Sarah Palin: The Hugo Chavez of Alaska

The governor may be pro-drilling, but she's no Big Oil puppet.

Published September 2, 2008 8:45PM (EDT)

Is Sarah Palin Big Oil's pawn or the Hugo Chavez of Alaska?

Just the fact that we can even ask that question is yet another reason why the 2008 campaign for president of the United States is proving to be the most entertaining political freak show in memory. But the question is far from rhetorical. Palin's eagerness to promote drilling in ANWR and offshore has led Obama supporters to the easy conclusion that she is in the tank for the energy industry. Yet a closer look at the facts on the ground in Alaska suggests that pigeonholing the governor in such a small coop misreads what's really going on.

One of the biggest ongoing energy stories in Alaska is the nearly 30-year-long struggle to get a new mega-pipeline built that will ensure the state continues to live large off of its immense natural gas reserves for decades to come. At the moment, two contenders are vying for the right to build such a pipeline. On one side, BP and ConocoPhillips, two energy companies that, along with Exxon, own potentially lucrative leases to pump natural gas in Alaska. The other proposal belongs to TransCanada, a Calgary-based pipeline builder.

Sarah Palin backs TransCanada. Indeed, just a few days before she was selected as the Republican vice-presidential nominee, she signed a bill declaring that TransCanada satisfied the legal requirements of the Alaska Gasline Inducement Act, which Palin had pushed through the Alaska Legislature in March 2007. The "inducement"? $500 million in seed money to get the project off and rolling.

If you dig around a bit on the Web, you may find references, here and there, to Sarah Palin actually being a member of the board of directors of TransCanada. That would be a clear and stunning conflict of interest, if it turned out to be factually correct. But Palin is not listed as a director on any of TransCanada's regulatory filings in either 2007 or 2008, and no news report that I have been able to find mentions it. So chalk it up as just another one of the conspiracy theories that find such fertile ground on the Web. It's not so hard to understand, is it? She's a Republican, she supports drilling in ANWR, she must not only be Big Oil's girl, but actually on the payroll!

Except not. Far from it. Her detractors from the right call her the "Hugo Chavez" of Alaska and "Alaska's Glam Tax & Spend Governor." Big Oil's pawn? In some ways she's Big Oil's worst nightmare. For national Republicans, a windfall tax on oil company profits is heresy. But Palin's already pushed such a tax through in Alaska. And she's clearly not doing the bidding of Big Oil when the subject is natural gas pipelines.

In June, Newsweek's Tony Hopfinger took a close look at the gas pipeline project:

The TransCanada proposal is born out of an attempt by Palin to force the hand of the big oil companies -- BP, ConocoPhillips and ExxonMobil Corp. -- to execute their gas leases, from which the state hopes to raise tens of billions in tax revenue. Uncertainties over natural-gas prices and state taxes have long left the companies skittish about committing to a project....

Alaska owns the natural gas; BP and Conoco, along with Exxon, hold most of the leases to develop it. The companies have long talked of tapping the reserves, but have consistently deemed the pipeline too financially risky without the state first agreeing to favorable terms on gas production taxes. Unlike Palin's predecessor, Gov. Frank Murkowski, who wanted to give the companies generous tax breaks, she has refused to budge.

Italics mine. Robert Rapier, the indefatigable chronicler of all things energy-related (and a former Conoco employee), suggests the tax issue is one reason why the name Hugo Chavez is being associated with Sarah Palin.

As I understand it -- and everything I have read seems to confirm this -- the real sticking point seems to be that Governor Palin refuses to make a long-term commitment on the tax rates for the project. For a $30 billion project, it is pretty important to understand the economics of the project pretty far in advance. What I don't know are specific details of what is being proposed -- nor whether the tax rates being asked for are in some way unreasonable. But I do think it should be reasonable to at least agree in advance not to change the rules during the game. That is, after all, what Hugo Chavez has become famous for. And Palin's threats to tear up existing contracts ... do provide a cause for concern.

Palin has even threatened to revoke ExxonMobil's natural gas leases, on the grounds that the company hasn't done enough to develop them. At the Alaska Gas Pipeline blog (yes, in 2008, even unbuilt pipelines have their own blogs), such threats, along with Palin's successful effort to push through a windfall tax and her lack of commitment on future tax rates, are combining to make energy companies reluctant to upgrade and expand their facilities. So just as Chavez is crippling his country's future (or so the right-wing argument goes) by alienating foreign oil companies and crimping on crucial investment, so is Palin sacrificing tomorrow's prosperity for today.

The right wing is probably going a little overboard on the Venezuelan comparison -- just as is the left, in its efforts to plug Palin into a familiar Bush-Cheney energy framework. One of the more fascinating aspects to McCain's choice of Palin as vice-presidential nominee is that it is precisely on the all-important issue that Palin best satisfies the requirements of a "maverick." Could it be that McCain became so infatuated with the narrative of the pro-drilling, anti-Big Oil governor that he neglected to look any further into the politician's closet?

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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2008 Elections Energy Globalization How The World Works Sarah Palin