Jobs, Gasoline Prices and the XL Pipeline

Dear Friends,

Yesterday the House of Representatives voted to approve the XL Pipeline.  It was a clean vote - no debate and no amendments.  Three members of the House of Representatives from Minnesota who are Democrats voted with the Republicans.  One of them is Colin Peterson who is more Republican than Democrat anyway and whom I have never supported.  Another is Rick Nolan from the Iron Range whom I have supported.

Rick Nolan, during his recent campaign for re-election said that he could support the XL Pipeline if it were built with US steel.  As you can imagine, the issue of using US steel is a big deal on the Iron Range whose economy depends on steel because they produce taconite.  Needless to say the bill that passed the House yesterday said nothing about requiring the use of US steel.  Representative Nolan sought to explain his vote by saying that his constituents wanted him to be bipartisan.  I am not sure what his vote has to do with bipartisanship.  A vote with no debate and no amendments is hardly a way to achieve bipartisanship.  One of his constituents does not seem to agree and voices the real reason for Representative Nolan's vote as quoted in the Minneapolis Star Tribune (here):

Why would you run a pipeline from Canada with the dirtiest oil running through it made with cheap foreign steel in the breadbasket of America … all in the name of profits for an oil company?” said John Malek, president of the 1,300-worker union local at Minntac mine near Virginia. “The only benefit I really see out of this is getting some good American steel in it and putting some construction workers back to work.

The third Democrat from Minnesota to vote for the bill in the House was Tim Walz.  I have supported Tim in every one of his runs for the House and have been proud to do so because he has done a lot of great things.  I do not know why he voted for this bill, but I doubt that I will agree with him and will certainly have trouble supporting him in the future.

The article in the Minneapolis Star Tribune quoted above also indicated that Senator Franken whom I have also supported from his start in politics implied that he might support the XL Pipeline if it passes the environmental study being done and it includes a provision to use US steel.  The clear implication is that the XL Pipeline should get support if it provides jobs.

So how many jobs would the XL Pipeline produce?  Once construction is completed it is estimated that there will be 35 permanent jobs created by this pipeline, according to estimates by the State Department.  TransCanada, the pipeline company, estimates that 20,000 jobs will be created during the one to two years of construction.  That is really an overestimate because TransCanada is using job years.  So a single job that last for two years is counted as two jobs.  Also of the 20,000 jobs, 13,000 are directly for the pipeline construction and 7,000 are for related manufacturing jobs.  TransCanada's estimates are not substantiated and according to a study from Cornell University, there will be less than 5,000 direct jobs during the construction of the XL Pipeline (here).

If Congress wants to pass a law that will encourage jobs and lots of good jobs, they should pass a law to bring our infrastructure into the 21st century.  The American Society of Civil Engineers has estimated that we need to spend $3.6 trillion by 2020 to update our infrastructure.  That would produce jobs.  Consider that today with only minor spending, there are 14.2 million jobs in infrastructure construction or about 11% of our total employment.  True bipartisanship would be to pass a real infrastructure building law that would also be a great jobs bill.  We could also require that US steel be used in government funded projects (if we do not enter into the Trans-Pacific Partnership).  If you want a quick summary of the infrastructure problem here is a CBS News article.

Another argument that you hear about the need to have the XL Pipeline is that it will lower the cost of gasoline.  A Bloomberg article (here) addresses this issue.

Keystone opposition has been shocking to many Americans, too. The world’s biggest oil consumer relies on some of the world’s cheapest gas prices to power its economy. How could the U.S. possibly turn down a new artery to deliver the stuff, even if it does come with new environmental risks?

The answer is that Keystone isn’t meant for U.S. consumption.

In Keystone’s weirdonomics, the pipeline would actually increase prices of gasoline for much of the country, according to at least three studies that have looked into it. Keystone would divert crude from Midwest refineries to Gulf Coast refineries, where it would then be shipped to more expensive markets. Bypassing heartland refineries could drive up prices at home.

For people living in the Midwest, Great Plains and Rocky Mountains, it could add 20 cents a gallon to the price at the pump. 

I try to stay away from sources that people could claim are biased when writing these blogs but sometimes the article is so compelling and summarizes the issues so well that I cannot help myself.  Friends of the Earth has a  great summary of the problems with the XL Pipeline (here) covered in seven paragraphs titled:
dirty tar sands oil
water waste and pollution
forest destruction
indigenous population
pipeline spills
refining tar sands
stopping the pipeline

So why is anybody supporting the XL Pipeline except for TransCanada and the oil companies that stand to make lots of money while potentially destroying our environment in many ways.  You can contact President Obama here and for those of you that live in Minnesota, you can reach Senator Klobuchar here and Senator Franken here.

Thanks for reading and please comment,
The Unabashed Liberal