The Keystone oil pipeline "would employ 20,000 people in the United States."

Johnny Isakson on Thursday, February 23rd, 2012 in a speech

Isakson: Keystone pipeline to employ 20,000

Backers of a massive oil pipeline from Canada to the Gulf of Mexico are telling voters that it will flood the U.S. with jobs.

President Barack Obama denied a permit to build the 1,700-mile Keystone XL pipeline in January amid bitter debate over whether it would damage environmentally sensitive lands. The pipeline may still win approval, however, and some lawmakers are trying to push it forward.

One of them is U.S. Sen. Johnny Isakson, R-Ga. In a Feb. 23 speech at Dalton State College, Isakson said the pipeline could employ enough people to populate Decatur.

"From Day One, this project [the Keystone pipeline] would employ 20,000 people in the United States," Isakson said.  

This jobs figure is a well-worn talking point for pipeline supporters. Georgia U.S. Reps. Paul Broun and Phil Gingrey used it. U.S. House Speaker John Boehner and House Republican Leader Eric Cantor said it as well.

We decided to take a closer look.

We reviewed news accounts, read analyses of the company’s job creation figures, interviewed a spokesman for TransCanada, the firm hoping to build the pipeline, and consulted critics.

We found that while the TransCanada estimate does say that 20,000 "Americans" will be directly employed by the project, that’s not what the company’s chief executive has said.

Furthermore, TransCanada’s numbers clash with lower estimates from critics and the U.S. Department of State.

TransCanada has said in a press release that those 20,000 jobs include 13,000 for constructing the pipeline and 7,000 to manufacture steel pipes and other equipment. It predicts it will take two years to complete.

But TransCanada’s estimate does not mean they expect 20,000 people to work on the project, a spokesman told us.

The spokesman provided little clarification. Fortunately, a Washington Post interview with TransCanada’s chief executive and an email interview with the economist who helped produce the company’s job creation estimates shed some light on the figure.

Each "job" represents one "job year" or one job lasting for one year, they said.  

This means that if a single person works on the project for both years, his or her stint is counted as two "jobs."

This could place the number of actual people employed by the pipeline closer to 10,000, or some 6,500 workers in construction and 3,500 in manufacturing. Not 20,000.

These construction jobs are not permanent, and for the most part, they aren’t local. The positions will disappear when the pipeline is complete. The U.S. Department of State, which is in charge of evaluating the project, estimates that only 10 to 15 percent of these jobs can be filled with workers from communities in the pipeline’s path.

News accounts and independent analyses have explored other shortcomings of TransCanada’s figures. A study released September 2011 by Cornell University’s Global Labor Institute determined that the 20,000 jobs figure is "not substantiated."  

About 50 percent of the pipe will come from an Arkansas plant owned by Welspun, a company based in India, according to a press release issued by TransCanada. The rest will come from Canada, Italy and India.

In 2009, company officials said that for an earlier phase of the pipeline, it imported bare pipe manufactured overseas. It’s not clear how much finish work the pipe will need once it arrives in the U.S.

We asked TransCanada whether its manufacturing jobs estimates might include foreign workers, but a spokesman did not provide a response.

Other analyses have called into question TransCanada’s jobs figure. A December 2011 report by Bloomberg said the company's estimate that the project would need six or seven construction workers for every mile of the pipeline is higher than the four to five worker average for earlier phases.

An August 2011 estimate published by the State Department said that the project will employ "approximately 5,000 to 6,000 workers" in construction jobs.

An independent analysis of TransCanada’s jobs estimates also produced lower numbers.

Using Cornell’s research, William Wade, president of a consulting economics firm, found that the pipeline would create an average of about 16,100 jobs for each of the two years of construction, or 32,200 "job years."

Wade’s figure includes more than the jobs for those who build the pipeline. People such as factory workers and checkout clerks also get jobs when project funds are spent on construction materials and wages.

If Keystone were to create 20,000 job years worth of work in construction alone, then those jobs combined with spinoffs should be much higher than 32,200 job years, Wade said.

"The 20,000 jobs number seems like a mistake. It seems like an overestimate," Wade said.

Our ruling:

Isakson said that Keystone "would employ 20,000 people in the United States." While any construction project creates jobs, the number Isakson uses seems misleadingly high.

Those 20,000 don’t represent actual people, but one job lasting for one year of a two-year project. The number of construction and manufacturing workers may be closer to 10,000, if you accept TransCanada’s estimate.

And there’s strong evidence from credible sources that it may be lower. Finally, it’s an open question how many of the jobs would be in America.

We give Isakson a False.