Keystone XL Isn’t the Key

Pipeline Project Won’t Improve Energy Independence

Kate Gordon and Daniel J. Weiss explain why the Keystone XL tar sands pipeline is weak on job creation and bad for America’s future.

Speaker of the House John Boehner (R-OH) talks to reporters after the House passed legislation to extend Social Security payroll tax cuts, Tuesday, December 13, 2011. The legislation included a sped-up permitting process for the Keystone XL pipeline. (AP/J. Scott Applewhite)
Speaker of the House John Boehner (R-OH) talks to reporters after the House passed legislation to extend Social Security payroll tax cuts, Tuesday, December 13, 2011. The legislation included a sped-up permitting process for the Keystone XL pipeline. (AP/J. Scott Applewhite)

As Congress attempts to finish its 2011 work, the House leadership continues to push hard to speed up the permitting process for the Keystone XL pipeline. Today Speaker of the House John Boehner (R-OH) threatened to add a Keystone provision to a two-month extension of the payroll tax cut, scheduled to expire on December 31. Boehner told reporters:

These rumors that are floating around here about a two-month extension, I’ll just say this: If that bill comes over to us, we will make changes to it, and I will guarantee you that the Keystone pipeline will be in there when it goes back to the United States Senate.

Ironically the State Department said Monday that such legislation would prevent it from approving the Keystone permit:

Should Congress impose an arbitrary deadline for the permit decision, its actions would not only compromise the process, it would prohibit the Department from acting consistently with National Environmental Policy Act requirements by not allowing sufficient time for the development of this information. In the absence of properly completing the process, the Department would be unable to make a determination to issue a permit for this project.

Nonetheless, on Wednesday House leadership—and some Democrats—passed a tax extender package that included a sped-up permitting process for the Keystone XL pipeline. In explaining why on earth this controversial 1,700-mile oil pipeline should be appended to a tax package focused on unemployment insurance and payroll taxes, Rep. Boehner argued that the pipeline private-sector infrastructure project “would create tens of thousands of American jobs.”

But as The Washington Post pointed out Wednesday, the Keystone project would do no such thing. Yes, the TransCanada Corporation initially said the pipeline might create as many as 20,000 construction and manufacturing jobs. But the company soon walked that figure back, explaining that its calculation was based on a “one job-one year” measure, meaning that one person working for two consecutive years would be counted twice. Using a more accurate calculation, TransCanada estimated the project would employ about 6,500 jobs. And an independent study by the Cornell Labor Institute found an even smaller number, noting that the pipeline will actually create “no more than 2,500-4,650 temporary direct construction jobs for two years.”

So Keystone is not, in fact, the key to getting tens of thousands of Americans back to work and off of unemployment insurance. But Keystone is much more insidious than that. Committing to this project would put the United States on the path toward an energy future characterized by extraction and export of dirty fossil fuels, where the vast majority of the benefits go straight to Big Oil companies.

The five largest oil companies have made $100 billion in profits so far in 2011 and are on track to make $130 billion. Rather than investing in clean alternative fuels, these companies are using their profits to buy back their own stock. And the five largest companies have nearly $60 billion in cash reserves. Meanwhile, four of the largest companies shed a total of 11,000 U.S. employees over the past five years.

But here’s what’s really at stake. This is a 1,700-mile pipeline, which would run all the way from upper Alberta, Canada, down to Houston, Texas. On the way it would pass through one province and six states. As originally routed, the pipeline would move 435,000 barrels per day of heavy crude oil through miles and miles of pipe that some fear is being manufactured under less-than-stringent controls in China and India. The line will run through critical areas such as Nebraska’s Ogallala Aquifer, where a leak or an oil spill could easily contaminate the water source for nearly 20 percent of the country’s agriculture.

All that oil—which, not incidentally, is extracted in the dirtiest way possible from the tar sands in Alberta—would then run down to Houston, where it would be refined and made, in large part, into petroleum products for export to foreign markets.

So far this story isn’t that great: not too many jobs, lots of environmental concerns, and not exactly promoting energy independence.

But it’s even bigger than that. If we build this 1,700-mile pipeline, we are making a decision about what kind of America we want to live in. We are choosing to allow Big Oil to tell us what kind of energy and fuel we should use, rather than choosing energy alternatives that work for each region of the country and build off our natural advantages of sun, wind, geothermal, and biomass.

We are also choosing to put our land, dollars, and hard work into the service of an industry that, in the long run, won’t really create all that much economic wealth for ordinary Americans.

Over the long term, most jobs in the oil sector aren’t good middle-class construction and manufacturing jobs; they’re minimum-wage jobs behind gas station counters. Contrast this with initiatives aimed at growing the clean energy economy, where there are job opportunities across a huge variety of industries and occupations, including a significant chunk in the manufacturing sector—long the anchor for America’s middle class.

In short, by choosing the pipeline, the House leadership is forcing America onto an economic path based on extraction and export, not one based on innovation and choice.

When the alternative looks like it can create jobs today, making a choice that’s in our long-term economic and environmental interest can be hard. It is especially hard for those workers (and the unions who represent them) who are most likely to get the 6,500 temporary construction jobs promised by pipeline developer TransCanada. But that’s why we have a national government—to take the long view and make the decisions that are truly best for the country, not for any particular state, region, industry, or interest group.

It is Congress’s job to get this country onto the path toward sustainable and strong economic growth, not to sell our country to the oil-and-gas industry. Clearly the House did not get that message. But that doesn’t mean the American people need to agree.

Kate Gordon is Vice President for Energy Policy and Daniel J. Weiss is a Senior Fellow and the Director of Climate Strategy at the Center for American Progress.

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Kate Gordon

Senior Fellow

Daniel J. Weiss

Senior Fellow