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The Economic Impact of the Keystone XL Pipeline
USAgNet - 03/15/2012

Regional Economic Models, Inc. (REMI), the foremost provider of dynamic economic models for policy analysis, and Energy & Water Economics, announce a study evaluating the economic impact of the Keystone XL pipeline.

Scott Nystrom, associate economist at REMI, and Dr. William W. Wade, resource economist and president of Energy & Water Economics, used the REMI model to resolve the differences in findings of the Keystone XL studies conducted by TransCanada's economic consultant, The Perryman Group, and Cornell University's Global Labor Institute (GLI).

"The REMI model forecasts that the XL expansion of the Keystone pipeline would create about 16,000 jobs over a two-year period," said Nystrom. "After that two years, about 800 jobs would be sustainable moving forward." "The pipeline will increase competition between Canadian and Middle East crude producers for position in Gulf Coast and Midwest refineries, but will not affect refined product prices," according to Dr. Wade.

The study's findings suggest that previous evaluations forecasted the economic impacts either too high or too low. It corrects model inputs and forecasts the job creation from the pipeline's construction, operation, and maintenance.

"The benefits of the Keystone XL pipeline would be concentrated largely in the pipeline states themselves," said Wade. "These areas could see an increase in gross domestic product by as much as $3.1 billion as well as an increase in business sales by as much as $6 billion."

Environmental impacts are a legitimate concern of the proposed pipeline expansion, but the study deals only with the incremental economic impacts of construction and operations of the pipeline. Copies are available from the authors.

REMI, Regional Economic Models, Inc., is a leading provider of economic models and policy analysis at the civic, state, regional, national, and global level. Since 1980, REMI has enabled its users to answer the "What If?" questions involving economic development, demography, energy, the environment, transportation, taxation, forecasting, and regional planning. REMI models see use in all levels of government, academia, and in public utilities, all of which utilize their model to create realistic, year-by-year estimates of the total effects of public policy initiatives on the economy and population. REMI models are custom-built for regional analysis, based on geography and level of detail, and they incorporate numerous analytical methodologies.

Dr. William W. Wade is president of Energy & Water Economics, an economic consulting firm that specializes in policy, planning, and litigation related to energy, natural resources, water and the environment.

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