Obama's job-creation comments ignite pipeline proponents

President Obama embraced the economic and environmental case against Keystone XL in an interview published late Saturday, suggesting that further emissions-cutting commitments from Canada's oil sands industry could prove crucial if the controversial pipeline is to win his approval.

Obama's comments to The New York Times are a boost to the green activists and rural landowners who have formed an unlikely alliance to defeat the $5.3 billion project linking the carbon-rich oil sands to Gulf Coast refineries eager for new heavy crude supplies. Both the pipeline's sponsor and its industry backers rushed to deflate Obama's statement that jobs created by KXL would represent "a blip relative to the need" for new U.S. employment.

"We have and can factually rebut each point the president has made," James Millar, a spokesman for pipeline sponsor TransCanada Corp., wrote in a Saturday memo to reporters. "I think the Americans we have put to work so far appreciate the fact they have been able to put food on the table for their families by helping to build Keystone."

Obama directly challenged the GOP for estimating KXL's employment-creation potential at 20,000 direct and more than 100,000 spinoff jobs -- both estimates taken from TransCanada, the second from a 2010 study that assume construction in the state of Kansas, where no new pipe would be laid.

According to "the most realistic estimates," Obama said in the interview conducted July 24, "this might create maybe 2,000 jobs during the construction of the pipeline -- which might take a year or two -- and then after that we're talking about somewhere between 50 and 100 jobs in a economy of 150 million working people."


The president "chuckles" after saying the words "50 and 100," according to the Times' transcript.

The State Department is now evaluating public comments on a draft environmental review of KXL in which it estimated that the 1,179-mile oil sands crude pipeline would create 3,900 direct jobs and 42,100 spinoff jobs during its construction period. While Obama's assessment falls below that level, it aligns more closely with the conclusions of Cornell University's Global Labor Institute in a 2012 study of pipeline jobs estimates.

"We have dealt with criticism of our job number totals for over two years and we stand by them," TransCanada's Millar wrote Saturday. "It is not logical to think a $7.6 billion dollar infrastructure project stretching across the entire breadth of the continental U.S. wouldn't employ thousands of workers both in the manufacturing sector and in constructing the pipeline."

Millar's figure for the total cost of KXL includes its southern Oklahoma-to-Texas leg, split from the northern portion after winning Obama's approval in 2012. Known as the Gulf Coast Project, that pipeline is on track for completion by year's end and has created 4,000 construction jobs, Millar said.

The Laborers International Union of North America and other groups that have endorsed the pipeline for its job-creation value have not wavered despite environmentalists' arguments that the dozens of permanent KXL jobs represent an insufficient economic reason to permit its 730,000 barrels per day of Canadian oil sands crude. Pro-KXL unions counter that temporary employment is a fact of life in the construction industry.

"The president cannot give lip service to the economy on a Wednesday then ignore an opportunity to create jobs on a Saturday," David Holt, president of the industry-backed Consumer Energy Alliance, said in a statement.

TransCanada's weekend rejoinder did not address the other Obama argument against KXL: that the pipeline "does not bring down gas prices here in the United States" and "might actually cause some gas prices in the Midwest to go up."

The president's remarks echo the anti-pipeline advocacy of California climate activist and Democratic donor Tom Steyer and tie into estimates of Midwestern refinery profit margins recently spotlighted by Senate Energy and Natural Resources Chairman Ron Wyden (D-Ore.) (EnergyWire, July 17). Since the Midwest currently obtains a discounted price for heavy Canadian fuel, KXL critics say, routing more of that oil sands crude to the Gulf Coast stands to drive up prices in the region.

Obama did not rule out approving KXL during the interview, noting "the potential benefit for us integrating further with a reliable ally to the north our energy supplies." Still, he reiterated a surprise KXL invocation during his June 25 climate change speech by vowing to judge the pipeline "based on whether or not this is going to significantly contribute to carbon in our atmosphere."

"And there is no doubt that Canada at the source in those tar sands could potentially be doing more to mitigate carbon release," Obama added. The oil sands industry generated 55 million tons of greenhouse gases in 2011, according to government reports -- less than half of the 225 million tons that U.S. EPA attributed to domestic oil and gas during that year, but the biggest future generator of CO2 in the Canadian economy.

Treasury Secretary Jack Lew joined Obama this weekend in declining to back down from criticism of the administration's years-long KXL review. During an interview yesterday on "Fox News Sunday," Lew blamed "political games" from the GOP for bringing the pipeline analysis "off the trail, past its completion." At the same time yesterday, former Obama adviser and longtime ally David Axelrod challenged the pipeline's job-creation value in an appearance on NBC's "Meet the Press."