State floats idea of 100% federal subsidy for gas line to outskirts of Fairbanks

On Feb. 1, the Anchorage Daily News posted a press release from Gov. Mike Dunleavy saying "this is Alaska's time to think big" on the gasline.

“We’re on the cusp of a generational dream,” the press release claimed.

“This pipeline could very well be the reality that we’ve all been waiting for.”

Generational dream? Yes. Reality? No.

Most Alaska newspapers printed the Dunleavy handout, no questions asked, with exaggerated headlines that matched the exaggerated text of the press release: “It’s time to build an Alaska natural gas pipeline,” “A gas line for the future and for Alaska,” “Dunleavy: It’s time to think big on energy,” “This is Alaska’s time to think big.”

By giving wide circulation to Dunleavy's plea to think big, Alaska news organizations misled the public by suggesting the pipeline dream would be a private venture. "The good news is that, in addition to private funding, there is a strong possibility of federal funding,” Dunleavy said.

What the governor failed to mention is that he was really hoping about being on the cusp of a big federal subsidy. But he is a small-government conservative, who wants to cut federal spending, so he never mentioned the big-government foundation of his generational dream.

Dunleavy wants to be seen as the tough-talking guy complaining about federal overreach, not the guy with his hand out looking for billions in federal gasline overreach.

On Monday, the president of the Alaska Gasline Development Corporation upped the ante on Dunleavy’s generational dream. Suppose the first phase of the gasline—to the outskirts of Fairbanks— became a 100 percent federal project?

Their names were never mentioned, but perhaps the gasline lobbyists hired by Dunleavy at hundreds of dollars an hour—former Sen. Mark Begich and former Gov. Sean Parnell—are saying they want to go big or go home.

Frank Richards presented the slide below to legislators mentioning that instead of a 75 percent federal subsidy, a 100 percent federal subsidy—$5.9 billion—would do even more to lower energy costs for Interior Alaska.

Richards was quick to point out to the Senate Resources Committee that the beauty of the Dunleavy dream is that he is not asking the Legislature for a dime—”This is recognizing that money may be flowing out of Washington, D.C. for infrastructure development and this may be a critical piece of infrastructure for Alaska to be able to move forward with.”

In other words, the pipeline is a critical piece of infrastructure for Alaska’s conservative leaders as long as it’s paid for with free federal money that carries no political risk or pain.

I would be tempted to take Dunleavy’s commitment seriously if he proposed spending state money on the pipeline, either making an unsustainable draw from the Permanent Fund or raising taxes.

That would show this is a matter with real political costs and consequences. It’s much harder to float and defend an idea like that, but Dunleavy is all about evading responsibility on budget matters.

His gasline con game was in progress on Jan. 28, when Dunleavy gave his State of the State speech, claiming, “Today, I’m happy to say, we’ve never been closer to realizing a privately led gas line project from the North Slope than we are right now.”

“A gasline led by private industry would be an absolute game changer and a chance to once again show the world that energy independence and protecting our environment are not mutually exclusive,” said Dunleavy.

The AGDC met Feb. 4 and no one saw fit to mention that the first phase of the gas line led by private industry required a $4.5 billion federal subsidy to get close to Fairbanks.

We only learned about the magnitude of the dream 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 asked Richards about Merrick’s comment and was told about the 75 percent federal subsidy.

But most other news accounts obscured the truth, running parallel to the misleading claims from the governor, and downplaying the scale of government dependence.

On Thursday, almost two months late, the Anchorage Daily News printed a piece by Brehmer, the first mention in the ADN of the giant federal subsidy Dunleavy seeks for the so-called private project.

But there was a mistake in that account, the part saying that Dunleavy revealed the 75 percent subsidy two months ago in the press release about his generational dream. Dunleavy never mentioned that the burden would be on the federal government to provide $4.5 billion.

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