” It’s about time we changed that.