Palin’s Phantom Pipeline Steals $500 Million from Taxpayers

Sarah Palin makin' things up and costing you money

Sarah Palin makin' things up and costing you money


Sure you knew she was annoying, but did you know she was costing us hundreds of millions of dollars?

During her RNC speech as Republican VP candidate Palin claimed, “I fought to bring about the largest private-sector infrastructure project in North American history. And when that deal was struck, we began a nearly forty billion dollar natural gas pipeline to help lead America to energy independence.”

And during the vice-presidential debate, Palin made this claim again: “we’re building a nearly $40 billion natural gas pipeline — which is North America’s largest and most expensive infrastructure project ever — to flow those sources of energy into hungry markets.”

And here’s where our story of grift, graft and greed begins.

During the campaign, The New York Times reported that the reality of the project was “far more ambiguous than the impression Ms. Palin has left at the convention and on the campaign trail.” This is because the contract to build a 1,715-mile pipeline to bring natural gas from Alaska to the Lower 48 existed only on paper. There is no pipeline. There never was.

Not only has the pipeline not been built, but as Palin’s signifying “accomplishment” during her brief time as Governor was written — the bill Palin championed to such an extent it was often referred to as the Palin Pipeline — left the state vulnerable to losing over 500 million dollars. Or should I say, it left us vulnerable to paying over 500 million dollars because Palin thought that the US Federal Government should shoulder all the financial risks of AGIA while writing a contract that guarantees profit for the private corporation (or Alaska will pay damages). Sort of like those bail outs Palin’s followers so object to, wherein we taxpayers subsidize the risk and the private company gets to take the profit. Palin’s signature achievement was to shell out 500 million dollars of our money for a bad idea, conceived mostly out of arrogance and widely criticized at the time as being wildly flawed.

According to the Juneau Empire, the bill was so poorly conceived that the state was urged to cut it losses at the time by former state petroleum economist Roger Marks, who said, “State leaders made faulty assessments in their quest to land the long-sought pipeline project.”

On August 27, 2008, Palin signed AGIA (Alaska Gasline Inducement Act) into law awarding Canadian energy company TransCanada a license and 500 million dollars as an incentive to someday build and operate the $26-billion pipeline to transport natural gas from the North Slope. A license. That’s all. If the project isn’t built, the state could be beholden to TransCanada for treble damages.

Not only were there rumblings about Palin’s connections with TransCanada and accusations that the bidding process had been tainted by Palin’s interaction with TransCanada during the process, but said accusations resulted in an AP investigation which determined that a flawed bidding process had existed that narrowed the field to a company with ties to Palin’s administration.

But just as Palin built a Sports Complex in Wasilla on land the city did not hold title to, the state of Alaska did not have any guarantee that they could bring gas through Canada to the lower 48. Furthermore, BP and ConocoPhillips own the leases in Alaska, not TransCanada, to whom the Palin administration awarded the contract. In other words, this contract never guaranteed the delivery of natural gas to US markets.

The Phantom Palin Pipeline

The Phantom Palin Pipeline

In fact, this contract never even addressed how the gas would get to the lower 48. The gas might be sold to China. It might be sold to Canada, if they were willing to pay more money for it. So in no way was this ever intended to be an energy solution for America. It was intended to make money for Alaska while the US taxpayer footed the bill. $18 Billion was appropriated as part of the Alaskan Natural Gas Pipeline Act of 2004 and more funds and loan guarantees will need to be committed if the pipeline is ever to be built. That’s in addition to the bail-out of TransCanada should the contract not proceed. It should be noted that all energy seems to get such perks — but why then the complaints when Democrats want to subsidize alternative energy? Palin refers to alternative energy subsidies as all kinds of threatening baloney, knowing full well that she is the Queen of subsidizing private energy corporations but she doesn’t have the excuse that it was for America’s energy needs. It was never for America. That “delivery to hungry markets” mantra was just as opaque as “drill, baby, drill”.

I believe this is one of those “Bail Outs” the Tea Party keeps screaming about.

The main problem with AGIA, however, is that producers have long held that “unreliable tax terms” (that would be Palin’s windfall profit taxes which are based on profit and hence impossible for producers to calculate in advance) kept them from pursuing a pipeline before AGIA was even introduced.

Cut to today: Open season on the bidding to build the project has closed, and there are no bids. The Parnell administration (for all intents and purposes, Palin administration, as he is carrying on the rest of her first term after she quit unexpectedly mid term) is trying to spin this into a win, suggesting that negotiations are ongoing, but not having to negotiate with the oil companies was the entire purpose of AGIA.

Andrew Halco reports:

“Most likely, TransCanada’s Palmer said, the bids will be conditional, leading to protracted negotiations. Bidders might ask for an ownership stake in the pipeline as a condition, or special tax breaks from the state. Or he said, they might want TransCanada to be responsible for construction cost overruns instead of seeing those extra costs added to transportation charges. According to several dozen quotes on the issue from administration officials over the last three years that were chronicled on countless blogs, AGIA’s must haves were supposed to be met without debate to protect the state.”

Palin’s big claim, the entire point of AGIA, was, “We’re not negotiating.”

Sounds familiar, eh?

AGIA was a part of Palin’s hubristic and simplistic idea of how the world works. She thought she could march in and tell the oil and gas companies how they were going to do business in Alaska, and while she was at it, she lobbied a huge windfall profit tax on them. It was part of her image of herself as a tough, Alaska first kinda gal. And it’s a charming idea.

It’s the kind if idea that makes it possible to understand why Palin was so appealing to people before they got to look under the hood. She was gonna make those oil companies pay. We’d all like to see that. The problem is that actual governing is not that simple and good or even reasonable legislation is a difficult to craft once everyone has weighed in on a subject.

It turned out that Palin was just as corrupt as the guy before her; she was just a better salesman. Not only was she corrupt, but also she made Bush look like he had a PhD in policy with her Rovian bulldozer approach to governing. And lastly, Palin billing herself as a fiscal conservative is not only disingenuous, it’s a disgraceful misrepresentation of reality. According to the ADN, “In her two years as governor, Alaska has requested nearly $750 million in special federal spending, by far the largest per-capita request in the nation, although she has cut, by more than half, the amount the state sought from Washington this year.”

Alaska could have to bail out TransCanada to the tune of $400 million to $2 billion. And when I say Alaska, I mean America. And by America, I mean the American taxpayer. That’s fiscal conservatism, Republican style. We pay a lot of money so they can lie about their accomplishments. Meanwhile, they moan about the deficit every time a Democrat tries to save the economy from the Republicans’ fiscally disastrous leadership.

Every time Palin goes on Fox News to allege that Obama is a socialist, try not to remember that she just fleeced us out of over 500 million dollars and we still don’t know what kind of kick backs, if any, she got for awarding the contract to TransCanada. But we do know that she padded her resume with millions, if not billions, of our tax dollars. We’re out at least 500 million and we’re back to square one in trying to get natural gas to the lower 48.

Pony up, people. Palin has another lie to sell you. Think of it as the Sarah Palin Bail Out.

Sarah Jones

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