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State Department Reports Little Economic Benefit to Rejected Keystone XL Pipeline

WASHINGTON—While some Keystone XL Pipeline supporters insist that President Barack Obama’s rejection of the project on January 18 will be costly for the American economy, analysis from the State Department does not appear to back up the claims.

“[I]t would not be reasonable to suggest the pipeline would cause an increase in employment or other economic activity by increasing crude oil imported into the United States,” according to a rejection letter report published by the State Department, which includes the following details on the matter:

Regarding economic, energy security, and trade factors, the economic analysis in the final EIS [Environmental Impact Statement] indicates that, over the remainder of this decade, even if no new cross-border pipelines were constructed, there is likely to be little difference in the amount of crude oil refined at U.S. refineries, the amount of crude oil and refined products such as gasoline imported to (or exported from) the United States, the cost of crude oil or refined products in the United States, or the amount of crude oil imported from Canada. . . .

The analysis from the final EIS, noted above, indicates that denying the permit at this time is unlikely to have a substantial impact on U.S. employment, economic activity, trade, energy security, or foreign policy over the longer term.

House Leader John Boehner and other Republicans have indicated that up to 100,000 American jobs could fail to be created as a result of the rejection.

On the contrary, the State Department finds that, “approximately 5,000 to 6,000 direct construction jobs in the United States that would last for the two years,” are really what is at stake.

Publicly, State Department officials have been less likely to point to the economic information presented in the report letter, instead saying that the decision was based on a lack of time to review the merits of the project given a 60-day deadline by Congress in legislation passed in December.

“This is a process decision that we made based on the decision that we made on November 10 and the information that we felt we needed to really inform our decision to make sure we had everything we needed to do the best, in terms of looking at this pipeline and determining whether or not it was in the national interest,” said State Department Assistant Secretary Jones in announcing the decision on January 18.

“So the White House made that decision. We, today, recommended to the president that the permit be denied, and also that he determine that it was not in the national interest. The legislation did not give us enough time to really do responsible evaluation of the factors. And so we continue to believe that this has to be done the right way. So from my perspective, this has not been—this decision is based on what we did November 10, and then the legislation has not given us adequate time to carry that out.”

The November 10 decision had been that the State Department would need until 2013 to assess alternative routes for the pipeline that would not impact the Ogallala Aquifer in Nebraska.