Yesterday the House Committee on Small Business’s Subcommittee on Agriculture, Energy and Trade held a hearing on the Keystone XL and Small Business. This hearing is that most recent in a number of hearings held by the House to talk about the importance of the Keystone XL pipeline project.
There were four witnesses, one of which was Mr. Peter Bowe, an NAM member, the President and CEO of Ellicott Dredge Enterprises, LCC. Ellicott Dredge makes dredging equipment that is used in the processing and the reclamation of tailing ponds at the mining site. President Obama is visiting the Ellicott Dredge facility in Maryland today to discuss infrastructure.
The other witnesses included Mr. Brent Booker, Secretary Treasurer, Building and Construction Trades Department, Department, AFL-CIO, ; Mr. Mat Brainerd, President, Brainerd Chemical Company, Tulsa, OK; and Mr. Christopher Knittel from the Center of Energy and Environmental Policy Research, Massachusetts Institute of Technology.
Peter’s business is a small business with about 200 employees in four locations, Maryland, Wisconsin and Europe. For Peter and the Ellicott Dredge organization, the Keystone XL is critical because it will move oil more quickly and result in additional demand. As oil demand increases so does the demand for his products and will result in $10s of millions of dollars being spend within his supply chain. These are small and large companies located throughout the United States. The ripple effect of spending within his supply chain is substantial and impacts a number of smaller communities throughout the country.
Brent Booker’s testimony discussed the importance of the Keystone XL pipeline to the building and construction trades. Brent called the Keystone XL pipeline a lifeline for many construction workers and that the unemployment among these workers is over 13 percent. He expressed frustration with the administration for the long delay in the approval of the project. He noted that the State Department’s study determined there as “no discernible impact on greenhouse gasses through the construction of this pipeline.” In closing he noted that this project will create tens of thousands of good paying jobs both here in the U.S. and Canada; and that it would further boost the American manufacturing resurgence.
Matt Brainerd’s company has 83 employees in three locations and serves 3,000 customers nationwide. His company is a chemical distribution company that is part of the chemical supply chain providing products to over 750,000 businesses. Matt stated that his company would benefit a great deal from increased supply of crude and a decrease in price. Companies like his take bulk volumes of chemicals and then break them into smaller units and also blend the chemicals before they transport and resell it to their customers.
Right now there is oil stranded in Canada because of the lack of pipeline capacity and Keystone XL would provide that additional capacity and in doing so place downward pressure on prices for the products created by crude oil. Some of these products are used in hydraulic fracturing and would decrease the costs of extracting gas from shale formation. He urged the committee to do all that they could to get this project approved and underway.
Christopher Knittel is an Energy and Environmental Economist that believes using oil from the oil sands and transporting it through the Keystone XL pipeline would have little impact on the greenhouse gas emissions. The fact that this oil would replace heavy oil from California and Venezuela, he noted, the overall impact on the environment would be far less than many would have you believe. Many make this calculation base on replacing oil sand crude with more traditional crude but that is simply not the case. It is not replacing traditional crude but it is replacing heavy crude which means that the overall impact as we switch from one source to another is not significant.
Christopher also argued that the economics of the pipeline are pretty straight forward. Building the pipeline will increase the profits of the producers by lowering costs and in turn those lower cost will get passed down throughout the economy. Finally, he said “The pipeline’s effect on jobs is amplified by the fact that the economy is still recovering from the Great Recession. When an economy is at less than full employment, short-term stimulus measures, such as governmental stimulus or capital intensive projects like the Keystone XL pipeline, can have longstanding effects beyond the short term employment effects tied to the actual project.”
Several members including Chairman Scott Tipton (CO-03) and Ranking Member Rep. Patrick Murphy (FL-18) asked the panel to discuss their feelings about the drawn out process and if there was anything they could add to why this project should not be approved quickly. Most of the Subcommittee Members express frustration with the slowness of the process and the lack of urgency. H.R. 3, Northern Route Approval Act, will come to the House Floor early next week for a final vote. It is expected to pass easily with support from both sides.
Chip Yost is assistant vice president of energy and resources policy, National Association of Manufacturers.
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