Pipe Wars, Part II: Will "Job Creation" Make or Break Oil Pipeline Projects in Canada and U.S.?

By: Meirav Even-Har, Toronto

Will the Keystone XL and Northern Gateway oil pipeline projects create 20,000 or 2,000 jobs? Will the jobs be long-term or temporary?

The answers to these and other questions about the economic benefits of oil pipeline projects have become a major point in the debate between energy companies and environmental activists, between the Canadian and U.S federal governments, and between contenders in the run-up to the American presidential election this fall.

Job creation is being touted to support the approval of the pipeline projects-and as an oversold smokescreen by those opposed. Emotions can run especially high when job creation is at stake-a closer look at the facts could yield some perspective on the issue.

Northwestern and coastal Canadian communities have been promised skilled labour training and work, if the Northern Gateway pipelines are approved. In the U.S., construction jobs are assured should Keystone XL (specifically, Keystone Gulf Coast Expansion Project) be allowed to start. Jobs are important; even as the U.S. economy posted 227,000 jobs in February [1], and the Canadian west continues to boom, work and local community development is a powerful proposition.

The number of jobs possible with the approval of the full Keystone XL project is estimated "...to directly create more than 20,000 high-wage manufacturing jobs and construction jobs in 2011-2012 across the U.S..." according to the TransCanada website. That potential job availability is also fuelling an online campaign that is aligned with the project "Build KXL Now." The website rhetoric connects political leadership to project approval through potential job creation: "In reality, the sad truth is that, since President Obama denied the permit, millions of American consumers and thousands of construction workers will fail to benefit from the new jobs, revenue and energy security that this pipeline will confer."

Enbridge's approach to gaining public acceptance for Northern Gateway has been more subdued, so far. Then again, it is still in the earlier stages of approval unlike Keystone XL, where only its cross-border portion is seeking a Presidential Permit. On the Northern Gateway website, Enbridge links 3,000-construction phase jobs and 560 long-term positions in BC, should the project go through. The website goes on to detail the economic gain for specific regions and sectors within the province (e.g. construction camp catering, equipment rentals, surveying, etc.). Enbridge has made a major commitment specifically for Aboriginal communities through an offer of 10% share in a $5.5 billion dollar project, as well as job creation [2].

But Enbridge's commitment to create direct, long-term economic benefit to Aboriginal communities has also been greeted by vocal resistance from many First Nations throughout BC [3].

Cornell University's Global Labor Institute has analyzed claims made by the TransCanada Corporation and the American Petroleum Institute about the economic value of the Keystone XL project. The report concludes "the project will create no more than 2,500-4,650 temporary direct construction jobs for two years, according to TransCanada's own data supplied to the State Department." It continues by noting that the "20,000 direct construction and manufacturing jobs" claim is not validated. [4]

Will the construction of new pipelines in the U.S. and Canada create additional jobs? Absolutely. It may not amount to the thousands promised, but there will be economic benefits realized from both Keystone XL and Northern Gateway. And while it is difficult to argue against more jobs made available to so many in need of work, we should - and some have-question whether following the same model of quick, economic growth via natural resource exploitation delivers on its promise of long-term sustainability.

This is Part II of a series about oil sands pipelines construction, one of the most hotly debated issues in Canada and the U.S., which examines the arguments for and against the Keystone XL and Northern Gateway projects. Part I of the series provided an overview of the issues and noted the potential and realized impact the projects may have on Canadians. Next week's blog provide an overview of environmental claims from proponents and opponents to the two projects.

NOTES

[1] Washington Post: Economy gained 227K jobs in Feb.; more unemployed rejoin workforce. http://bit.ly/wOleNQ

[2] Enbridge: Northern Gateway project website: http://www.northerngateway.ca/economic-opportunity/benefits-for-aboriginals/

[3] Financial Post: First Nations reject alternate Northern Gateway route. http://natpo.st/wZiMfo

The Vancouver Sun: B.C. First Nation rescinds earlier support for Northern Gateway deal. http://bit.ly/vZvApZ

[4] Cornell University Global Labor Institute: Pipe dreams? Jobs Gained, Jobs Lost by the Construction of Keystone XL. http://bit.ly/w3ch0l

The Perryman Group: The Impact of Developing the Keystone XL Pipeline Project on Business Activity in the US: An Analysis Including State-by-State Construction Effects and an Assessment of the Potential Benefits of a More Stable Source of Domestic Supply. http://www.transcanada.com/docs/Key_Projects/TransCanada_US_Report_06-10-10.pdf

Photo Credit: By Hillebrand, Steve (via Wikimedia Commons)