42,100 Reasons to Build the Keystone XL Pipeline

Mark Green
Posted February 4, 2014

President Obama is taking issue with the number of jobs the Keystone XL pipeline would support during its construction phase – 42,100, according to the U.S. State Department environmental review issued last week. During an interview with Fox News’ Bill O’Reilly taped Sunday, the president interrupted when O’Reilly brought up Keystone XL and its potential economic impact:

“Well, first of all, it’s not 42,000. That’s – that’s not correct. It’s a couple of thousand to build the pipeline.”

The remark echoed what the president said to the New York Times last summer and also a line in an economic speech he delivered in Tennessee a few days later – each looking askance at the Keystone XL’s job-creating potential.

With all due respect, 42,100 is the Obama administration’s number – the number of jobs the president’s State Department estimates Keystone XL would support across the U.S. while the pipeline is being built. Detail from the section (4.10) in the State Department report on the project’s socioeconomic impacts:

Construction contracts, materials, and support purchased in the United States would total approximately $3.1 billion, with another $233 million spent on construction camps. During construction, this spending would support a combined total of approximately 42,100 average annual jobs and approximately $2 billion in earnings throughout the United States. … Approximately 16,100 would be direct jobs at firms that are awarded contracts for goods and services, including construction, directly by Keystone. The other approximately 26,000 jobs would result from indirect and induced spending; this would consist of goods and services purchased by the construction contractors and spending by employees working for either the construction contractor or for any supplier of goods and services required in the construction process.

And:

Construction of the proposed Project would contribute approximately $3.4 billion to the U.S. GDP. This number includes not only earnings by workers, but all other income earned by businesses and individuals engaged in the production of goods and services demanded by the proposed Project, such as profits, rent, interest, and dividends.

The State Department’s jobs chart:

Another chart from the department’s report, showing job distribution and earnings generated by the Keystone XL:

These are significant job-creation numbers for an economy that’s still regaining strength from the recent recession. As State’s report explains, they come from the IMPLAN economic modeling system founded on data available from the U.S. Bureau of Economic Analysis, the Bureau of Labor Statistics, the U.S. Census Bureau and other sources. It is “regarded by government agencies and academic as a highly credible economic modeling system.” It takes into account direct, indirect and induced jobs:

• Direct economic activity associated with construction includes all jobs and earnings at firms that would be awarded construction contracts for the proposed Project.
• Indirect activity includes all goods and services that would be purchased by these construction contractors in the conduct of their services to the proposed Project, such as concrete, fuel, surveying, welding materials and earth-moving equipment.
• Induced activity includes the spending of earnings that would be received by employees working for either the construction contractor or for any supplier of goods and services required in the construction process, such as spending by access road construction crews, welders, employees of pipe manufacturers and ranchers providing beef for restaurants and construction camps.

In other words, the State Department used realistic estimates of the broad economic impacts likely to stem from a multi-billion infrastructure project. The president’s view of the Keystone XL’s impacts is narrower. But, respectfully, this view minimizes the real economic benefits this project would likely bring. Worth recalling is that when the administration proposed its 2009 economic stimulus package, the proposal’s jobs numbers included direct, indirect and induced jobs.

Keystone XL’s job-generating has a number of high-profile backers:

Keystone pipeline continues our effort to build a strong middle class everywhere with the jobs that it brings #kxl

— Senator Landrieu (@SenLandrieu) February 4, 2014

And:

I once again call on Sec Kerry & Pres to approve #KeystoneXL because it will create American jobs & support American energy security

— Senator Kay Hagan (@SenatorHagan) February 1, 2014

Other Keystone XL supporters:

U.S. Sen. Mark Pryor, Arkansas – “We cannot afford to wait any longer. Let’s build the Keystone Pipeline so we can ensure our future energy security and create jobs here at home.”

AFL-CIO President Richard Trumka – “Anything that makes sense and creates jobs and is sound environmental policy as well, we will be doing it. [With respect to] the XL pipeline, there’s no environmental reason that it can’t be done safely while at the same time creating jobs.”

Laborers’ International Union of North America President Terry O’Sullivan – “It’s about jobs; that’s what it’s about.”

Building and Construction Trades Department (AFL-CIO) President Sean McGarvey – “The interstate highway system was a temporary job. Mount Rushmore was a temporary job. If they knew anything about the construction industry they’d understand that we work ourselves out of jobs and we go from job to job to job.”

Near the close of his speech in Chattanooga last summer, President Obama said this:

“Jobs are about more than just paying the bills. Jobs are about more than just statistics. We’ve never just defined having a job as having a paycheck here in America. A job is a source of pride, is a source of dignity.  It’s the way you look after your family. It’s proof that you’re doing the right things and meeting your responsibilities and contributing to the fabric of your community and helping to build the country. That's what a job is all about. It’s not just about a paycheck. It’s not just about paying the bills. It’s also about knowing that what you’re doing is important, that it counts. So we should be doing everything we can as a country to create more good jobs that pay good wages. Period.”

The president was right. Every job matters, every job counts. The Keystone XL means thousands of jobs. Let’s build the pipeline and create those jobs.