American Oil, American Jobs

Mark Green
Posted February 27, 2015

President Obama, in an interview with a North Dakota television station, explaining why he continues to delay the Keystone XL pipeline:

“Part of the reason North Dakota has done so well is because we've very much been promoting domestic U.S. energy use. I've already said I'm happy to look at increasing pipeline production for U.S. oil. But Keystone is for Canadian oil. Sending it down to the Gulf. It bypasses the U.S., it estimated to create 250, maybe, 300 permanent jobs. We should be focusing on American infrastructure for American jobs for American producers, and that's something we very much support.”

In the span of just six sentences, the president contradicts expert analysis of Keystone XL’s jobs and market impacts at least four times – about once for each breath. Let’s discuss.

Canadian oil

The president simply refuses to acknowledge findings of the U.S. State Department and others that oil shipped via Keystone XL to U.S. Gulf Coast refineries will not be for export. State:

Gulf Coast refiners’ traditional sources of heavy crudes, particularly Mexico and Venezuela, are declining and are expected to continue to decline. This results in an outlook where the refiners have significant incentive to obtain heavy crude from the oil sands. Both the EIA’s 2013 AEO (Annual Energy Outlook) and the Hart Heavy Oil Outlook (Hart 2012b) indicate that this demand for heavy crude in the Gulf Coast refineries is likely to persist throughout their outlook periods (2040 and 2035 respectively). … Thus Gulf Coast refineries have the potential to absorb volumes of (oil sands) crude that go well beyond those that would be delivered via the proposed Project. On this basis, the likelihood that (oil sands) crudes will be exported in volume from the Gulf Coast is considered low.

IHS CERA recently released a new study reaching the same conclusion. IHS Senior Director Aaron Brady:

“There is a common misunderstanding that somehow most or all of the oil shipped to the U.S. Gulf Coast via the Keystone XL pipeline would be exported to other countries. The reality is that the U.S. Gulf Coast is the world’s largest single refining market for heavy crudes such as oil sands, making it unlikely these barrels would be exported offshore. And, the overwhelming majority of refined products produced in the Gulf are consumed in the United States, regardless of the crude source. … Regardless of whether the oil is imported from Canada or Venezuela, the overwhelming majority of the refined products produced in the Gulf will continue to be consumed in the United States.”

With all due respect to President Obama, the “common misunderstanding” about Keystone XL oil is due in no small part to incorrect statements the president has made in recent months on that point. Twice the Washington Post’s “FactChecker” has chided the president for such statements, here and here. (Update: FactChecker handed the president four Pinocchios on Monday for his latest claim about Keystone XL's oil bypassing the U.S.)

Yet, he keeps making these statements. That he repeated this canard to a North Dakota reporter is particularly shameless, because up to 100,000 barrels of oil per day from the North Dakota Bakken region (Executive Summary, Page 6) would be part of Keystone XL’s cargo – delivered to U.S. refineries operated by American workers. To recap: American oil and American refineries.

Jobs, Jobs, Jobs

The president’s statements dismiss State Department’s analysis that Keystone XL would support tens of thousands of jobs and boost the U.S. economy:

During construction, proposed Project spending would support approximately 42,100 jobs (direct, indirect, and induced), and approximately $2 billion in earnings throughout the United States. … Construction of the proposed Project would contribute approximately $3.4 billion (or 0.02 percent) to the U.S. gross domestic product (GDP).

The president’s serial mischaracterization of Keystone XL’s ability to generate jobs is especially galling to the workers who would build the pipeline, workers who want the jobs the president dismisses. From an open letter published earlier this year by North America’s Building Trades Unions:

It is the height of hypocrisy for any politician – Democrat or Republican – to champion construction jobs out of one side of his or her mouth when talking about infrastructure investments and economic growth, and then turn around and curse these same jobs when they are associated with an issue such as the Keystone XL pipeline.

Permanency and Infrastructure

The president talks regularly about the need for infrastructure investment – and he’s right. Another IHS study found that essential oil and natural gas infrastructure improvements could prompt up to $1.15 trillion in new private capital spending over the next decade while supporting 1.15 million new jobs and adding $120 billion on average per year to GDP.

But if we’re only going to build infrastructure that has permanent jobs, we won’t be building much infrastructure. Working men and women have said this over and over during the Keystone XL debate, but the president apparently doesn’t hear them.

The president has made Keystone XL a political issue instead of one based on fact, merit and the U.S. national interest. He talks about defending processes and procedures to justify his inaction, then mischaracterizes careful, expert analysis to suit a political end. Leadership, not political maneuvering, is needed to make the U.S. energy secure. On the facts, on the merits, Keystone XL should be approved and built. President Obama should set aside politics and process decisions to make one decision that would benefit America. #TimeToBuild.