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Rural Texas Counties See Boost from Gulf Coast Pipeline construction

Construction from the Gulf Coast Pipeline brought $3.6 billion in new economic activity and $1.7 billion in wages for area workers, a new report prepared for Consumer Energy Alliance by the Maguire Energy Institute at Southern Methodist University finds.

Small businesses along the construction route, which passes through 16 Texas counties, reported upticks in business and revenue as a result of construction related activities.

“Local restaurants, hotels, and businesses experienced a significant boost,” the report says. “Business owners in Texas and Oklahoma reported large increases in volume due to the construction of the pipeline.” The report notes TransCanada spent approximately $6 million a month directly with local businesses. Wood County located in East Texas received the biggest infusion with $290 million in new economic activity.

The report finds the $3.6 billion in economic activity “enhanced labor income by almost $1.7 billion…supporting 27,000 person-years of employment.”   Workers in Polk County received an additional $138 million in wages with Liberty, Jefferson and Wood counties also seeing wages in enhanced by more than $130 million over the 16 months of pipeline construction.

Overall, TransCanada spent $2.3 billion and hired 4,844 construction workers to build the 485 mile long pipeline connecting Cushing, OK with Gulf Coast refineries. Construction took sixteen months beginning in August of 2012.  The Gulf Coast Pipeline started delivering crude oil in January 2014.

The proposed Keystone XL Pipeline would extend the Gulf Coast line connecting a hub in Steele City, NE with the Canadian oil sands located in Alberta.  TransCanada, the operator of the pipeline, estimates the final leg will require more than $5 billion in investment and 3,000 construction workers.

The study: Gulf Coast Pipeline System: A Catalyst for American Jobs and Energy Security, was prepared by Bernard L. Weinstein, Ph.D; Terry L. Clower, Ph.D, and Nicholas J. Saliba, B.B.A., B.S.,B.A. through the Maguire Energy Institute at SMU. The study uses a frequently used input-output model developed by the Minnesota IMPLAN Group.

Input-output models track how spending flows through a regional, state, or national economy. The estimates include direct, indirect, and induced impacts. Direct impacts are the result of TransCanada procuring goods and services in the local community. For example, the company will purchase an array of goods and services ranging from equipment and tools to office supplies from local vendors. These vendors, in turn, purchase goods and services to support their local operations. For example, the firm providing pipe hires employees, utilizes inventory-counting services, and engages other professional service providers such as accountants—activity that is captured as indirect impacts. Induced impacts track the economic and fiscal effects of TransCanada employees, contractors and vendors spending a portion of their earnings in the local economy for goods and services.  

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