How The Keystone Pipeline Will Impact the Economy
TransCanada is proposing a multi-billion dollar project called The Keystone XL Pipeline (Phases 3 and 4), which is part of the existing Keystone Pipeline (Phases 1 and 2). This major pipeline will have significant and far reaching, short and long term effects on the US economy. In this article we will examine some of the main economic points regarding the pipeline.
The Scope of the Keystone Project
The original Keystone Pipeline project, which consisted of the now operational phases 1 and 2, cost approximately $5.2 billion to complete. The proposed Keystone XL expansion which include phases 3 and 4, are estimated to cost approximately $7 billion. This makes the Keystone Pipeline an extremely large, expensive undertaking with a massive potential for economic stimulation.
In addition to the high dollar cost associated with the Keystone Pipeline, TransCanada, the company has the potential to bring huge revenue to multiple states through the country. TransCanada has contracts with more than 50 different supplier across 18 states. Thus, the pipeline affects communities and its people, all throughout the country.
The most staggering figure of all, however, is $20 billion. This is the total overall economic impact that TransCanada has estimated that the Keystone Pipeline will have in the United States. This would include many different sources over a long period of time, which will seriously impact the direction of the US economy.
The Keystone Will Create Jobs
One of the most important ways in which the Keystone Pipeline will impact the economy is through job creation. This is both in terms of the construction and maintenance of the pipeline itself as well as the associated companies and businesses which will need to hire new employees in order to keep pace with the development the pipeline causes. Considering that unemployment is one of the fundamental measures of the economy this is an incredibly important factor.
Estimates on the number of jobs that will be created by the Keystone Pipeline vary dramatically from source to source and are hotly contested. Further adding to potential confusion is the fact that some estimates are related only to specific industries while others take all sectors into account. Additionally, some numbers are based on a specific timeline. However, here are a few very important statistics:
TransCanada estimates that the pipeline will create:
- 15,000 new construction and manufacturing jobs.
- 9,000 American jobs to build the Keystone XL Pipeline.
- 7,000 American jobs to manufacture the steel pipe needed to build the pipeline.
The US State Department has noted that including direct, indirect, and induced effects, the Keystone project could potentially support approximately 42,100 average annual jobs across the country over a 1-to-2 year period of construction.
The numbers jump even higher when considering total estimated jobs created by the year 2035. The Canadian Energy Research Institute places the figure at about 117,000 jobs. However, the American Petroleum Institute gives an even more optimistic estimate of up to 500,000 jobs.
The Keystone Pipeline will have a major impact on the economy by creating permanent and temporary American jobs.
The Keystone Will Raise Tax Revenue
One major way in which the Keystone Pipeline will contribute to the economy is through the revenue that is raised by taxing it. For example if the Keystone XL is approved, there is not sufficient housing present in the needed areas to support the full number of anticipated construction workers. In order to overcome this obstacle, the Keystone has proposed that it will build temporary housing and construction camps. The property tax alone on these encampments is estimated at $2 million – which is a combined full year of property tax revenue for the seven host counties in the construction pipeline area.
In addition, TransCanada has estimated that the pipeline will generate about $5.2 billion in total property taxes from Montana, North Dakota, South Dakota, Kansas, Oklahoma and Texas. This is major economic stimulus for these states. Income from other taxes and sources of revenue will bring the total even higher.
The Keystone Will Lower Crude Oil Costs
The Keystone would be a boom to the US economy in terms of the amount of money it will save the country on annual crude oil cost. Because the pipeline will help stabilize prices, it is estimated that the United States could save as much as $9.1 billion in crude oil costs, per year. The saved money could then be reinvested into the economy for even greater benefit and to spur growth.
However one chooses to interpret the numbers and look at the overall picture, it is virtually indisputable that the Keystone will have a very significant impact on the US economy. This would also be coming at a very pivotal time in our economic landscape as we struggle to overcome a recession.