We’ve already looked at the first two parts of Governor Romney’s Jobs Proposal: Reducing the corporate tax rate to 25% and Implementing Free Trade Agreements with Colombia, Panama and South Korea. First, we found reducing the corporate tax rate would not create jobs. Second, we found that the free trade agreements had, been implemented in 2 of the 3 cases and that, as a result, few jobs would be created; many could be lost.
Next on Governor Romeny’s agenda is The Domestic Energy Act. What is that? Governor Romney would “direct the Dept. of the Interior to initiate leases to oil companies in all areas currently approved for exploration.” Sounds good right. Get those rigs drilling, Put men to work? Isn’t that what Keystone was all about?
Problem is, oil companies already hold leases on millions (yes millions) of acres of land that could be producing energy, but they aren’t. In fact, nearly 60% of all the “Onshore” acres the oil and gas companies have leased, are not being drilled. And over 70% of all “offshore” leases are sitting idle.
Why? Oil companies lease blocks of land for a period of 5-10 years for between $75,000 to $2 million. If they find oil or gas, they get to keep the lease for the life of the well paying 12-18% in royalties to the federal government for the use of the land.
So why aren’t oil and gas companies drilling? It could be their geologists have told them it wouldn’t be profitable enough to drill. Or, as oil companies argue, it takes 6-9 years to do the seismic work, line up contractors and begin drilling.
Others argue that the oil companies are sitting on the leases while waiting for the price of oil to increase at a later date. Still others argue that the oil and as companies book the leases as an asset on their balance sheet, in order to drive up their stock price.
Whomever it right, all agree — leased lands are already sitting idle. So leasing more wouldn’t seem to create any jobs.
Sounded good tho, right?
So let’s look at the Keystone Pipeline — since that’s generated tons of controversy. It’s not about leasing land for drilling, it’s about transporting crude oil drilled by TransCanada Oil Company, from Canada to various points in the United States.
1. The first section of the TransCanada Keystone Pipeline from Hardisty, Alberta, Canada to Pakota, Ilinois was operational in June 2010.
2. The second section of the TransCanada Keystone Pipeline, from Steele City, Nebraska was routed through Kansas to a tank farm in Cushing, Oklahoma and became operational in February, 2011.
3. The third section of the TransCanada Keystone Pipeline was approved by President Obama in March 22, 2012. This section will transport crude oil from Cushing, Oklahoma to Nederland, Texas. Work began on the pipeline in June, 2012.
4. The Fourth and final phase of the pipeline (the controversial section), would begin in Alberta Canada. Enter the United States at Baker, Montana, travel through South Dakota and Nebraska where it would join existing pipelines at Steele City, Nebraska.
So what is the issue? The routing of the pipeline in Nebraska goes over the Ogallala Aquifer. What’s the Ogallala Aquifer? It’s one of the largest suppliers of fresh water in the world supplying fresh drinking water to 2 million American citizens and supports $20 billion worth of agriculture. Even a minor leak would cause major devastation to the agricultural business.
Second, the pipeline is routed to cross an active seismic area. The fact that TransCanada had applied to use thinner steel and pump at higher pressures than normal, worried many citizens.
The cause for both these worries is the fact that the pipeline will be carrying crude oil from oil sands — apparently a very dirty form of crude.
Those are the political issues surrounding this last section of the Canadian pipeline that would carry crude oil from Canada to Texas for sale on the world marketplace.
Two things are clear — (1) this Canadian oil is not American oil. It will not reduce gas prices. It will be sold on the world market. The pipeline is simply being used to transport the oil from Canada, across the United States, for sale in the world market. (2) The pipeline will generate 6,500 construction jobs. Not the hundreds of thousands the GOP has promised, the 25,000 the U.S. Chamber of Commerce has promised.
So, as in this third part of Governor Romney’s Jobs Proposal, we again find (as in the first two sections), no new jobs would be created.
Next we will look at Governor Romney’s 4th proposal to create jobs: the Retraining and Reform Act.