WIUM Tristates Public Radio

Dakota Access Pipeline: Economics

Mar 14, 2015

The proposed Dakota Access pipeline could bring an economic boom to communities along its 1,100+ mile path stretching from the Bakken Oil Fields in North Dakota to the small town of Pakota in southern Illinois.  One Iowa-based economist wants to make sure residents and local governments tame their expectations from the project.

Dakota Access spokeswoman Vicki Granado said the $4-billion project will require a large workforce to complete the work before the end of 2016.
 

"The range is between 8,000 and 12,000 construction jobs," she said.  "We think it is going to be on the higher end of that, but we are sticking to that range right now."

Granado said with as many as 12,000 people working on the pipeline, the economic benefits will be great.

"You will have materials that are being bought, employees who will be staying in hotels and eating in restaurants and all of those types of things," she said.

She added that Dakota Access expects sales taxes will bring in $35-million during the construction process, as well as $14-million in income taxes.

Granado said there will also be tens of millions of dollars spent to gain access to the land needed for the pipeline through Iowa and to pay the annual taxes associated with the project.

Dave Swenson, associate scientist in the Department of Economics at Iowa State University, said Iowa residents should keep these numbers in perspective.

Swenson, who has studied the impact of large scale economic development projects on local governments for years, said he has reviewed Dakota Access' projections and believes the numbers provided to the public have been overstated.

"We provide a lot of public subsidy based on the expectation of jobs and what I am trying to do is manage those expectations," he said.

Dakota Access wants to have the proposed pipeline completed by late 2016.
Credit www.flickr.com / shannonpatrick17

Dakota Access has said the project could create as many as 4,000 construction jobs in Iowa over a one-year period.  Swenson said his projections put the number of jobs created at about half that.

"Maybe one-third of those jobs, a little more than a third of those jobs, will be really good, skilled construction trades jobs," he said.  "The rest of them are in all other kinds of industry."

Swenson said fewer of the high-pay, high-skill jobs will mean less in wages, sales tax revenue and income tax revenue.

He said there could also be a lot of jobs that are short-term, which impacts the projections.

"A lot of this is part-time or seasonal or service sector jobs that will march across the state of Iowa."

Swenson said the economic impact on Iowa will also depend on how many of the construction jobs go to Iowa residents and how much of the needed materials are made in the state.