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State dept. gives much lower estimate in jobs benefit from tar sands oil pipeline from Canada

Supporters of the Keystone XL pipeline claim that the project will be a rich source of jobs, but critics say their numbers don’t add up and any boost in jobs will be temporary.

The controversial TransCanada project would move tar sands oil — diluted bitumen — from northern Alberta, Canada 1,700 miles across the U.S. to refineries along the Gulf of Mexico through a three foot wide pipe that would cross North Dakota, Montana, Nebraska, Oklahoma and Texas.

TransCanada and the American Petroleum Institute say that the project will generate at least 20,000 jobs, but the U.S. State Dept., which considered the project’s socioeconomic impact as part of the still ongoing permit process, puts the number far lower.

“During construction, there would be temporary, positive socioeconomic impacts as a result of local employment, taxes on worker income, spending by construction workers, and spending on construction goods and services,“ the agency said. “The construction work force would consist of approximately 5,000 to 6,000 workers, including Keystone employees, contractor employees, and construction and environmental inspection staff.”

Advocates for the pipeline say that building it will have a multiplier effect because many new jobs will be created to serve the construction work force.

An economic impact study by the Perryman Group, commissioned by TransCanada, found that the project would create 118,935 “person-years” of employment.

The Cornell Global Labor Institute recently published an analysis of the Keystone jobs claims that criticizes the methodology of the Perryman report.

“Person-years,” said Institute Director Sean Sweeney, is an inappropriate way to talk about the economic impact of the project because people will easily confuse that for the total number of jobs the project would create. And that is exactly what is happening.

On June 23, as he hailed the passage of a bill to expedite a decision on the Keystone pipeline, House Energy Committee Chair Rep. Fred Upton said that the pipeline would “create more than 100,000 jobs.”

In an editorial for the Tulsa World this week associate editor Mike Jones writes that the Keystone project “smells like jobs.”

… Once finished, the states along its path could receive an additional $5.2 billion in property taxes. That’s is a good deal of money for public schools in Oklahoma that are making drastic cutbacks. And there is this: The $7 billion project could create as many as 100,000 jobs, as many as 20,000 of which would be high-wage manufacturing jobs. Those jobs and the pipeline would create spin-off companies and more jobs. Some industry experts believe that the project could create as many as 250,000 new jobs, although that could be an inflated number.

Sweeney, at the labor institute, says people should be skeptical about claims like this.

The Perryman Group report that estimated 118,935 person years of employment for the project “does not allow for independent validation of the findings because details are not provided about the inputs or how the outputs are arrived at,” he said.

In an e-mail to Michigan Messenger Perryman Group president M. Ray Perryman acknowledged that his modeling system is “proprietary” but insisted that it is valid and widely respected.

“All construction jobs are temporary,” Sweeney said. “TransCanada’s own transmissions are pretty open about that. The multiplier effects in the economy are going to be temporary.”

And not all of the jobs associated with the pipeline will be new jobs, he said, many will go to existing Keystone employees and contractors.

According to the Institute’s analysis of Phase 1 of the Keystone pipeline, which was completed last year, only 11% of the construction and inspection workforce in South Dakota was hired locally. And the pipeline materials may be manufactured elsewhere, he said.

“If the first two phases of the project are any indication,” he said, “They will use steel from Canada and India.”

Forty percent of the steel for the first phase of the project came from Canada, he said, and ten percent from India, and if this model continues the spin-off manufacturing jobs will be in those countries.

State Dept. is expected to decide whether to grant a permit for the project by the end of the year.

The Dept. will hold hearings on the project this week in Port Arthur, Texas, Topeka, Kansas, Glendive, Montana, Lincoln, Nebraska, Austin, Texas, Pierre, South Dakota, Atkinson, Nebraska, and Midwest City, Oklahoma.

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