the observatory

Keystone XL Jobs Bewilder Media

Reporters still fumbling numbers in wake of pipeline’s rejection
January 24, 2012

God help the poor news consumers of America, especially the would-be voters.

President Obama’s decision to reject the Keystone XL pipeline last week incited a new wave of coverage and speculation about how many jobs the line would create. Unfortunately, many outlets are still citing inflated and unreliable industry figures in the tens to hundreds of thousands while ignoring more modest and trustworthy approximations from academia and government, which place the total anywhere from 2,500 to 6,000.

The media were obsessed with the jobs number in 2011 and developed a preference for 20,000. A wide variety of conservative politicians and industry groups, from House Speaker John Boehner to the American Petroleum institute, have cited that figure, and some reporters have mistakenly attributed it to a variety of research firms that have issued reports on Keystone XL. But make no mistake, the number comes directly from TransCanada, the company that wants to build the 1,700-mile pipeline, which would transport crude oil from Canadian tar sands to Gulf Coast refineries in the United States. TransCanada first mentioned it, with no explanation, in a February 2 press release, but didn’t explain its math for another eight months.

Here’s how the company arrived at the figure:

Construction of the 1,600 mile pipeline is broken down into 17 U.S. pipeline spreads or segments, with 500 workers per spread—that’s 8,500 jobs
Keystone XL also needs 30 pump stations worth tens of millions of dollars. Each station requires 100 workers—that’s 3,000 jobs. Add another 600 jobs that would be needed for the six construction camps and tank construction at Cushing, Oklahoma. A project of such magnitude needs construction, management and inspection oversight—that would create 1,000 jobs, bringing the overall Keystone XL total to 13,000 direct, on-site jobs.

Now, compare the math in the company’s press release to the information that it provided to the US State Department for its final Environmental Impact Statement (EIS), delivered in August. With regard to the seventeen “spreads,” it read:

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Approximately 500 to 600 construction and inspection personnel would work on each spread, except for the proposed Houston Lateral which would require approximately 250 workers. Each spread would require 6 to 9 months to complete. Construction of new pump stations would require 20 to 30 additional workers at each site. Construction of all pump stations would be completed in 18 to 24 months. Tank farm construction would require approximately 30 to 40 construction personnel over a period of 15 to 18 months.

Notice that in its press release, TransCanada omitted the durations of employment and inflated the number of pump-station and tank-farm jobs in order to arrive at 13,000 construction jobs. To that, it arbitrarily added 7,000 manufacturing supply jobs in order to get to 20,000 jobs. Most reporters published only that number despite the fact that, based on the information provided by TransCanada, the State Department’s EIS said Keystone XL “would result in hiring approximately 5,000 to 6,000 workers over the three-year construction period.”

In September, researchers at Cornell University’s Global Labor Institute used the information in the EIS to come up with an estimate that was even more modest. Factoring in the various durations of employment, it calculated that “on-site construction and inspection creates only 5,060-9,250 person-years of employment (1 person-year = 1 person working full time for 1 year). This is equivalent to 2,500-4,650 jobs per year over two years.”

One of the researchers told InsideClimateNews that the difference between the Cornell and State Department estimates is attributable to the fact that the State Department includes a number of workers that TransCanada has already hired, while the Cornell study addressed only new jobs from pipeline construction. Whatever the case, the State Department and Cornell figures are clearly more reliable than those from TransCanada, which has a history of toying with numbers.

After the 20,000 “direct jobs,” the second most popular tally cited by the media has been 118,000 “spin-off jobs,” and it, too, has a long, convoluted history. It comes from a June 2010 report from The Perryman Group, a financial analysis firm based in Texas that was hired by TransCanada to evaluate Keystone XL. That report estimated, in a very non-transparent way, that the pipeline would create 118,935 person-years of employment over the hundred-year life of the project.

TransCanada first cited the figure in a September 2010 press release (which failed to mention the century-long time frame). But two months later, it issued another press release that dispensed with person-years and mistakenly referred to “118,000 spin-off jobs” instead. The error was repeated in dozens of media reports.

The Perryman Group did, in fact, estimate the “spin-off” jobs that result from “the permanent increase in stable oil supplies associated with the implementation of the Keystone XL Pipeline”: 250,348 under a “normal oil price scenario” and 553,235 under a “high oil price scenario.” And these figures formed the basis for countless media assertions that the pipeline would create hundreds of thousands of jobs, but they are highly suspect. A report to Congress submitted by the State Department took issue with the numbers, stating:

The economic analysis conducted for the EIS under contract to the Department of Energy, however, indicates that Keystone XL is unlikely to have any impact on the amount of crude oil imported into, or refined in, the United States. Therefore, it would not be reasonable to suggest the pipeline would cause an increase in employment or other economic activity by increasing crude oil imported into the United States.

“Regarding employment, the construction of the Keystone XL pipeline would likely create several thousand temporary jobs associated with construction; however, the project would not have a significant impact on long-term employment in the United States,” the State Department concluded.

That’s the bottom-line best guess for reporters: a few thousand temporary construction jobs over the course of a couple of years. Permanent jobs operating and maintaining the pipeline once it’s built probably wouldn’t add up to more than a few hundred. Everything else is unsubstantiated spin.

But estimates in the press have ranged wildly. A Media Matters video released last week—amusingly titled “To Infinity and Beyond”—presented a montage of various reports from conservative media over the last few months, led by Fox News, which placed job-creation everywhere from thousands, to tens of thousands, to hundreds of thousands, to a million. The dissonance is maddening.

The print media haven’t been quite as bad. In recent months, outlets like The New York Times, The Washington Post, USA Today, Politico, and the Pittsburgh Post-Gazette have done a good job challenging industry estimates. NPR, too, has been good on this. But others, including The Wall Street Journal, The Christian Science Monitor, and many smaller papers have uncritically repeated the 20,000 jobs figure since Obama rejected Keystone XL, despite plenty of evidence that it is misleading.

With arguments over the pipeline—and energy in general—expected to play a significant role in the presidential election going forward, reporters need to get their numbers straight so that Americans can start having a more informed debate about environmental regulations and jobs.

Curtis Brainard writes on science and environment reporting. Follow him on Twitter @cbrainard.