In this time of stubborn unemployment, jobs are number two on the list of top policy priorities for the American people. This is why it is easy to get angry about the jobs lost by the administration’s decision to say no to the Keystone XL pipeline, a pipeline that would end up delivering around 700,000 barrels of oil per day by 2020. Number one on the list is the economy, and while it is easy to see how a massive construction project would be good, it is harder to grasp the entire economic impact of the decision. I mean, what is 700,000 barrels a day anyway? And what difference does it make if we get it from Canada or from somewhere else? A big difference. Let’s get some perspective.
700,000 barrels of oil a day is roughly 255.5 million barrels annually, or, at $100 a barrel, $25.5 billion in oil we would be buying from Canada. The “from Canada” part is important because Canada is our largest trading partner and over the past ten and half years has bought 81 cents’ worth of goods from us for every $1 we bought from Canada. So, though the relationship between imports and exports will vary depending on which industries we import from, we can roughly estimate that buying $25.5 billion worth of oil from Canada would generate about $20.7 billion dollars worth of sales to Canada from the U.S.
And this matters why? Well, saying no to the Keystone XL didn’t diminish our use of oil or increase U.S. production of oil, so that 700,000 barrels a day has to come from somewhere. In 2011 the U.S. imported 951,000 barrels a day from Venezuela. Venezuela has a different trade relationship with the U.S. than Canada does. In fact, over the same ten and half year period as we looked at above, Venezuela only purchased, on average, 27 cents’ worth of goods for every $1 we bought from them. I’m sure you can see where I’m going with this.
Saying no to the Keystone XL, and saying no to 700,000 barrels a day from Canada instead of Venezuela means a loss of $13.8 billion a year in possible sales for U.S. exporters. So what exactly is $13.8 billion in sales? Well, for 2011 that is more than U.S. box offices sales ($10.2 billion), the top 100 U.S. concert tours ($2.3 billion) and all food trucks/street vendors ($1 billion) combined.
So when you hear the administration saying no to the Keystone XL pipeline, what you need to consider, in terms of economic impact, is that it’s saying no to all U.S. sales at the box office, the top 100 concert tours, and food trucks. That was the policy response to the top policy concern of the American people. And it wasn’t a good one.