There is bipartisan consensus: The Keystone XL pipeline means jobs, jobs, jobs.
The Obama administration last month announced that it was taking more time to consider how to balance environmental concerns and economic issues in deciding whether to approve the pipeline, which would carry heavy crude oil from Canada’s Alberta province to the Gulf Coast.
(Skeptics would suggest the White House wanted to avoid angering two key allies during an election year.)
Ever since, advocates of the pipeline have pressed the case that thousands of shovel-ready jobs are being delayed by the administration’s inaction, with House Republicans including a shortened timeline for a permit in legislation extending the payroll tax cut.
We’ve repeatedly warned that many “job creation” statistics are often guesstimates of estimates, and should be viewed skeptically. By some accounts, the number of jobs that would be created could be as many as 150,000.
But the State Department in August put the number of construction jobs at just 5,000 to 6,000. What’s going on here?
TransCanada Corp., which is pushing to build the pipeline, claims that Keystone XL “was poised to put 20,000 Americans to work to construct the pipeline.”
The company also cites another figure — 118,000 spin-off jobs Keystone XL would create through increased business for local restaurants, hotels and suppliers — that comes from a study commissioned by the company.
The study even suggested that under “normal” oil price assumptions, the number of permanent jobs would top 250,000.
These statistics form the basis of most of the claims made about the jobs supposedly created by the pipeline. Caveat emptor: the company building the pipeline is obviously going to offer the rosiest scenario possible.
One should especially view with a large grain of salt any study for which it paid good money.
Juliet Eilpern and Steven Mufson of The Washington Post explored some of the problems with these numbers in an article last month, but their analysis apparently did not get enough attention.
Here’s what they wrote:
"A key question for the administration is how many jobs the Keystone XL project would create. TransCanada's initial estimate of 20,000 — which it said includes 13,000 direct construction jobs and 7,000 jobs among supply manufacturers — has been widely quoted by lawmakers and presidential candidates.
"[TransCanada chief executive Russ] Girling said Friday that the 13,000 figure was "one person, one year," meaning that if the construction jobs lasted two years, the number of people employed in each of the two years would be 6,500. That brings the company's number closer to the State Department's; State says the project would create 5,000 to 6,000 construction jobs, a figure that was calculated by its contractor Cardno Entrix."
People can reasonably disagree whether one should look at the overall size of the construction force — as the State Department did — or whether one should look at jobs per-person-per-year.
"Obviously, the second method can greatly increase the number of “jobs,” depending on the length of the project.
TransCanada officials also argue that the State Department estimate was made before binding labor contracts were signed, which they suggest means the estimate could increase.
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