Mining Keystone XL economics

Mining Keystone XL economics

By Joe Duggan January 21, 2013 4:01 pm Comments

Pipelinomics (PIE-plin-om-eks) definition - An emerging subcategory of public discussion on a proposed Canadian oil pipeline marked by dueling studies and a generalized lack of agreement.

It’s a made up word for a real debate.

Exhibit A: a recent analysis by Creighton University economist Ernie Goss on the economic benefits of the proposed Keystone XL pipeline, which would carry oil mined from Canada’s tar sands to refineries on the Gulf Coast. Building and operating the pipeline over the course of 17 years will increase economic activity in Nebraska by an estimated $1.8 billion, Goss said.


The Consumer Energy Alliance — a national coalition whose members represent airlines, trucking, shipping and petroleum — hired Goss to do the analysis. Anticipating that the study would draw fire from opponents, the CEA’s Michael Whatley called Goss “the most widely respected economist” in Nebraska while calling those who would question his professional integrity “foolish.”

Moments after Goss uttered the $1.8 billion figure last week at a news conference in Lincoln, pipeline opponent Bold Nebraska accused the economist of spreading “tar sand fairy dust.”‘ The group also called the study “phony,  inflated and ridiculously false.”  Guess they’re not impressed by Goss’ vitae.

Welcome to pipelinomics.

Bold Nebraska has a beef with the data used by Goss, which he got from TransCanada, the firm that wants to build the pipeline. The opponents say other studies have raised doubts about some of the company’s economic claims.

CEA said  the company gave Goss the same data that was used in a similar economic analysis released Jan. 4 by the Nebraska Department of Environmental Quality.

That analysis also predicted the pipeline would produce impressive economic benefits for the state, although not as impressive as the Goss study. For example, Goss predicted 5,500 jobs during construction while the state estimated 4,560. Goss: $580 million in pipeline construction spending; state: $418 million.

So two different studies crunch the same data but reach different results. What gives?

Goss said they used the same basic data, but different variables and assumptions. For example, the state calculated labor income just for Nebraskans working on the pipeline in Nebraska. Goss assumed Nebraskans will make up 6 percent of the pipeline’s work force and they will travel to Montana and South Dakota to help build the project (he didn’t have the same workers traveling to Kansas and Oklahoma, however). As long as the workers maintain their homes in Nebraska, the state derives some benefit from their out-of-state work.

The state assumed TransCanada will build labor camps in Nebraska, which means workers will spend less on rent or motel rooms. Goss didn’t figure in labor camps, which means his analysis says workers will infuse more money in dozen counties along the 195-mile route through Nebraska.

So what did Goss think of being called a fairy duster, or a sandman or whatever? He sounded surprised. Rarely do his freelance jobs put him in the middle of a national oil-versus-environment donnybrook. “I’m just an economist,” he said.

While the data did come from TransCanada, Goss insisted there was no outside influence to produce a certain result.

Another citicism by opponents: the Goss study didn’t estimate the economic cost of a large-scale oil spill in Nebraska. 

Not in the study’s scope, he replied.