Wednesday, September 28, 2011

Fabricating Energy Jobs

The Utica Shale hype is heating up. Before you start thinking about how great you would look in a new diamond belt, consider the controversy surrounding energy jobs. The latest lightening rod is the Keystone XL pipeline project:

TransCanada’s claims that an estimated 20,000 construction and manufacturing jobs would be created if the Obama administration approves the controversial Keystone XL pipeline are “significantly inflated,” according to a new analysis of the project released today.

The assessment, by the Cornell University Global Labor Institute, concludes that “the construction of Keystone XL will create far fewer jobs in the U.S. than its proponents have claimed and may actually destroy more jobs than it generates.”

Take both views of the matter with a grain of salt. The people who want the pipeline to be built are exaggerating job creation claims. Those against the pipeline contend there is little to no benefit. Anyone with an interest in the issue will have a hard time getting a straight story.

Besides following the award winning coverage by the Pittsburgh Post-Gazette's "Pipeline" team, citizens should following what is happening outside the United States in a far different political climate. From Accra, Ghana:

Citizens in countries throughout Africa have long been angered over the lack of benefits reaped from multinationals exploiting minerals from their seas and land. In recent years, African governments – authoritarian and democratic alike – have come under increasing pressure to develop policies to ensure the exploitation of oil and minerals provide long-term benefits to their citizens, through creating jobs and growth in industries.

At an oil conference in Accra, Ghana, held last week, African countries made it clear that oil industry players would be required to meet "local content laws," which includes hiring a certain percentage of workers locally, if they wanted to tap Africa’s oil reserves.

The dividend from resource extraction tends to be the smallest wherever it is mined. That's as true in Nigeria as it is in Pennsylvania or Ohio. The oil and gas industry is geared to move talent wherever the boom is. Experience, particularly in hydrofracking, is critical. The demand for more labor will be heard in the places where the talent is traditionally produced. The local spoils will be less-skilled (i.e. lesser pay) jobs such as truck driving. As the bust cycle takes hold, those workers will have to move.

History should teach the residents of Pennsylvania and Ohio that some sort of royalty for every citizen is the way to go, at least in the near-term. That money should be used for retraining or simply educating the workforce. That's the only lasting job creation shale gas and oil will generate.


Paul Wittibschlager said...

Royalties for every citizen is a nice gesture. We should increase regulation on this industry to prevent well documented disasters. We should increase taxes on all carbon based fuels to fund renewable energy development and conservation.

Then the royalty will be clean air, clean water, and a sustainable future with energy. Now that's a community I want to be a part of.

enjoy your blog

Steve said...

Rather than royalties for every citizen would using the royalties to shore up public pensions be a better idea? Rust best cities and counties (and even states) have legacy costs from when they had larger populations. This means pensions. Since the shale royalties won't last forever, why not solve a one time problem that will hit at the same time? It would be a real boost for Pittsburgh and anyplace else in the Rust Belt to be able to say "legacy (pension) costs are no long an issue".

Jim Russell said...


I agree that shoring up public pensions would be a better use of the funds. But the sense of what is fair will, as usual, trump policy efficacy. Imagine the uproar over money from wells in a rural county going to the City of Pittsburgh.