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Obama, GOP To Face Off Over Keystone XL Pipeline


We're also tracking a big story in Washington. We're going to drill down now on the battle over the Keystone XL pipeline. President Obama's administration is still deciding whether to approve the final link of that pipeline in Nebraska. Leaders of the new Republican Congress have vowed to pass a bill requiring its approval as their first order of business -Senate Bill 1. Some Democrats will join them, though President Obama has promised a veto. And all of this raises a question - it's whether Keystone is such a big deal. NPR's Scott Horsley is the perfect man to talk us through this. He's an economics reporter-turned-White House correspondent. Hi, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Steve.

INSKEEP: What's the basic debate here?

HORSLEY: This is a debate about greenhouse gases that, unfortunately, is taking place in a political hothouse with wildly hyped claims on either side. Casual observers could be forgiven for thinking that either the fate of the U.S. job market or the fate of the planet is riding on this pipeline. That's a big load for even a big pipeline to carry.

INSKEEP: OK, so it's jobs versus the environment. That's at least how the debate has been cast - that the pipeline will create jobs, but proponents say it will destroy the environment. So let's go through these claims. How many jobs are we talking about?

HORSLEY: The State Department estimates building the pipeline would require about 4,000 construction workers. Now, that's a significant project. But just to put it in context, the U.S. added five times that many construction jobs in November alone. Now the Keystone pipeline would provide that work for one to two years. After that, employment would drop off pretty sharply. It'd only take about 50 people to operate the pipeline.

INSKEEP: Wait, wait, wait - 50 permanent jobs? That's what this debate is about?

HORSLEY: That's right, well, that's direct employment. If you count all the people whose jobs would indirectly be supported by the pipeline, the numbers get bigger. The State Department estimated it would pump $3.5 billion into the U.S. economy or, in other words, it would boost GDP by about two-one-hundredths of 1 percent.

INSKEEP: OK, so not that it would be nothing to the people who would get those jobs, but not a lot of jobs, not a lot of economic activity here. What about on the environmental side? How damaging would this pipeline be?

HORSLEY: Well, it's not so much the pipeline itself as the source of the crude oil it would carry. It's the Canadian tar sands; that's a relatively dirty form of oil, generates above-average carbon pollution, and that's why critics have been so adamant about stopping this pipeline. But when the State Department issued its final environmental report a year ago, it suggested the pipeline really wouldn't make that much difference to the climate because it said the tar sands would be developed with or without Keystone.

Now, there is an important caveat to that conclusion though. When the State Department wrote that, oil was trading for nearly $100 a barrel, and that's more than enough to justify using more costly railcars, trucks, even carrier pigeons to get the oil to market if the pipeline were not built. Today, of course, oil is selling for about $50 a barrel, and the State Department said at that price, producers are much more sensitive to transportation costs. So it could make the pipeline more of a make-or-break deal.

INSKEEP: Although we were hearing from an analyst elsewhere in the program that they're already pumping, they've already invested, and so they're going to be pumping for while no matter what the price it seems.

HORSLEY: In a way, you could say, pipeline critics have gotten a break from falling oil prices. But the flipside of that is cheap gasoline has revived consumer interest in carbon-spewing pickup trucks and SUVs. So what the carbon gods give with one hand, they take away with the other.

INSKEEP: OK, Scott, thanks for putting things in perspective.

HORSLEY: My pleasure, Steve.

INSKEEP: That's NPR's Scott Horsley. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.