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Obama: Keystone Jobs A Blip, Pipeline Might Raise Gas Prices

In his big June climate speech, president Obama said he would approve the Keystone XL tar sands pipeline only if it “does not significantly exacerbate the problem of carbon pollution.”

In an interview with The New York Times this week, Obama repeated that point: “I’m going to evaluate this based on whether or not this is going to significantly contribute to carbon in our atmosphere.”

As Climate Progress and many others have explained, that criterion should be fatal to Keystone.

Equally important, the president made clear to the Times that the economic arguments for the pipeline had been wildly overhyped:

OBAMA: Republicans have said that this would be a big jobs generator. There is no evidence that that’s true. 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.

NYT: Yet there are a number of unions who want you to approve this.

MR. OBAMA: Well, look, they might like to see 2,000 jobs initially. But that is a blip relative to the need.

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. 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.

As an aside, I think it is questionable at best for the New York Times to tell us that Obama “chuckles” at that point. What’s next “sighs” or “rolls his eyes”?

The bottom line is that pipeline has little upside and a big downside. Killing it should be an easy choice for the president and his secretary of state, John Kerry.

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John Miller's picture
John Miller on Jul 30, 2013 10:22 pm GMT

Let’s review some of the facts surrounding this debate.  The Keystone XL cost about $5 Billion to build, the President’s advisers (he’s not an experienced business person, let alone experienced with major construction projects or pipeline operations) tell him the project construction will only generate 2,000 temporary jobs and about 50-100 full-time jobs thereafter.  In a typical major construction job labor normally makes up about 30% of the total project costs and the project of this scope could take about 2 years to complete.  So that means (0.3 x $5,000,000,000 / (2 x 2,000) =), those insignificant 2,000 jobs pay about $375,000/yr. on average each.  Not too bad if you can get the work vs. the part-time, low paying jobs that appear to be dominating the recent economic recovery over the past 3-4 years.

The new pipeline includes multiple pumping stations, operating controls-facilities, 24-hour manned shift-operations, significant-routine inspections/maintenance, full-time supervision/management and other administration support staff.  Limiting this staffing to about 75 full-time positions does not sound like the staffing level would allow such things as vacations, sick leave, avoiding excessive overtime, training, etc.  I wonder how many existing unions that operate most other pipeline systems around country would support or tolerate such onerous working conditions.

Randy Voges's picture
Randy Voges on Jul 31, 2013 5:30 pm GMT

“The bottom line is that pipeline has little upside and a big downside. Killing it should be an easy choice for the president and his secretary of state, John Kerry.”

If it’s so easy, why doesn’t he just nix it already?  Time to put up or shut up, Barry!

If I were cynical, I’d wonder if he was trying to push a decision out past the midterms.

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