Critics like Tom Steyer’s Next Gen Climate operation wants you to believe that the Keystone XL pipeline will only create a few dozen jobs. However, after looking at the construction of the southern leg of the pipeline, the truth is far different.
A new report finds that construction of the 485-mile Gulf Coast Project, stretching from Cushing, Oklahoma to Nederland, Texas, created thousands of jobs and added billions to local economies. The Gulf Coast pipeline is the portion of the proposed Keystone XL pipeline that was able to be built because it didn't require a Presidential Permit. It is helping improve the transportation of oil sands crude to Gulf Coast refiners - the same crude that Keystone XL will carry.
The report, prepared by Southern Methodist University's Maguire Energy Institute for the Consumer Energy Alliance, found that in Oklahoma and Texas, the project resulted inOver $5.7 billion in new economic activity. Over 42,000 person years of new employment. Over $217 million in additional state and local taxes.
The authors write:
[T]he Gulf Coast Project pipeline contributed substantially to the economic health of most of the counties along the alignment during the 2012-2014 construction period. In the years ahead, recurring expenditures for operations and maintenance of the pipeline will continue to support jobs while generating income and tax revenues for Oklahoma, Texas and the 24 affected counties.
Counties in Oklahoma where the pipeline was construction saw an average per capita income increase of 78%. Three counties—Seminole, Hughes, and Coal—saw over 90% increases. For counties in Texas, the average per capita income increase was 58%.
On a press call, Bud Weinstein, an economics professor at Southern Methodist University’s Cox School of Business and one of the reports’ authors noted that "most of these counties are comparatively low-income, rural counties.” Construction of the Gulf Coast Project has been a "tremendous economic tonic." For instance, the report finds “pipeline activities averaged 31 percent of personal income” in Oklahoma.
During construction, TransCanada spent about $6 million per month directly in the local community. Here are some examples of local entrepreneurs taking advantage of the business opportunities the pipeline's construction offered:
For instance, Clifford Bryant, a local entrepreneur in Prague, Oklahoma, reports that construction of the pipeline “doubled our city sales tax receipts.” Clifford bought a mobile RV and trailer park when he heard that TransCanada would be bringing a construction yard to town for its Gulf Coast Pipeline Project. Previously, only 11 of the 57 spots in the park were occupied. Once construction began, all 57 were occupied. Clifford notes that a full RV park contributes as much as $8,000 a month in electricity fees alone to the municipal utility.
In the Southeast Texas town of Kountze, Jeremy Kunk’s Ready Ice Company sold approximately 30,000 pounds of ice per week to pipeline construction sites in its area. The ice improved safety by keeping workers cool and hydrated. Kunk expects that the economic boost supplied by pipeline projects will be long-lasting. “Pipeline construction such as TransCanada’s Gulf Coast Pipeline Project is going to feed our refineries more product and keep us hopping for the next five, 10 years at least.”
Joe Penland is another Texas business owner who benefited from TransCanada’s pipeline construction. Joe owns Quality Mat Company in Southeast Texas. His company partnered with TransCanada to make the Gulf Coast Project safer. With a patented concept, Penland fabricates more than 250,000 mats per year in his facility inside the Beaumont city limits. He leased the mats to TransCanada during construction of the Gulf Coast Pipeline in Oklahoma and Texas.
Positive benefits would extend to more states if the northern leg of the pipeline, linking Alberta to Nebraska, were approved by the Obama administration. “Similar state and local economic benefits can be anticipated should the United States give the go-ahead for construction of the Keystone XL pipeline from Hardisty, Alberta to Steele City, Nebraska,” the authors write.
"I would expect similar impacts" to those found in Oklahoma and Texas if the northern leg of the Keystone XL pipeline is approved, Weinstein said on the press call.
The link between energy and security is increasingly evident as geopolitical hot spots flare up around the world. Global oil prices have gone up 4% since the beginning of June as Iraq—the second-leading producer in the Organization of the Petroleum Exporting Countries—is under siege by insurgents, threatening exports and sending reverberations through oil markets. Russia is using its vast natural gas supplies—on which much of Europe and Ukraine depend—to wield geopolitical control in the ongoing conflict with Ukraine.
For good or for ill, those who have energy have power and influence in a global economy. Today, the United States and its abundant resources can be a force for good in our own economy and for stability around the world.
We’re sitting on a 200-year supply of oil and have enough natural gas to last 115 years—and we’re discovering more resources every year. Thanks to entrepreneurship and ingenuity driven by the private sector, we’ve been able to access and develop more oil and gas than ever. As a result, U.S. petroleum imports have fallen from 60% to 35% in less than a decade. And with the combined resources of our friends and partners in Canada and Mexico, North America is on track to be energy independent by 2020 and could be a net energy exporter by 2030.
The positive effects of the U.S. energy boom are benefiting the rest of the world too. The drop in U.S. oil imports and the increase in U.S. exports of refined products have helped keep international prices relatively stable—even amid market shocks and supply disruptions. Businesses and consumers would be much more vulnerable to geopolitical strife or the whims of foreign dictators or forces without a steady flow of U.S. Supply.
Yet we can do more. As America tears down impediments to the development and export of U.S. energy resources, including oil, gas, and coal, our allies can reduce their dependence on imports from uncertain or even hostile suppliers. That would promote greater global stability. How much more leverage might Europe, a key U.S. partner, have over Moscow if it didn’t need to turn around and buy Russian oil and gas?
Besides security benefits, energy bolsters our domestic economy, creates jobs, drives manufacturing, and generates revenue. But if we’re going to fully realize any of these benefits, we must see a change in U.S. policies that promote endless permitting delays, wrongheaded regulations, attempts to pick winners and losers among industries, and political agendas.
U.S. energy can be a powerful force for good at home and abroad—but only if we let it.
The Newsweek graphic above sums up the wishful thinking behind EPA’s proposed carbon regulations. The story that's attached to it delivers some “coal, hard” facts [emphasis mine]:
Five countries dominate the global consumption of coal. China, the U.S., India, Russia and Japan are the world’s biggest coal burners. In recent years, the growth in coal consumption of developing countries, especially China and India, has overtaken growth in developed nations like the U.S.
The U.S. is the second largest consumer of coal in the world today, but China’s consumption dwarfs all others. Last year, while the U.S. consumed 925 million tons of coal, China is estimated to have consumed 4 billion tons. Each year China consumes almost as much coal as the rest of the world combined.
Here's another fact. As the Christian Science Monitor reports, demand for coal will continue to rise:
For now, coal remains behind oil in terms of its share of global energy demand, capturing 30.1 percent compared to oil’s 32.9 percent. But that could change. In a December 2012 report, the International Energy Agency predicted that by 2017, coal would become the world’s top source of energy. Between 2012 and 2017, annual global coal consumption is expected to jump by 1.2 billion tons, which is equivalent of adding the coal consumption of Russia and the US combined.
Even if these proposed regulations are implemented, by 2030 global emissions will still be about 29% higher than in 2011.
President Obama can say all he wants, “We cannot exempt ourselves from the rules that apply to everyone else.” The truth is that with these proposed carbon regulations, we’ll have less-affordable, less-reliable electricity production. When the number one goal on most people's minds is generating faster economic growth to put more Americans back to work, imposing a costly burden like this is counterproductive.
The spice must flow.
If you ever watched the 80s sci-fi flick Dune, you remember that haunting line. Since in Dune’s universe, the spice was required for interstellar space travel, someone would find a way to ensure it didn’t remain locked up on a desert planet.
Just like the spice flowed in Dune, crude oil will flow from Canada’s oil sands to hungry energy markets. The Canadian national government approved a pipeline running west from Alberta:
The Canadian government approved Enbridge Inc. Northern Gateway pipeline, eliminating the final major regulatory obstacle for the conduit that would move Alberta oil to the Pacific coast for shipment to Asia.
The approval of the C$6.5 billion ($6 billion) project by Prime Minister Stephen Harper’s cabinet is subject to Enbridge satisfying the 209 conditions placed on the proposal by a regulatory review panel in December, Natural Resources Minister Greg Rickford said in a statement today from Ottawa.
“The proponent clearly has more work to do in order to fulfill the public commitment it has made to engage with Aboriginal groups and local communities along the route,” Rickford said in the statement.
[Prime Minister Stephen] Harper’s government has made building energy infrastructure a national priority, part of C$650 billion of investment in more than 600 existing or planned projects over the next decade to develop the country’s natural resources, including the world’s third-largest pool of recoverable crude reserves.
Crude producers such as Canadian Natural Resources Ltd. and Cenovus Energy (CVE) Inc., facing a five-year average discount of almost $20 a barrel for their oil relative to U.S. benchmarks, are seeking new markets. Canadian oil-sands output is set to more than double to 4.1 million barrels a day by 2025 from 2013, according to the Canadian Association of Petroleum Producers, an industry group.
John Ivison of the Canada’s National Post noted, “Canada is now committed inexorably to developing Asian markets for its resources.”
Asian nations will be pleased, while Americans should be distressed.
Much has to be done before construction begins on the Northern Gateway pipeline. However, it’s clear that Canada continues looking for ways to move its oil sands crude to market. Rail terminals being built and TransCanada's plan to convert a natural gas pipeline to transport oil sands crude from Alberta to the Atlantic coast are examples some of the many oil sands transport projects underway. Whether it’s by rail, barge, or pipeline, the oil will flow to where it’s needed.
Keystone XL opponents want us to believe that by stopping its construction, development of Canada’s oil sands will also be stopped. As we can see, that’s a pipe dream.
At least the State Department didn’t buy into that when it released its final environmental impact statement. It concluded that
[A]pproval or denial of any one crude oil transport project, including the proposed Project [Keystone XL], is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios.
Yet, the Keystone XL pipeline has been awaiting approval for over five years. As we wait, we miss out on the thousands of jobs that will be created and the economic benefits the pipeline will bring to state and local economies.
You don’t have to go into a trance like Paul Atreides did to understand the nature of the global energy economy. You only have to remember this:
The oil will flow.
The Obama administration should relent in their obstruction and finally approve the Keystone XL pipeline.8 Key Facts about the Keystone Pipeline from U.S. Chamber of Commerce
Over the weekend, EPA Administrator Gina McCarthy yucked it up on HBO's Real Time with Bill Maher about her agency’s proposed carbon regulations. Although she won applause from the comedian and his California-based studio audience, a group of governors representing states not on the West Coast expressed their disapproval with EPA's agenda:
[Louisiana Gov. Bobby] Jindal and Texas Gov. Rick Perry were flanked by the governors of North Dakota and Wyoming in a brief press conference aimed at blasting the EPA’s proposed rule to cut carbon emissions by 30 percent from 2005 levels over the next 15 years.
The rule is expected to gut the coal power industry across the United States. Coal plants have already fallen out of favor with utilities as cheap, low-carbon emitting natural gas surges. It’s expected to pave the way for more natural gas power plants.
When asked whether Texas will benefit from the EPA’s proposed policy, as it promotes natural gas development, Perry said it’s not up to the federal government to decide which energy sources are winners and losers. He said 37.6 percent of the energy produced in Texas is by coal power plants.
“The idea that we should be picking and choosing – particularly Washington picking and choosing – is just outside of the realm of thoughtfulness from my perspective and certainly outside the realm of economic viability,” Perry said.
After the press conference, nine Republican governors, including Perry and Jindal, sent a letter to President Obama urging “a pragmatic energy policy that balances our nation’s economic needs, energy security, and environmental quality objectives.”
The letter said the carbon emissions rule would “largely dictate to the states the type of electricity they could build and operate” and cut out coal from the nation’s energy mix.
California barely relies on coal for electricity, unlike Indiana, Ohio, Wyoming, and other states. That makes it easy for both Maher and his audience to cheer since they won’t feel as much pain from the proposed carbon regulations. In fact, Bloomberg New Energy Finance projects that California will be able to increase its emissions under EPA’s rule, while other populous states such as Texas, Pennsylvania, and Florida all take it on the chin.
But let’s get into the substance of what Administrator McCarthy said in her conversation with Maher. She tried to make the case that the proposed carbon regulations are critical to “show domestic leadership” in international climate negotiations:
"This is about leadership. This about US being a leader on this issue and we believe and we already know it's going to leverage a much better opportunity for a global solution," she added Friday night.
McCarthy was responding to assertions by opponents of the new rules, who say the U.S. should not act on climate change policies when other countries such as China and India are continuing to build coal-fired power plants.
McCarthy argued: "But if the US doesn't act what voice do we bring to the table to drive that larger solution."
McCarthy was taking her cues from President Obama, who recently said, "We cannot exempt ourselves from the rules that apply to everyone else."
But both the President and McCarthy have built a strawman that actually distorts concerns about upcoming international negotiations, which are not that the U.S. will not show leadership, but that EPA is moving ahead with its rules regardless of whether they apply to anyone else.
Further, McCarthy's assertion ignores the fact that other nations’ hunger for energy to fuel economic growth will trump any symbolic act by the United States, as Marketplace reports:
BP’s annual world energy report is out, and it turns out coal has its largest share of the global energy market since 1970.
Just because coal use is going down in the U.S. doesn’t mean it’s not popular in other parts of the world.
“Coal is still a fairly fast growing fuel globally," says James Stevenson, director of North American coal at IHS Energy, a global research and consulting firm. “We have fairly strong growth in countries like China.”
The use of coal is also expanding in Latin America, parts of the Mediterranean, and Africa, though more slowly. Even Germany is burning more coal, partly because it’s shutting down its nuclear power plants.
Kristoffer Inton, an equity analyst with Morningstar, says coal is easy to come by.
“That’s the main advantage of coal," he says, "that it’s cheap and it’s available.”
EPA’s proposed carbon regulations will push a useful energy source—coal—out of America’s energy mix. The result will be higher electricity costs and a less-reliable electrical grid. And since under the proposed regulations, 2030 global carbon emissions will be 29% higher than in 2011, the joke will end up being on us.