Also see: Keystone PipeLIES Exposed: New Film Refutes Jobs, Security, Gas Price, Tax, Safety, and Climate Claims and Keystone PipeLIES Exposed: The Facts on Sticky Leaks, Billion Dollar Spills and Dirty Air
The claim of Keystone XL supporters that has drawn the most scrutiny and criticism, and one of the most repeated, is the number of jobs that the KXL project would generate. Despite significant, substantiated research that disproves it, a persistent claim — made repeatedly in many venues — holds that KXL will create 20,000 jobs in the United States.
Proponents say those 20,000 jobs are just the tip of the iceberg. The Republican-controlled House Energy and Commerce Committee insists that an additional 100,000 jobs will spring from the pipeline. The oil industry-funded American Petroleum Institute asserts that those numbers will increase to 500,000 by 2035.
Those who have been walking the halls of Congress to discuss the issue say those claims have little substance to support them. They say the jobs vs. environment trope is an overused red herring.
“Usually the politicians that are out there saying, ‘You’re killing jobs, you re killing jobs,’ are the same politicians that are receiving major oil [campaign] contributions,” says Colarulli of the Sierra Club. “It’s a talking point, and there’s nothing real behind it.”
A charitable interpretation might find, as PolitiFact did, that the inflated numbers come from a confusion of actual jobs — that is, employees hired as a result of the pipeline — as opposed to the number of “job years,” the number of years of the project’s duration multiplied by number of workers hired.
Cornell University’s world-renowned Global Labor Institute (GLI), however, did not find that the actual data supported so generous an assessment. Looking directly at the claims and crunching the numbers, its report concluded that there are “questions that are serious enough to generate a high level of skepticism regarding the value of KXL as an important source of American jobs.” This report concludes, among other things, that TransCanada’s numbers are suspect, the conclusions reached on the basis of those numbers are unsubstantiated, and studies commissioned by TransCanada to back its claims are “flawed and poorly documented.”
In a separate report, the GLI found that KXL could put at risk the $76 billion agricultural industries in the states the pipeline would traverse, jeopardizing hundreds of thousands of jobs, including half a million in agriculture alone.
Just 50 Jobs
For its part, the State Department concluded that KXL likely would create just 35 permanent jobs and 15 temporary jobs that would have “negligible socioeconomic impacts.”
When President Obama challenged TransCanada’s jobs numbers, possibly tipping his hand on his ultimate decision, the company swiftly jabbed back with the corporate equivalent of “says you.” The TransCanada spokesperson told Canada’s CTV News that Obama probably was posturing for political purposes, rather than expressing his true opinion on the matter.
“Even though there is politics involved, we believe that the decision will ultimately be made from a business standpoint of what makes the most sense,” the spokesperson said. (Emphasis added.)
TransCanada spokesperson also played the “would I lie to you?” card, claiming that the company has no reason to inflate job numbers. This of course ignores the public relations plan, or PR campaign, it has pursued since it first proposed extending the original pipeline, including the promise of jobs and opportunity to Americans suffering a debilitating recession.
Aiding “Energy Security” by Bypassing the Middle East?
Not only has the recession seen rising fuel prices, it has coincided with widening political instability in the Middle East, the region that supplies the United States with about 13% of its petroleum. To some, a nation that has waged two wars on the Arabian Peninsula in the past 25 years might be forgiven for seeking a more stable supplier for its economic lifeblood.
The Keystone XL Pipeline is not a crude oil export pipeline — period. It is a supply line to U.S. Gulf Coast refineries — which have signed up to 20-year binding commercial contracts to receive oil through Keystone XL. This much-needed oil will allow refineries to create products that we all rely on every day — gasoline for our vehicles, aviation fuels, and diesel fuels to help transport goods throughout the continent.
It makes absolutely no sense for companies to purchase cheaper Canadian crude, and then pay (again) to ship that product overseas, while continuing to import higher-priced oil from the Middle East and Venezuela for refineries on the Gulf Coast to deal with the eight to nine million barrels a day that must be imported.
That’s a very strong statement, and one that might convince a large number of people. However, refineries that TransCanada touts as partners in its quest to make the United States energy independent have told a different story.
Getting to the Gulf Coast to Bypass the U.S. Market for Foreign Countries
Oil Change International (OCI) published a report in 2011 details extensively how Valero, one of the major refiners in Port Arthur and a key client of the KXL pipeline, has prepared its facilities to refine tar sands oil into diesel fuel that gathers a much higher price on the global market than it does in the US. It also chronicles statements by Valero executives promising to do just that. The contradiction casts doubt on whether TransCanada’s claims are to be trusted.
“Those are pretty deceptive claims,” says OCI’s Lorne Stockman. “In terms of energy security for the United States, most of this oil will end up going out into export. The refineries that the pipeline will serve are the leading export refineries in the United States today.”
Tyson Slocum of Public Citizen agrees: “The Keystone pipeline really isn’t designed to strengthen America’s energy security or provide lower cost gasoline. It is all about getting landlocked Canadian tar sands crude oil out of northern Alberta and to the Gulf Coast where refineries can process that tar sands crude for international shipment for export.”
On the north side of the border, it’s no secret that KXL is designed to get Canadian oil to foreign markets. As the Toronto Globe and Mail reported in April, Mexican heavy crude was earning $30 more per barrel than land-locked Canadian heavy crude, thanks to its easy access to Atlantic and Pacific shipping lanes.
Job One Is “Reaching International Markets”
The provincial government in Alberta has no qualms about declaring its true intentions: “Job one for our government is reaching international markets, to get the fairest price possible and services,” wrote Alberta’s Premier Alison Redford.
Among the concerns facing Alberta’s oil producers, according to a provincial report on “International Strategy,” is “[t]he growth of domestic energy supply in the United States [which] could diminish demand for Alberta’s oil and gas.” This is a significant worry:
In 2012, the province found itself in an unprecedented situation. This trend could continue indefinitely as the United States ramps up its own energy production, expecting to be self-sufficient in oil by 2030.
With less demand and higher supply in the US, Slocum explains building KXL is a simple matter of economics for TransCanada.
“If you’re in the business of selling a product, you don’t want to sell into a flat-lining growth market — you want to sell where there is going to be a lot of growth,” he says, pointing out that the U.S. oil market currently faces a glut while higher efficiency and less consumption translate to lower demand. “For TransCanada that means getting this oil not to the Midwest to oil refineries where it’s currently being processed, but to the Gulf Coast. That’s their escape hatch to get to China, to get to Latin America, to get to Europe, to get to emerging markets. And that’s the key.”
“It has nothing to do with providing ample supplies for American consumers. It has everything to do with getting trapped tar sands oil into the global market where they can get a far higher return than they could just selling to the United States.”
KXL = Higher Prices at the Pump?
The aptly named consumer watchdog group Consumer Watchdog found that not only were TransCanada’s promises of energy security misleading, but that many Americans would take a direct hit right in the pocketbook. Because KXL would provide producers in Alberta an outlet to the global market for their product, the glut that Midwesterners currently enjoy as the only available market for tar sands oil would disappear. That could mean an additional 20 to 40 cents more per gallon at the pump.
That would mean an additional $3-4 billion dollars going to oil companies, essentially offsetting the billions that TransCanada claims building the pipeline will pump into the U.S. economy.
Oil Corporations Getting Tax Refunds and Operating in Tax-Free Zones?
Not even oil company profits are likely to help pump up the US economy. The largest refinery in Port Arthur (and in fact the largest in the US) is owned by Motiva, jointly owned by the Saudi state-run oil company Aramco and the British-Dutch multinational Royal Dutch Shell. Another large refinery is run by Valero, the San Antonio-based company that made $68 billion in sales, but got a $157 million tax refund for 2012.
That’s not the only way American taxpayers are likely to get shafted by this deal.
OCI’s report notes that Port Arthur is a Free Trade Zone, which means corporations can dodge paying export tax on shipments from its terminal. Stockman adds that TransCanada could also avoid taxes by creating a Master Limited Partnership (MLP), a corporate form that renders virtually all of its profits unreachable for tax purposes. OCI considers this to be a multi-billion dollar subsidy for the oil industry and has published a report by researcher Doug Koplow of the group “Earth Track,” describing in detail how fossil fuel producers have exploited the tax loophole.
“MLP is a particular corporate tax structure that basically avoids all corporate taxation,” says Stockman. “TransCanada hasn’t done that but it could do that at any point, and therefore the company itself would pay no corporate tax, and the shareholders would pay very little tax on the dividends they get from the company. It’s unclear whether they’re going to do that, but they certainly have the potential and the opportunity to do that.”
With tax savings worth potentially billions of dollars, why has TransCanada failed to declare itself an MLP?
“There doesn’t seem to me to be any reason why they would not create an MLP. Their competitors are all doing it. Perhaps they don’t want to attract that publicity right now because the project has become such a focus of attention and a political hot potato,” Stockman says.
Instead, TransCanada has been trying to spin KXL as good for the planet and for the country. See for example its Facebook ads, which talk about pipelines but show solar panels. And watch how it plucks at Canadian heartstrings by equating transcontinental pipelines to the coast as the incarnation of that nation’s pioneer spirit.