Meeting with Canada’s Prime Minister Stephen Harper at the White House, President Obama declared, “our focus today, however, is our highest priority, and my top priority as president, and that’s creating jobs faster and growing the economy faster.”
Yet, when it comes to the Keystone Pipeline, which would create 20,000 jobs, Obama is going slow. The latest? Refusing to tie approval of Keystone to a payroll tax cut.
How strange. Obama says a payroll tax cut will create jobs, even though there’s little evidence that it has done so. But when the opportunity comes to pass a project that will actually employ Americans, Obama punts.
Take the Keystone Pipeline, for example. In September 2008, TransCanada Pipelines Ltd, a Canadian company, submitted an application to build a 1,711 mile, 36 inch pipeline to carry crude from the oil-rich Lake Athabasca region of Canada to the U.S. Gulf Coast, where it would be refined. Since 1,384 miles were to be built in the United States, the application was submitted to the State Department.
Even though the State Department gave the project a positive environmental assessment in August, last month the department announced that approval would be delayed until the first quarter of 2013, pending the study of alternative routes.
The original cost of the project was $7 billion, and $1.9 billion has already been spent by TransCanada. The Perryman Group, in a study commissioned by TransCanada, estimated that the project would result in $9.6 billion in domestic product, with $6.5 billion in personal income, and about 119,000 person-years of employment.
During construction, the pipeline was estimated to provide $99 million to local governments, $486 million to state governments, and about $5.3 billion in future cumulative property taxes. The federal government’s share in tax revenue, assuming a rate of 15 percent, would be around $1.44 billion.
One obstacle came from Nebraska, which objected that the pipeline would go over the Ogallala Aquifer in the state’s Sand Hills region. Residents worried that a spill would pollute the aquifer and leave the water unusable for generations.
To counter this concern TransCanada offered several concessions, including: a cement pipe coating in areas where the water table is close to the location of the pipe; a $100 million performance bond to the State of Nebraska; and an oil-spill response team, with equipment, in the Sand Hills area.
But Nebraska cannot prevent State Department authorization of the pipeline, which could be approved over Nebraska objections. In fact, Nebraska is working with TransCanada over a different route.
Others attacked the proposed Keystone XL pipeline because the pipeline expanded the use of the oil sands in Alberta, Canada, which is a more carbon- intensive form of oil than that produced from traditional underground reservoirs.
Yet in the State Department’s environmental review it was noted that “oil sands mining projects have reduced greenhouse gas emissions intensity by an average of 39 percent between 1990 and 2008 and are working toward further reductions.”
Further, the idea that stopping the pipeline would curtail development of the Canadian Oil Sands is economically na?ve. Canada would just export the oil to Asia.
Currently a large portion of the heavy oil that Gulf of Mexico refineries receive is from Mexico and Venezuela, whose volume available for import has been dwindling.
America’s single largest concentration of petrochemical facilities and associated industries is located in the Gulf. These would also benefit from new sources of oil.
Obama may pose as a champion of jobs, but his priorities keep the middle class out of work and out of luck. It’s time for change.
Examiner Columnist Diana Furchtgott-Roth ([email protected]), former chief economist at the U.S. Department of Labor, is a senior fellow at the Manhattan Institute for Policy Research.
