The People of America's Oil and Natural Gas Indusry

Simply True – The Benefits of Keystone XL

John Felmy
Posted March 18, 2013

Last Thursday approval of the Keystone XL pipeline came up during the House Minority Leader Weekly Briefing.  Here is what Rep. Pelosi had to say, via CSPAN transcript:

THEY WERE INTERVIEWING SOMEBODY FROM THE AMERICAN PETROLEUM INSTITUTE. AND HE SAID, OH, THIS IS GOING TO BE GREAT. TENS OF THOUSANDS OF JOBS. THAT'S NOT TRUE. ENERGY IN OUR COUNTRY, YOU KNOW THIS IS ALL FOR EXPORT. SO WHATEVER YOU THINK ABOUT IT, I KNOW I WANT TO SEE WHAT THE REPORT IS FROM THE STATE DEPARTMENT ON IT AND SEE WHAT PEOPLE ARE SAYING ABOUT IT, BUT -- THE OIL IS FOR EXPORT. THERE AREN'T THAT MANY JOBS CONNECTED WITH IT.

BUT PEOPLE BELIEVE THAT THERE ARE, LET'S JUST SEE WHAT THE REPORT IS. AND THAT'S WHAT I HAVE SAID. I WANT TO SEE THE REPORT. WHAT I HEARD ON THE RADIO THIS MORNING WAS, -- WAS SO DISTORTED IN TERMS OF WHAT IT WAS, I SAID WHY CAN'T WE JUST HAVE A DISCUSSION ON THE FACTS?  ON THE FACTS.  TENS OF THOUSANDS OF JOBS.  SIMPLY NOT TRUE.

Here is the State Department report.  Here is what the report says about jobs:

…the proposed Project would potentially support approximately 42,100 average annual jobs across the United States over a 1- to 2-year construction period…This employment would potentially translate to approximately $2.05 billion in earnings.

And about exports:

…there is a question of whether the oil sands/Western Canadian Select (WCS) crude oil transported into Gulf Coast markets via the proposed Project may be simply “passed through” the market and loaded onto vessels for ultimate sale in markets such as Asia or Europe. Under the current market outlooks, such an option is unlikely to be economically justified primarily due to transportation costs…Gulf Coast refiners’ traditional sources of heavy crudes, particularly Mexico and Venezuela, are declining and are expected to continue to decline…Gulf Coast refineries have the potential to absorb volumes of WCSB crude that go well beyond those that would be delivered via the proposed Project. On this basis, the likelihood that WCSB crudes will be exported in volume from the Gulf Coast is considered low.

These are the facts, from the State Department report.  The pipeline will create tens of thousands of jobs, simply true.  Also true, the economics which indicate the crude we get from Canada likely will be replacing crude oil imported from Mexico and Venezuela and not be exported.

The benefits of the Keystone XL are clear, and they were clear in 2011, and they were clear in 2010, and they have been clear for over four years.  The facts have been discussed, parsed, researched, studied, reviewed, appraised, examined, reexamined, reviewed and scrutinized.  It is time to approve this pipeline.

ABOUT THE AUTHOR

John Felmy is API’s Chief Economist. He is responsible for overseeing economic, statistical and policy analysis and has over twenty-five years experience in energy, economic and environmental analysis. John is a Pennsylvania native and received Bachelors and Masters in Economics from Pennsylvania State University and a Ph.D. in Economics from the University of Maryland. He is a member of several professional associations including the American Economic Association and the International Association for Energy Economics.