Obama’s Keystone comments give opponents reason for hope

HARDISTY, ALBERTA - JUNE 21: Bryan Templeton is facilities manager at the Keystone facility. The pipes at left are literally the ones that will connect the existing Keystone operation with the new expanded Keystone XL (AKA Keystone B) which is under construction. A massive construction project is well underway on what is known as Keystone B, (AKA Keystone XL) the expansion of the existing Keystone oil pipeline. (Photo by Michael S. Williamson/The Washington Post
(Photo by Michael S. Williamson/The Washington Post

For those trying to decipher which way President Obama is leaning on whether to grant the Keystone XL pipeline a presidential permit, the comments he made in an interview with The New York Times published this weekend suggest he accepts much of the criticism opponents have lodged against the project.

In the interview, which was posted online Saturday night, Obama questioned the project’s economic benefits, saying “there is no evidence” to the Republican argument that “this would be a big jobs generator.”

“And my hope would be that any reporter who is looking at the facts would take the time to confirm that the most realistic estimates are this might create maybe 2,000 jobs during the construction of the pipeline -- which might take a year or two -- and then after that we’re talking about somewhere between 50 and 100 [chuckles] jobs in a economy of 150 million working people,” Obama added.

He also suggested that the pipeline would not lower gas prices in the U.S., and could actually increase them in the Midwest, an argument buttressed by recent fluctuations in the crude oil market.

“So what we also know is, is that that oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States,” Obama said. “In fact, it might actually cause some gas prices in the Midwest to go up where currently they can’t ship some of that oil to world markets.”

The pipeline’s critics have made both of those arguments for months, although the State Department—which has oversight over the permitting process—has not embraced either one so far.

While the White House could not say late Saturday what analysis Obama is basing his 2,000 jobs estimate on, it appears he was referring to the low-end estimate of a study done by the Cornell University Global Labor Institute. That analysis, which uses TransCanada's own estimates, assumes that each segment of the pipeline requires about 500 workers per segment.

The 485-mile southern leg of the pipeline known as the Gulf Coast Project between Steele City and Port Arthur, Tex., is 95 percent complete, so the only new construction jobs that would stem from a presidential permit would come from the 1,179-mile northern leg between Hardisty, Alberta and Steele City, Okla., which has yet to be built. Since there are about 10 segments left, it would mean 5,000 jobs over two years, or 2,500 jobs a year.

Before the project was divided TransCanada estimated it would create 3,500 direct jobs for a two-year period, after which point about 35 workers would operate the pipeline. Backers of the pipeline say it could create anywhere from 20,000 to 100,000 jobs when spinoff jobs are taken to into account, while the Cornell study suggested any jobs stemming from the pipeline’s construction could be outweighed by the environmental damage it caused, along with a possible rise in Midwest gasoline prices.

Any final permit decision is months away: the State Department has yet to issue a final environmental assessment of the project, after which it must conduct a 90-day review of whether constructing Keystone XL would be in the national interest. After that point the president could weigh in on the final decision, though he will only be legally obligated to if another agency challenges the State Department's final determination.

TransCanada spokesman James Millar challenged the president's assessment in an e-mail to reporters Saturday night, saying both the construction and operating phase would create more jobs that Obama suggested. In addition to constructing the pipeline, he wrote, the project requires 30 pumping stations to be built that require 100 people each, along with construction management and inspector positions the pipeline requires.

He noted that with the southern leg nearly complete, "We will close the books in the coming months on the 4,000 Americans we put to work on the pipeline from Oklahoma to Texas. On this leg of the Keystone system alone we employed more Americans than the 2,000 figure the President pointed to."

"It is not logical to think a $7.6 billion dollar infrastructure project stretching across the entire breadth of the continental U.S. wouldn’t employ thousands of workers both in the manufacturing sector and in constructing the pipeline," he added.

By alluding to the fact that Midwest gas prices could rise with the pipeline's construction, Obama was referring to the fact that new pipeline would divert that region’s current oversupply of oil to the Gulf Coast. Just this month the price of West Texas Intermediate crude, which is shipped to Gulf refineries, came close to reaching parity with the North Sea's Brent crude before dropping slightly on the expectations that Keystone's southern leg would ease the glut of oil in Cushing, Okla.

In his climate address last month Obama established a new litmus test for Keystone XL, saying, “Our national interest will be served only if this pipeline does not significantly exacerbate the climate problem.”

“The net effects of climate impact will be absolutely critical to determining whether this project will go forward,” he added. “It is relevant.

Bill McKibben, co-founder of the grassroots advocacy group 350.org, wrote in an e-mail Sunday,  "I think it's been clear all along that whenever anyone takes even a cursory look at the tarsands pipelines, their theoretical benefits vanish and their enormous costs loom up. If the president follows in good faith the carbon standard he's set in his remarks, there's no possible way he can approve Keystone."

Obama did raise the possibility in his New York Times interview that Canada "could potentially be doing more to mitigate carbon release" at the source of the pipeline's source, Alberta's oil sands, and such efforts could influence his administration's final decision.

"We haven't seen specific ideas or plans," the president added. "But all of that will go into the mix in terms of John Kerry’s decision or recommendation on this issue."

Sabrina Fang, a spokeswoman for the American Petroleum Institute, wrote in an e-mail that her group believed the pipeline "equals new jobs and enhanced energy security for the U.S."

"The president's own State Department review says KXL will create tens of thousands of jobs during the construction of the pipeline," Fang wrote. "Bringing more stable Canadian oil to the market will help put downward pressure on prices. It's the law of supply a demand. KXL is in our nation's interest. The public strongly supports building it and we hope the president will make the right decision and approve this vital infrastructure project. "

 

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