Michels wrong on Keystone cancellation job claims

After about a decade of gas prices declining overall, they have skyrocketed this year.

Following Russia’s invasion of Ukraine on Feb. 24, gas prices rose sharply, peaking at $4.33 a gallon on March 11 before a slight decline. They then started rising again from late April through mid-June, when they reached a record $5.01 per gallon on June 13 before declining again.

Tim Michels, a Republican running for governor in Wisconsin, had a novel approach to the blame game. He attributes the prices at the pump to President Joe Biden’s decision some 18 months ago to cancel the Keystone XL pipeline.

In a video Michels tweeted on June 23, he said the decision “killed hundreds of jobs, sent gas prices way up, making everything more expensive.”

In the tweet, Michels wrote that his company “was building the Keystone Pipeline when Biden canceled it” – a claim we rated Mostly True.

But what about the claim related to job losses and gas prices?

Hundreds of jobs were lost, but most of them were temporary

Michels Corporation, the construction company Michels co-owns, was awarded a contract to construct eight pump stations in the United States for the Keystone XL pipeline. It was also awarded a contract to construct about half of the Canadian portion of the pipeline in Alberta.

So, he’s got a direct stake in the issue.

Let’s start with the portion of the claim about hundreds of jobs lost.

According to a post on Michels Corp.’s website, the company expected to employ more than 350 people for the pump stations contract. Another post on Michels Canada’s website said the company expected to hire 1,000 workers each year over the two-year construction period for the segment of the pipeline’s Canadian portion.

Thus, Michels is on the money about the number of jobs involved.

But it’s important to note the jobs were temporary. A 2014 State Department report, which provides the most comprehensive estimate of jobs tied to the Keystone XL pipeline project, found that it would support 3,900 direct construction jobs in the United States over one year of construction, or 1,950 per year if construction took two years. Once construction was complete and the pipeline was operational, about 50 total employees were required in the United States: 35 permanent employees and 15 temporary contractors.

Yes, a job is a job, but the fact that most of the jobs created by the Keystone XL pipeline project were shortterm is an important detail that Michels left out.

Gas prices “completely unrelated” to Biden’s decision

Now let’s look at the other, more problematic, half of the claim – that the end of the pipeline sent gas prices way up.

In response to a request for backup, Chris Walker, an adviser to the Michels campaign, said “obviously with gas prices nearly doubling in price since President Biden took office, the results of abandoning American energy production speak for themselves.”

But gas prices did not begin to spike until late February, over a year after the pipeline was canceled. What’s more, the pipeline was not expected to be operational until sometime in 2023 – many months from now.

So, there are two major problems right there.

Here’s one more: As envisioned, the pipeline would have had a negligible impact on the world’s oil supply once operational. And it’s important to remember that oil prices, and the gas prices that follow, are part of a global market.

“There’s just no connection there,” said Gregory Nemet, a professor of public affairs and energy policy researcher at the University of Wisconsin-Madison, adding that rising gas prices are “completely unrelated” to Biden’s decision to cancel the Keystone XL pipeline.

The main problem with Michels’ claim, Nemet said, is that the oil and gas markets are global, since oil is shipped around the world by pipelines, ships and trains.

As such, “there’s really one global price for oil,” he said. There’s some variation in different places, but that variation doesn’t last long.

This is an important point, he said, because around 95 million barrels of oil get used per day. When the Keystone XL pipeline would have been completed, it would have moved a small fraction of that, having an impact of less than 1%.

So what’s causing the rising gas prices?

According to Nemet, two main things: post-COVID-19 pandemic recovery and disruptions from Russia’s war in Ukraine.

Transportation demand fell during the pandemic, and the supply of oil followed. The demand has now bounced back as people return to their pre-pandemic driving and flying habits, but the supply has been slower to rebound.

Following Russia’s invasion of Ukraine in February, many countries stopped buying oil from Russia, one of the world’s largest oil producers.

“Again, because it’s a global market, disruptions far away affect the U.S. directly,” Nemet said.

Our ruling

Michels claimed that by canceling the Keystone XL pipeline, “Biden killed hundreds of jobs (and) sent gas prices way up.”

He has a point on the loss of jobs, but left out the fact that all but 35 would be temporary. He’s way off the mark, though, on the impact of the decision on today’s gas prices. Even if it had not been canceled, the pipeline would not be finished today. And if it were, its presence would have a negligible impact on the global oil market.

Our definition for Mostly False is “the statement contains an element of truth but ignores critical facts that would give a different impression.”

That’s what we rate this claim.