The bad news about the diluted bitumen (or dilbit) that would come from the Canadian Tar Sands to fill the
pipeline is that it is not crude oil. It is more toxic than crude oil, far heavier, and more expensive to clean up.
We have good data on this because of a major leak in 2010 into the Kalamazoo River from a pipeline carrying
dilbit. The first problem came from the benzene, a light petrochemical that is added to the dilbit, without which
the dilbit is too thick to actually move along a pipeline. After the leak of over a million gallons, which ran for
17 hours before pumping finally stopped, the benzene evaporated into a brown poisonous gas, necessitating the
immediate evacuation of all neighboring houses. The second problem was that after the loss of its benzene the
diluted bitumen became just plain bitumen – close to the tarry stuff that goes on roads – and sank to the river
bottom, where it bounced slowly along, creating lasting damage for scores of miles. The cost so far, for work
that still continues two and a half years later, has reached an estimated $1,000 a gallon, over 20 times the already
heavy cost of dealing with regular oil in a river leak. These details can be checked in a detailed report that won
last year’s Pulitzer Prize for American Journalism from InsideClimate News.2
So much for the risks. Now what about the rewards? The main potential reward, especially in an economy
that is having the slowest recovery ever recorded, is in job creation. Job creation turns out to be an incredibly
complicated economic issue, depending on the unique circumstances of each project and how it interacts with
competing projects. If there were armies of unemployed welders and other construction workers sitting around,
one could easily imagine that almost every job needed would draw from the unemployment pool and would be
true job creation. But what if there were intense competition for every welder, every oil worker, and most heavy
construction workers? Then we would not be in the job creation business but in the job competition business,
deciding which potential employer will bid up wages and which will go without workers. A recent Bloomberg
article opened with the question, "How high is the demand for welders to work in the shale boom on the U.S.
Gulf Coast?" It then answered, "So high that you can take every citizen in the region of Lake Charles between
the ages of 5 and 85 and teach them all how to weld and you’re not going to have enough welders," citing a
source from Huntsman Corp. "So high that San Jacinto College in Pasadena, Texas, offers a four-hour welding
class in the middle of the night" because the equipment is finally available then.
The article points out that in the Gulf area shortages of welders, fabricators, pipe fitters, and oil and gas workers
are pushing up wages so fast that expansion projects are running well over budget already and some, like a $20
billion gas-to-liquids plant slated by Royal Dutch Shell Plc for Louisiana, have already been canceled. Labor
conditions in the Gulf Coast will be especially tight in 2016 and 2017 and projects along the Houston Ship
Channel alone are expected to employ more than 250,000 workers, according to the Port of Houston Authority.
Attempts to calculate investment opportunities opened up by cheap local supplies of natural gas or to estimate
the time it will take to absorb the current surplus will have to take into account this chronic shortage of workers
with the required skills. In this area – oil and chemicals in the Gulf – as in many others, the shortfalls in the
quantity and quality of U.S. training programs are playing a painful role.
Considering the above, it is clear that the XL Pipeline will not "create" jobs. Every one of its potential workers,
almost all of whom already travel widely for jobs, could get a job several times over if given an hour on the
telephone. What is happening here is an allocation of limited manpower resources: will we use them to extend
chemical plants to capitalize on the incredible U.S. advantage in cheap natural gas; will we extend our fracking
of U.S. sweet crude; or will we transport Canadian diluted bitumen, the most dangerous and toxic of all fuels, in
order to increase the price for a handful of Canadian Tar Sand producers who currently suffer from constrained
delivery capabilities and hence lower local prices? Even ignoring the severe environmental risks, it should be
an easy decision on economic grounds alone.
2 Elizabeth McGowan, Lisa Song, and David Hasemyer, "The Dilbit Disaster: Inside the Biggest Oil Spill You’ve Never Heard Of," InsideClimate News, June