How the Keystone XL Pipeline Will Help the U.S. Economy

Oil extracted around Fort McMurray in Alberta would flow south through the Keystone XL pipeline Photograph by Michael S. Williamson/The Washington Post via Getty Images

The State Department announced late Friday that it has completed its assessment of the controversial Keystone XL Pipeline from Canada, clearing the way for TransCanada to move forward with the project. For environmentalists, the news was a double blow because the new Secretary of State, John Kerry, is a noted climate hawk. Technically, the “draft analysis” made no recommendation about the pipeline. But because the assessment does not identify any major environmental risks, the main hurdle to building the pipeline has been removed. President Obama will ultimately decide.

Republicans will cheer the news. Obama’s decision to stop earlier plans for the pipeline was a big issue in the recent election, with GOP candidates lining up to whack him and urge that the pipeline move forward, both for the sake of economic growth and to further wean the U.S. from having to import oil from overseas.

So what kind of an economic impact will the pipeline have?

In November 2011, Bloomberg Government produced a comprehensive four-part study on the Keystone Pipeline (subscription only). Here are its top-line findings on the benefits to the U.S. economy:

Staffing Plans: TransCanada says it intends to hire 11,500 pipeline and pump station construction workers during the two-year construction project. The State Department estimates half that figure, approximately 5,000 to 6,000 workers. The difference may be that TransCanada is talking about “job-years,” adding together the 5,000 to 6,000 workers it plans to employ, on average, in each of the two years.

Staffing Strategy: TransCanada’s plans call for more construction workers, on average, on each XL pipeline mile, compared with Keystone’s completed pipeline phases. This suggests that TransCanada either intends to hire more workers for shorter periods of time, or the company’s pipeline jobs estimate is overstated.

Construction Duration: Pipeline construction would likely take place from May to November. Employment for construction workers would be seasonal and temporary, lasting six to nine months each year.

Construction Pay: XL construction jobs would likely pay more than the prevailing construction wage in the counties through which the pipeline would run. That may be partly attributable to two factors: Oil and gas pipeline construction jobs command higher pay than construction jobs as a whole; and TransCanada has agreed to put trained contractors and labor union members to work.

Workforce Mobility: Many workers would migrate to the Keystone XL region, possibly from around the country, lured by the construction jobs’ high pay.

Unemployment Rate: The XL project is unlikely to change the 15.7 percent seasonally adjusted unemployment rate for U.S. construction workers, but would provide some temporary employment relief.

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