(Changes language in graf 37 to Levi "has written'" from Levi
"said;" recasts graph 38 to show that Levi was critiquing
Perryman analysis of oil prices impact on U.S. economy ;)
By Alistair Bell
STEELE CITY, Nebraska, March 14 In the heated
debate over whether to build the Keystone XL pipeline, the
energy industry and lawmakers have predicted that the project
could unleash an economic bonanza in the Midwest, and provide
jobs for up to a half-million people.
Kansas pipeline worker Jeremy Rippe knows better.
"Short term, there will be jobs for everyone around here.
Then, not many at all," said Rippe, who helps maintain a gas
pipeline on the Nebraska-Kansas border.
Rippe saw TransCanada Corp - the company that hopes
to build the 1,200-mile (1,900-km) Keystone XL segment as part
of a network of pipelines that move oil from Canada to
refineries on Texas's Gulf Coast - lay another section of the
Keystone line nearby four years ago.
He recalls that there was well-paying union work for scores
of local laborers and machine operators for several months. But
the jobs dried up as soon as the construction was over. After
that, there were just four workers overseeing pumping stations
near this Great Plains town of about 60 people.
Rippe's experience reflects what many labor analysts are
saying as President Barack Obama's administration weighs whether
to approve the Keystone project: that despite predictions by
TransCanada, politicians and business groups of a
Keystone-inspired boom, the pipeline would result in few
permanent jobs in the United States.
The optimistic forecasts by Keystone supporters are rooted
largely in one report from 2010 - funded by TransCanada - that
predicted hundreds of thousands of jobs would be created mainly
because a flood of crude through Keystone XL would help reduce
U.S. oil prices, thus boosting the economy.
Pro-Keystone groups also have arrived at big numbers in
estimating the project's potential impact on employment by
counting not only those who would work on the pipeline, but also
jobs that might be created by economic activity related to the
project. For example, a hamburger vendor working extra hours to
serve truck drivers who transport steel pipes for Keystone could
be regarded as adding to the jobs total.
A State Department study in January was the latest report to
throw cold water on Keystone XL's potential as a driver of
employment, forecasting that it would create just 35 permanent
staff jobs for people who would oversee the completed pipeline.
"We are having a national debate about the Keystone XL
pipeline and one of the issues being brought up is jobs, but
this project is really in scale similar to a local project like
extending the (Washington, D.C.) Metro subway system to Dulles
Airport, or a major highway project," said energy economist Ian
Goodman, who worked on a Cornell University study of Keystone.
Much of the debate over Keystone has cast conservative,
pro-business pipeline supporters who stress jobs and energy
needs against liberal groups such as the Sierra Club that say
the pipeline - and the methods used to harvest crude from
Alberta's tar sands oilfields - would damage the environment.
Keystone XL would begin in Alberta and cut across Montana
and South Dakota to Steele City, in southern Nebraska. There it
would link up with existing Keystone pipelines that run from
Steele City to Texas, carrying 830,000 barrels of crude a day.
There is no dispute that building the final leg of the
Keystone network would create temporary American jobs.
TransCanada, unions and economists agree that the company would
need about 9,000 workers in the two-year construction phase.
Complaints that such jobs would be temporary do not make the
jobs any less valid, said Alex Pourbaix, executive vice
president of TransCanada.
"I often have to shake my head when our opponents make these
allegations. The entire construction industry on this continent
is comprised of temporary construction jobs," he said.
Keystone XL also would put money in the pockets of thousands
of others not directly involved in construction, such as steel
workers, Texas refinery workers and even Margo Compton, the
owner of a Steele City bar called the Salty Dog Saloon.
At the Salty Dog, stickers from pipeline workers' unions are
plastered on a beer refrigerator by the bar.
Compton's business boomed briefly in 2010, thanks to
big-spending construction workers who built an earlier segment
of the Keystone pipeline nearby. Today, she jokes that the bar's
regulars, many of whom work in agriculture, are poor tippers
compared with the pipeline workers.
'A DYING VILLAGE'
The arguments for Keystone XL are popular in Steele City.
Jobs of almost any sort are welcome in a town where the only
other employers are farms, the Salty Dog Saloon and a post
office barely bigger than a hut. One resident makes money
selling guns from his home.
"Everyone here agrees that Keystone has been nothing but
good for us," said Steele City postmaster Bill Scheele.
TransCanada donated $10,000 to help improve the town hall
and build bathrooms in the firehouse as a gesture to the
community in 2010.
But Steele City's status as a pipeline hub has not reversed
the town's decades-long decline, as residents have left to find
work elsewhere. The population fell to 61 in the last U.S.
Census in 2010, down from 137 in 1980.
"We have to face it: This is a dying village," Scheele said.
That's why people here don't mind lofty estimates about
Keystone jobs, even if the claims by officials such as U.S.
House of Representatives Speaker John Boehner seem inflated.
"Let's work together on building the Keystone pipeline and
the tens of thousands of jobs that would be created as a
result," Boehner said in January, adding that more than 100,000
jobs would "come with" a completed pipeline.
Boehner's estimate appeared to include what economists call
"indirect" and "induced" jobs - those that would be created in a
ripple effect from the pipeline work.
It's a method that is seen as legitimate in the world of
economic forecasting, even though such job gains often are
educated guesses of how many people's livelihoods would benefit
from a project like Keystone XL.
One State Department study this year, using data from
TransCanada, predicted that Keystone would "support" 42,100
jobs, with fewer than half created by the project itself. Such
nuances in job estimates often have been lost as lawmakers and
energy lobbyists have urged Obama to allow Keystone XL.
"During the construction phase, the project will create
42,000 jobs," Republican Senators John Hoeven of North Dakota
and Bob Corker of Tennessee asserted in a statement in January.
'A GAME EVERYBODY PLAYS'
Even as they have accused Republicans and TransCanada of
overstating Keystone's job-creating potential, Democrats have
used similar accounting tactics in touting measures they have
supported, such as Obama's $787 billion economic stimulus
package in 2009.
The White House says the package, a mix of tax cuts and
spending on public works and social benefits, generated an
average of 1.6 million jobs a year for four years. Republicans
reject that figure as too high.
"This is a game that everybody in Washington plays - how you
model job creation," said David Mallino, a Washington-based
lawyer for the Laborers' International Union of North America,
which supports Keystone XL.
The strategy of talking up potential job gains is working
for backers of Keystone XL, at least in influencing public
opinion. A Washington Post-ABC News poll this month found that
85 percent of Americans believe that the project would create a
significant number of jobs, while just 10 percent did not.
The 2010 study that is the basis for the most optimistic
claims about Keystone XL's potential to create jobs was done by
the Perryman Group, a Texas-based financial analysis firm.
Funded by TransCanada, the study said that extending
Keystone would create 250,000 to 500,000 jobs. It said most of
the new jobs would stem from the benefits of lower U.S. oil
prices that would result from the increased flow of Canadian
crude to American refineries.
Michael Levi, energy specialist at the Council on Foreign
Relations, has written that the report's assumptions were "dead
wrong," partly because Canadian tar sands oil will get to U.S.
and world markets via other pipelines, rail or ships regardless
of whether Keystone XL is built.
Levi believes that Perryman incorrectly calculated the
impact of Canadian tar sands oil on U.S. and global prices.
Ray Perryman, president of the Perryman Group, said, "I
strongly disagree" with Levi, adding that Keystone XL could
foster a more self-sufficient North American oil market.
Despite questions about the Perryman report, its numbers
still shape much of the political debate about Keystone XL.
The 250,000 figure was used by Thomas Donohue, head of the
U.S. Chamber of Commerce, in a letter to Congress and Obama in
2011 that urged them to back the pipeline.
If Keystone XL were built, most laborers would earn about
$30 an hour, according to union officials. At the top end would
be pipeline welders, some of whom can pull in $120,000 a year if
they have their own equipment and are willing to travel.
But once the pipeline is built, the jobs would melt away,
oil economist Phil Verleger said.
"You build a pipeline," he said, "and it's gone."
(Additional reporting by Valerie Volcovici; Editing by David
Lindsey and Ken Wills)