A Union-Industry Model for Solving Energy Problems

By Merrill Matthews, Ph.D. – Sometimes a political movement can find itself at cross-purposes. That’s pretty much what’s happened with President Obama’s desire to create jobs and his simultaneous disdain for expanding the development of traditional energy sources such as oil and gas.

On the one hand, the president wants to create high-paying, and especially unionized, jobs to spur the economy-and his chances for reelection. On the other hand, he has strongly resisted increased oil and gas drilling, which would … create thousands of high-paying union jobs and perhaps increase his chances for reelection.

Take, for example, the Keystone XL pipeline, a $7 billion project that would pump Canadian tar-sand oil-a heavier oil that is more difficult to transport and refine than the preferred “sweet light crude”-across the plains, through Texas and down to the Houston area where several refineries can handle heavy crude. Officials estimate that building the pipeline would create 20,000 jobs immediately, and another 100,000 indirectly.

And several unions representing more than 2 million workers agree. The Pipe Line Contractors Association, United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the U.S. and Canada, International Union of Operating Engineers, Labors’ International Union of North America, and the International Brotherhood of Teamsters have all signed a labor agreement with TransCanada, the company behind the Keystone XL pipeline.

These unions have workers who are ready and eager to jump into the project, and yet they have been sidelined for more than a year waiting on Obama administration approval-which finally appears to be forthcoming.

That’s not to say that every union supports the project; several oppose it over environmental concerns-but many or them don’t have jobs at stake. It’s a lot easier to take a stand against something when someone else will suffer the loss.

Significantly, at a time when there appears to be a growing national clash between unions and corporate leaders-witness the Occupy Wall Street demonstrations, which apparently are drawing union workers-the oil and gas industry and a number of unions seem to be working in a rare harmony.

For example, in June of 2009 the oil and gas industry’s American Petroleum Institute (API) signed an agreement with 15 labor unions to create the Oil and Natural Gas Industry Labor-Management Committee in a first-ever effort to work together to promote job creation and retention and economic growth. The agreement included several unions in the construction trades associated with the AFL-CIO, and the Teamsters and Operating Engineers, among others.

Actually, the industry-labor agreement sounds, at least initially, like the steps taken by German companies between 2002-05 that radically reformed labor relations in that economically strong country. German unions sat down with mostly mid-sized companies, they listened to each other’s needs and concerns, both made some compromises, and they created a blueprint for moving the country forward in a way that helped both sides. The result was an economy that was booming at 9 percent growth last year, while the U.S. economy was struggling at 1.6 percent.

The primary focus of the Labor-Management Committee currently is to get Congress and the Obama administration to move forward quickly on the Keystone XL pipeline. And it looks like they may win that battle pretty soon, with perhaps even more victories to come.

The Obama administration recently announced it would uphold nearly 500 oil leases to drill in the Arctic Ocean issued during the Bush administration. One company said it planned to begin drilling by the summer of 2012, and hiring would start even earlier. Now that’s what you call “shovel ready.”

While some commentators have dismissed the Arctic drilling approval as a sop to the oil companies, it would be shortsighted to overlook the role union lobbying may have played. President Obama has never shown the oil companies much love; the same cannot be said for unions. While moving forward with the Keystone XL is in the interest of the oil and gas companies, it clearly benefits thousands of union workers. Just maybe this industry-union agreement can serve as a model for worthy projects in other sectors of the economy.

Regardless of which group the president might be trying to placate, both the oil and gas industry and the related unions win-not to mention the victory for the American people who will have to import that much less energy from outside North America. And that is at least one good first step in creating jobs and energy independence.

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas.

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