Alaska needs 12-step program for gas pipeline addiction
Much of the news coverage of the “closer than ever” natural gas pipeline proposed by Gov. Mike Dunleavy skipped the single most important detail, misleading Alaskans about the dream that never dies.
Major Alaska news organizations either failed to mention that Dunleavy hopes the federal government will pay 75 percent of the cost or they downplayed the reality that this $5.9 billion pipeline dream is founded on a $4.5 billion federal subsidy.
This serious error of omission remains uncorrected.
With a 75 percent subsidy, the pipeline is probably possible, but that would require Alaskans to think of it as a government public works project, which is not the story the Dunleavy administration is trying to sell.
We need a 12-step program to cure this delusion starting with: “We admitted we were powerless over the gasline.”
One reason Alaskans have been misled is that the Alaska Gasline Development Corp. president and board members failed to make any public mention during their Feb. 4 meeting that $4.5 billion would need to be approved by Congress and the Biden administration to build the $5.9 billion gas pipeline.
It’s hard to imagine why anyone would think $4.5 billion is not worth mentioning.
AGDC President Frank Richards did produce a slide that said “The private sector would build, own and operate” the gas line, but he never said who would pay how much. And he never said that the private sector would only have to invest $1.5 billion.
The closest he came to revealing the truth was this sentence: “So we presented this concept to the governor as a stimulus project, one that would rely on federal funds, namely infrastructure-type funds to capitalize the project.”
Most of the reporters who wrote about this presentation did not pay enough attention to that statement. The Anchorage Daily News said the plan “relies on an as-yet-unnamed private partner, as well as federal dollars.”
The Fairbanks News-Miner said “‘an unnamed ‘strategic party’ is working with the Alaska Gasline Development Corp. to develop, finance and construct all or part of a pipeline to bring natural gas to Fairbanks as soon as 2025.”
The News-Miner followed that with an editorial inhaling the fumes of Dunleavy’s delusion. It didn’t mention a dollar amount, but said the federal government would be asked to “help fund a pipeline” to Fairbanks.
The Dunleavy press release printed in the state’s major newspapers also treated the government subsidy as a small matter.
“The good news is that, in addition to private funding, there is a strong possibility of federal funding,” Dunleavy said in his press release.
“Backed by significant private sector interest, and the real possibility of funding from the federal government, this opportunity to create thousands of construction jobs couldn’t come at a more opportune time for our state,” his press release said.
This flips the order of importance, putting 25 percent and the virtuous private sector ahead of the far more significant 75 percent, which in any other context would be attacked by Dunleavy as uncontrolled socialism.
We only know about the 75 percent plan at all because a critic of the proposal and supporter of a competing plan, Joey Merrick, testified at the meeting that the Dunleavy plan didn’t make any economic sense, requiring a ”$4 billion to $5 billion” subsidy.
Elwood Brehmer of the Alaska Journal of Commerce had the sense to ask Richards about Merrick’s assertion and he received the answer withheld from Alaskans.
“Under the working concept, the pipeline firm would contribute 25 percent of the $5.9 billion, or about $1.5 billion, while the rest would come from federal infrastructure funds,” Brehmer wrote.
Perhaps Dunleavy, Richards and the members of the AGDC board are embarrassed at admitting the scale of the subsidy for a project they promote as a private venture.
We can’t afford the self-delusion that ignores the reliance on the biggest of big government subsidies.
The confusion created by the deceptive Dunleavy press release, the lack of disclosure by AGDC and the misleading coverage by Alaska news organizations has to be cleared up if Alaskans are to avoid fooling themselves once more about the financial challenges of any pipeline.
The pipeline would create 1,400 “high-paying direct jobs” and 20,000 or more indirect jobs, getting gas to Fairbanks in 2025.
It is unlikely that the federal government is going to provide $4.5 billion for a pipeline to Fairbanks, despite the work of contract lobbyists former Gov. Sean Parnell and former Sen. Mark Begich—Parnell is getting $450 an hour from the state and Begich probably the same. That leaves 1,398 high-paying direct jobs to follow.
A timely reminder on all this comes from Michael Carey’s account of the time he heard a laborer ask an assistant business agent in Fairbanks, “Hey Willie, how is that gas line lookin’?”
“It’s lookin’ good, brother. It’s lookin’ real good,’” Willie replied.
Yes, Carey writes, in that long ago spring of 1980 in Fairbanks, “the gas line was ‘lookin’ good, lookin’ real good.’ As it is today, will be tomorrow and shall be forever. Amen.”
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