Report: Effort to ban tar sands could cost South Portland 5,600 jobs, $252 million in earnings

Posted Sept. 24, 2013, at 10:03 a.m.
Charles Lawton, chief economist at Portland-based Planning Decisions, presents his report on the potential effect of a proposed Waterfront Protection Ordinance in South Portland on Monday morning. Lawton, speaking at Sprague Energy in South Portland, estimated 5,600 jobs with earnings of $252 million could be lost over 10 years if the ordinance passes.
Charles Lawton, chief economist at Portland-based Planning Decisions, presents his report on the potential effect of a proposed Waterfront Protection Ordinance in South Portland on Monday morning. Lawton, speaking at Sprague Energy in South Portland, estimated 5,600 jobs with earnings of $252 million could be lost over 10 years if the ordinance passes.

SOUTH PORTLAND, Maine — A report suggests the city would lose 5,600 jobs and $252 million in accumulated earnings over the next decade if its petroleum industries shut down after passage of a proposed Waterfront Protection Ordinance.

The report was written by economist Charles Lawton, with assistance from professor Charles Colgan of the University of Southern Maine, and commissioned by the Maine Energy Marketers Association. It was presented Monday morning in a news conference at the Sprague Energy facility near the Fore River.

The proposed ordinance is a citizen initiative on the Nov. 5 ballot. It would regulate loading of petroleum products into tankers, and expansion of petroleum storage tanks and distribution facilities in Ferry Village and shoreland commercial areas.

The report is now the centerpiece of opponents’ efforts to block passage of the ordinance, which was presented by a group now known as Protect South Portland. A June petition supporting the initiative attracted 3,800 signatures.

Proponents have said the amendments specifically target importing Canadian “tar sands” oil through a pipelines from Montreal owned by the Portland Pipeline Co.

Natalie West, the attorney who wrote the final text of the amendments, has said the ordinance clearly allows all existing uses of the waterfront and will not lead to an industry shutdown in the city.

Lawton’s report came five days after Protect South Portland released a letter signed by owners of 216 businesses opposed to importing tar sands oil.

There are no public plans to reverse the flow in one of the pipelines to import the oil, but Portland Pipeline President Larry Wilson has said the company would welcome the opportunity and work with city officials on any proposal.

Jamie Py, MEMA executive director, said the ordinance would prevent expansion of petroleum-based industries on the waterfront. Lawton’s 11-page report suggests dire consequences if the ordinance passes.

“We are basing our opinions on fact, not emotion,” he said.

Lawton said he found four areas of direct effect. The first harms city finances, since Assessment Department records show seven petroleum companies pay $1.4 million in city taxes on 380 acres currently valued at almost $85 million. The companies also pay $8 million in state and local fees and taxes.

Lawton said the companies employ about 85 people earning a total of almost $9 million, while spending almost $29 million in nonlabor operating costs and on capital improvements. Indirectly, Lawton estimated companies spend about $26.6 million annually, supporting about 250 jobs and $12 million in income.

A third effect is on the Portland waterfront, because 84 percent of cargo ships arriving and leaving port in 2011 were oil tankers carrying 94 percent of the total cargo volume. The loss of all tanker traffic would affect a wide variety of suppliers and contractors in the area, Lawton said.

At the same time, the need to ship fuel and heating oil to the city by truck could add as much as 10 cents a gallon to energy costs, Lawton concluded.

“It was not so much surprising as eye-opening to see the dependence of all Mainers on a wholesale distribution system,” Lawton said.

He assigned an “employment multiplier” value of 3.9 to the local petroleum-based industry, meaning it sustains a wide network of economic activity, in his view.

“These good jobs generate an above-average employment multiplier because of the volume of consumer spending they provide to local retailers and service providers,” he said.

Py estimated passage of the ordinance would cost each Maine family $300 annually in increased fuel and energy costs. Some products could still be shipped to terminals in Bangor and Searsport, but Py said gasoline could only arrive by truck from Chelsea, Mass.

Burt Russell, Sprague Energy vice president, said the proposed changes have already affected Sprague’s operations, although the company has no stake in importing tar sands oil. He said he has already postponed completion of a $1.5 million pipeline expansion that is 50 percent complete until after the Nov. 5 vote on the ordinance.

Russell said Sprague has only 16 employees in the city, but the decision to delay work also affects the contractors and equipment suppliers for the four-year project.

Matthew Marks, chief executive officer of the Associated General Contractors of Maine; President Beth Sturtevant of Westbrook construction company CCB, who is chairwoman of AGC of Maine; and Joyce Newman, a past president of the Maine chapter of the National Association of Women in Construction each spoke Monday about how trades could be hurt by the ordinance.

“As written, it is reckless,” Marks said. “Local taxpaying businesses deserve better than to be run out of town.”

With an estimated 8,000 construction jobs lost since 2006, Marks and Sturtevant said increased energy costs and lost waterfront construction jobs will blunt economic recovery. Sturtevant added that the energy industry is a sector where construction employment has remained steady over the last seven years.

“I hope this is reviewed, discussed and a clearer picture is presented,” Newman said.

Lawton said “people should think about the consequences.”

Monday’s news conference was the first of three events planned by the South Portland Working Waterfront Coalition to state its case against the Waterfront Protection Ordinance.

Lawton will discuss his report at 7 p.m. Thursday at the Redbank Community Center at 62 MacArthur Circle East, and a “Working Waterfront Family Day” will be held 9 a.m.-3 p.m. Saturday at Bug Light Park.

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