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Clean Energy

Keystone XL: Don’t believe the hype

Keystone XLProponents of the Keystone XL pipeline—like TransCanada, the company building it—claim the project will pay out over $5 billion in property taxes and create 20,000 direct jobs and 119,000 indirect jobs over its lifetime.

In a tough economy when so many Americans struggle to find work, any project that could flood $5 billion into state economies and create that many jobs deserves attention. So are the numbers correct?

DROP IN THE BUCKET

To really dig into the property tax numbers, keep in mind that experts estimate the Keystone pipeline will have a life of 100 years. Let’s presume that the $5 billion in tax revenues would be divided evenly among the six states containing the pipeline: North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, and Texas. Under this equation, each state would receive approximately $9 million in property taxes each year. Sounds like a lot, doesn’t it? Well, it’s not. Even in a sparsely populated state like North Dakota, $9 million would be a mere four-tenths of one percent (that’s 0.04 percent!) of the state’s annual budget in 2013. In a huge state like Texas, $9 million doesn’t even register in the tenths of one percent range. When you look at it this way, that $5 billion won’t make much of an impact.

What about jobs? Cornell University’s Global Labor Institute analyzed TransCanada’s job numbers in a report released this week. Not surprisingly, they concluded the company dramatically overestimated the jobs that pipeline construction would create and indicated there may be as few as 2,500 to 4,600 temporary construction jobs—and only for the two-year construction term.

OIL SPILLS AHEAD

Just as important, Cornell’s researchers determined that 91 oil spills would probably occur from the pipeline over the next 50 years, concluding that the unknown costs of clean-up would far outweigh the pipeline’s economic benefits. Oil from tar sands is much more corrosive and toxic than conventional oil, meaning spills are more frequent and cost much more to clean up.

For example, two years after the tar sands spill in the Kalamazoo River in Michigan, the company that owned the pipeline has spent $725 million cleaning up the approximately 1.2 million barrels of tar sands oil that leaked into the river. That‘s 10 times the cost of cleaning up conventional crude oil and doesn’t factor in the costs of lost work time and tourist dollars.  And the clean up isn’t even finished yet; the final costs may be much higher.

TransCanada has consistently sold the Keystone pipeline as a jobs project, but if constructed, the pipeline would offer far fewer economic benefits than proponents claim, dramatically increase the risks of toxic spills, and might even raise the costs of gasoline sold in the Midwest by ten to twenty cents a gallon.

If it is jobs we want, we’d be much smarter to focus on renewable energy.

Photo: LA Times

Proponents of the Keystone XL pipeline claim the project will pay out over $5 billion in property taxes and create over 100,000 jobs over its lifetime. In a tough economy when so many Americans struggle to find work, any project like that deserves attention. So are the numbers correct?

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