Saturday We Said, “Canada’s Pipe Policy Pursues Perplexity“

(Today, 8-20-18, it’s Alaska’s Turn)

We say Alaska pursues perfidy because it does.  Everyone in the state with at least one good eye on this government-owned bureaucrat-controlled enterprise (i.e. the Alaska Gasline Development Corporation, or AGDC) knows it is is not what it claims to be.

Heaven knows what Governor Walker told President Trump about his pipedream last year when his role as governor gained him entrance to America’s seat of power to talk about a $1 trillion US “Infrastructure” investment project.  We can imagine politicians from every state, including the 49th, thinking, “I’m gonna get me somma that”.

We can only imagine what a difficult position Senators Murkowski and Sullivan and Congressman Young were in when asked — if, indeed they were — “Say, what do you think of Governor Walker’s pipeline project?  You all have a lot of gas up there, don’t you?  Governor Bill says the Chinese want it and they are already a big trading partner.  He says the project will not only bail Alaska out of its fiscal crisis but will also add to our national defense, contribute to our balance of payments deficit with China and indirectly support our Korean diplomatic effort with China.  So what do you think?”

If you think about it, it really takes enormous chutzpah to knock on the President’s door and talk about the strength of a $40-60 billion project that hasn’t completed even its preliminary Front End Engineering and Design (FEED) work.  But to then go on and arrange for the two presidents to sit down as the Governor’s bureaucrats sign non-binding memoranda of understanding with Chinese bureaucrats in front of cameras is, in and of itself, some accomplishment.

But what did China have to loose? They know Walker is so desperate to have a deal that their bargaining position is tremendously strong.  Japan and Korea seem to have little other than a diplomatic courtesy interest.  But saavy traders that they are, we can expect them to continue increasing their bargaining chits with others by having “memorandum agreements” with Governor Bill Walker.

Just imagine temporarily elected and appointed Alaska politicians and bureaucrats bargaining with China.   And then seeing the Governor put his former AG on the Permanent Fund board (Note: Norway forbids investment of its permanent fund in-country for good reason.)  Then noting that the Governor stacks the Alaska Gasline Development Corporation board with his dutiful appointees, making the “independent public corporation” entirely dependent on the Governor’s disposition.  Bondholders beware the claim of independence.

The whole thing smells a little foul, beginning with the various corruptions and motives politicians and bureaucrats would inevitably encounter when given use of BILLIONS of dollars of other people’s money.

Private corporations have supervisors, managers, officers, board members, lawyers, accountants and stockholders — with jobs on the line — overseeing big capital investments.  The future of the corporation is at stake and everyone involved in a private project is expected to protect and grow the investment.

We can only hope that the state legislature can capture unused AGDC funds soon, terminate this misbegotten, government-run project and put the assets up for bid to the private sector before this governor can get the 49th state and its citizens committed to a path with no means of escape.

Alaska should get the heck out of the multi-billion dollar pipeline risk business before more damage is done to its own economy and the country’s reputation.

One last thing: we continue to remind fellow citizens that the 1953 Armistice signed by North Korean, Chinese and United Nations representatives was not a truce.  It did not produce peace.  The Korean Armistice still finds America — as leader of United Nations forces on that peninsula and its South Korean ally — at war with both North Korea and China.

Selling fish to China is one thing.  Developing a massive, LNG entangling alliance with that country threatens Alaska’s economic future.  It also involves a relatively obscure group of Alaska politicians in international diplomacy of which they know little and have no stake.  Finally, as one of the most — if not the most — uneconomic LNG projects in the world, the only reason a big, powerful country like China would want to toy with Alaska LNG is not because the project is financially attractive to China.

If sophisticated Chinese energy marketers know how infeasible Alaska’s gas project is and are pursuing it anyway, without committing, does it occur to anyone that its goal may not involve consummation of an LNG project relationship at all?

We have some misgivings but no major problems in supporting trade between America’s private sector and China’s communist bureaucracy.  But we would warn public officials about risking public money and Alaska’s economic future on what is now, 1) an economically unproven LNG project, and 2) a multi-tens of billions of dollars project involving parties who’ve been on the brink of war for 65 years.