The new Great Hope for job creation in Washington is the Keystone Pipeline, a plan to create a pipeline that would transport oil from Alberta, Canada as far as New Orleans. According to the Republican leadership and other proponents of the pipeline, it is expected to create 20,000 jobs in construction and supplier industries.
There have questions raised about this number by the State Department, which must approve the pipeline, and other analysts. It seems that this 20,000 number refers to "job years," not jobs. This means that if a construction worker is employed for 2 years working on the pipeline, she would count as holding two jobs in the 20,000 jobs number. The number of jobs created at a point in time would likely be closer to half of this figure, perhaps less than 10,000.
It's also likely that many of these jobs will go to Canadians. This is good for them, but beside the point if the goal is to create jobs for people in the United States.
But even 10,000 jobs would be better than nothing, the question is how much better? Without some context the public is not well-positioned to assess the economic argument for the pipeline.
One basis of comparison is the economy's normal rate of job creation. Back in the late 1990s the economy created 3 million jobs a year for 4 years. At this pace, the jobs created by Keystone Pipeline would be equal to about 30 hours of job creation.
Of course the economy created jobs at an even more rapid pace in the recoveries following the 1974-75 and 1981-82 recessions. If we were to see the sort of normal recovery that is expected after a steep downturn that Keystone Pipeline jobs would be equal to around 20 hours' worth of job creation.
But we can't just snap our fingers and get the economy back into a job creation mode. The question is how the Keystone measures up to other potential job creation policies.
One that should be on the agenda is lowering the value of the dollar. If the dollar falls in value it will make our exports cheaper to people in other countries, causing them to buy more U.S. exports. Similarly, imports will be more expensive for people living in the United States, leading people to buy domestically produced goods instead of imports.
Suppose that the dollar fell by an average of 10 percent (adjusting for differences in inflation rates) against the currencies of our trading partners. Economists often assume that the change in the quantity of imports and exports will be roughly twice as large as the change in relative prices.
This means (using some simplifications) that if the dollar fell by 10 percent, then our exports would rise by 20 percent and our imports would fall by 20 percent. Since most of the items traded are manufactured, this would translate into a huge increase in the output of our manufacturing sector.
Working off the 2010 trade data, this decline in the value of the dollar would imply an increase in manufacturing output of more than $500 billion a year. This is equal to almost 44 percent of current manufacturing output. If employment increased proportionately, that would translate into more than 5 million additional manufacturing jobs.
Comparing this to the Keystone Pipeline, we could say that a 10 percent reduction in the value of the dollar would have roughly the same impact on employment as 500 Keystone Pipelines. Since the effect of the dollar on exports is roughly proportionate, even a 1 percent drop in the value of the dollar would create as many jobs as 50 Keystone Pipelines. A drop in the value of the dollar of just one-tenth of one percent would create as many jobs as 5 Keystone Pipelines.
Of course these calculations are oversimplifying issues considerably. First, trade flows will not adjust immediately to changes in prices. It will likely be many months after a change in currency prices before we see any effect and close to two years before most of the effect is felt.
Furthermore, these numbers assume that no steps are taken to offset the decline in the value of the dollar. For example, importers may squeeze their profit margins rather than lose market share. On the export side, our trading partners may impose tariffs or other barriers to keep out U.S. made goods, especially in countries that are still reeling from the recession themselves.
But the general story is right. If we want to create jobs and have put the stimulus genie off the table for superstitious reasons, a more competitive dollar provides an excellent alternative to the Keystone Pipeline. It can create many more jobs and it won't threaten the environment.
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50 to 90 miles or more each day FREE. Energy From the Sun. Many are doing so all over the Earth.
Electric Cars and Hybrids Cars that run on Electric and some other fuel will soon out
sell all others. With the Help of Solar Energy and People around the Planet getting more
knowledge every day of it on the news and seeing it on more roofs everywhere. Those that
have the intelligence to see the good in Solar Energy are growing every day.
Solar Energy this year will out pass most all other forms of energy.
Under Solar Energy there is 19,000,000 websites and under
Images 1,520,000 for Solar Power plants.
For Coal power plants 1,290,000 under images.
For Hydro Power Plants 3,690,000 websites and 1,5000,000 under images.
Iran is a Little slow do to its export of crude oil, oil is number one in that country
right behind that is their gas guzzler cars.
Now Israeli is making a Electric Hybrid that you will be able to drive anywhere in Europe
and in one tenth the time it would take to put gas in your car you can drive up and away
with a recharged Battery Pack. Like a cordless drill or Cordless Tool it would take out the
old and put in a recharged one back in in less then a minute in seconds just like the
Cordless Tool. You would pay for only the electric used the battery packs are owned by
the car manufacturer.
No more oil change stations or gas it will be a Battery exchange
station. For those that are driving cross country the rest will be able to recharge at
home or at work.
put and end for the need of OIL for most world wide very soon. The day will come when many
will use the Sun’s Energy from our roof tops through solar panels to split the tap water
into Hydrogen and store it in tanks by our home to refill our cars to run on. This
system of Solar Hydrogen will run our cars heat our homes and we will cook our food.
The ability to use the Sunlight Solar Energy to split water and make Hydrogen and store it.
Hydrogen Hybrid Vehicles like the one Dr. Addison Bain built for NASA Years ago.
And his First in the World Home Solar Hydrongen Refueling Station will more then help put an end,
for the need and high demand of Dirty Oil.
Solar, Wind, Hydroelectric and Geothermal Energy. Now are the leading froms of Energy in the World
wanted by most all. Clean safe Energy and Clean Cities.
The Lord’s Little Helper
Paul Felix Schott
PS
Oil from Canada is going to be far better then giving our money to the Middle East.
No one wants to see more fighting or more wars in the Middle East. Have not our
United States of America lost enough service men and women from all branches of the military there!
Support us The United States United We Stand in GOD We Trust.
A discussion of increasing production and imports without consideration of the cost (all the costs) of energy is meaningless.
I don't support the pipeline and the pipeline would not reduce our cost of energy, but neither will a "competitive dollar" in the long run. Ultimately we are looking at slower 'growth' due to high energy costs.
for the amount of money used to build this pipeline, we could repair 100's of school, which would create jobs for construction workers, increasing their demand and providing our kids with a better place to learn.
Last I heard, American taxpayers pay to fix US schools, and we are not giving Keystone any money to build a pipeline.
Please come up with a better example.
but this administration has had such an idiotic energy policy I am not surprised Obama is against it as he tries to satisfy the environmental left nuts
We are net importer of oil.
We are a net exporter of refined products from oil.
Utlimately the cost of importation will affect the ROI of refining oil, even with such a 'large refiining capacity' that we have.
The pipeline won't change this equation whether it is built or not built, so I think it is being used to obfuscate the real issues here. High energy costs into the foreseeable future.
in fact if we had a brain we would be drilling everywhere to increase world oil supplies and keep prices from rising as fast as they are sure to as the recession ends...
Neither party gives a damn about the people. It's about fulfilling corporate desires only, and if the people get hurt...tough luck. It's governmental genocide of the population.
I agree %100 with everything else you suggest...but I doubt if Congress would do anything that is good for the American people....while they remain on the corporate payroll.
the right moves were made by Reagan. lower taxes to spur demand and close tax loopholes to increase revenue. don't look to Dems for this - and even Republicans seem to not want to close the loopholes
Wasn't domestic drilling supposed to help the U.S.? If so, the Keystone pipeline goes against that.
Please wise up, republican voters.
“http://www.reuters.com/article/2012/01/03/athabasca-idUSL3E8C36LL20120103
Athabasca to sell 40 percent of its Oil Sands project to PETROCHINA!. Any doubt about what the pipeline is for now !!”
lol...I wouldn't hold your breath
the stupidity of falling for Democrat lies for decades is staggering.
Do you know the source of the worst spills? TANKERS
The SAE has announced that petroleum burning vehicles are on their drawing boards for the next ten years . Many of those vehicles will be on our roads 30 years from now burning petroleum and polluting . Which means we will be having oil spills large enough to wreck any ecology for decades in to our future .
There are no laws mandating that we buy these vehicles but our egos , as usual , will get the best of us .
And ya you can choose to not by gas cars - good luck with your choices....