If Approved, Who Will Reap Keystone XL Benefits?

Congress is moving quickly to vote on the controversial pipeline extension, but who exactly will reap the benefits of Keystone XL?

With a tight Senate race in Louisiana heading toward a December 6 runoff, both parties are trying to set their candidate up for victory. Both Democratic Sen. Mary Landrieu and her challenger Rep. Bill Cassidy are co-sponsors of their house’s respective versions of the bill approving Keystone XL. It passed the House on Friday and will go to the Senate for a vote on Tuesday.

JUST IN: House votes 252 to 161 to approve construction of #KeystoneXL pipeline. Senate takes it up as early as Tuesday

— Ed O'Keefe (@edatpost) November 14, 2014

On Friday in Myanmar, President Obama all but declared his intention to veto the bill should it pass in the Senate and reach his desk. His State Department has been studying the project for years – it has jurisdiction because the pipeline crosses the border with Canada – but made some of his most forceful comments yet on the proposal while speaking to reporters.

“Understand what this project is: it is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else,” Obama said, according to ABC News. “It doesn’t have an impact on U.S. gas prices.”

Instead, the president said, “if my Republican friends really want to focus on what’s good for the American people in terms of job creation and lower energy costs, we should be engaging in a conversation about what are we doing to produce even more homegrown energy?”

The congressional vote has been much hyped but faces a couple key challenges, highlighted by the Washington Post’s Chris Mooney:

But as a legal matter, it is unclear whether Congress actually has the power to ensure the pipeline gets built. There are two separate issues: Whether the executive branch (and more specifically, the State Department) does or does not retain control over giving a permit for the pipeline, since it would cross an international border with Canada; and whether states retain the power to decide on the siting of pipelines. In Nebraska, there's a lawsuit before the state Supreme Court over whether the state legislature had the power to put pipeline decisions in the hands of the governor, rather than the state Public Utilities Commission.

Mooney concludes that yes, the law may get around the executive power issue. His evidence is a report by the Congressional Research Service that concluded the legislative branch does indeed have the power to regulate foreign commerce, under which the Keystone XL extension would fall. But Obama also maintains the ability to veto the bill and reassert his own prerogative. So that could be a wash.

As far as a political matter, the first and most obvious Keystone XL benefits go to Democrats who want to position themselves away from the president. Namely, Mary Landrieu. But remember that her opponent could also – and will also – claim credit for passage since his name is on the House version of the bill. If Obama vetoes it, though, it may further boost Landrieu’s argument that she is independent of the president. Whether that will help her on December 6 remains to be seen.

https://twitter.com/johnboehner/status/533342611285610496

What about the economic benefits? Will the pipeline extension only reap rewards for Canada, as President Obama said Friday? Or will it be a boon for America in the form of lower gas prices and new jobs?

The State Department’s preliminary review of the Keystone XL extension estimated that about 42,000 jobs would result during its two years under construction. It would also pump about $3.4 billion into the U.S. economy, or about 0.02 percent of GDP. But just under 4,000 of those jobs would only be for temporary construction work. Once that work is complete, Keystone XL would support just about 35 permanent jobs.

At least that was according to this year’s State Department review. In 2012, the department said the number of permanent jobs could be even lower – about 20.

“I don’t see a big jobs impact,” Stephen Fuller of George Mason University told Bloomberg at the time. “It gets the oil into refineries that already exist. It’s like replacing a bridge on the highway.”

TransCanada, the company behind the project, also argues that taxes it will pay because of the project will “provide counties much-needed revenue to pay for infrastructure.” The company says the pipeline will also transport oil from North Dakota and Montana, helping to boost U.S. domestic production – not just providing a way to move Canadian oil.

But where will that oil go? “Everywhere else,” as President Obama said Friday? No, according to TransCanada, which said in response that “Keystone XL is not an export pipeline – period.”

But the Post reported Saturday that “a substantial portion of the oil – after being refine into gasoline and diesel – will be exported.” And, of the 830,000 barrels of crude oil that would flow to Texas, only about 100,000 would be from Montana and North Dakota.

A Valero spokesman told the Post that “zero percent [of the oil it receives from the pipeline] would be exported.”

“We intend to process that crude and turn it into products at our refineries on the gulf coast,” he added.

But as the Post notes, once the oil is refined into gasoline and diesel, some of it will indeed be exported. And Valero has told investors that it intends to boost its ability to export refined oil products as well.

Pretty amazing Democrats are willing to build a pipeline in exchange for 1 senate seat they may not even win. #notcomplaining #KeystoneXL

— Abby Huntsman (@HuntsmanAbby) November 14, 2014

So the question of who exactly will feel the Keystone XL benefits has a somewhat unsatisfying answer: it’s complicated. Yes, the pipeline extension would lead to several thousand temporary construction jobs. And yes, some of the oil would go to the United States and the pipeline would offer a path for at least some domestic crude. But no, it would not appear to lead to many long-term jobs (only about 20-35, according to projections). And no, it would not be strictly for American benefit – once refined, there will definitely be some that will be exported (even if we aren’t quite sure what that portion will end up being). And the vast majority of the oil transported will indeed be Canadian.

But in the short term, Mary Landrieu and Bill Cassidy are clearly betting that Keystone XL will have both immediate and lasting benefits for their political futures.