Editors' Note: This piece has been corrected.
There has been much speculation about what outgoing Gov. Sarah Palin of Alaska is running toward on the national scene but not so much about what she's running from. Back in March of 2007, shortly after she took office as governor, Palin proclaimed that under her watch Alaska would be “maintaining focus on becoming a viable and significant player in the nation’s energy plan.” The policy decisions that she sold as solutions to America's energy crisis are now failing investors, stakeholders, and the environment.
To understand the legacy Palin hoped for, it's worth examining her rejection of nearly $30 million in American Recovery and Reinvestment Act stimulus funds, and the status of the two energy projects at the heart of her political and economic agenda: offshore oil drilling along the Alaskan north coast and a gargantuan natural-gas pipeline project. In each case, Palin hoped to establish herself as a bonafide conservative leader who could position her state as a leader in energy production and also as a model for self-sufficiency, free of federal meddling.
When the federal stimulus was passed, Palin, like other Republican governors, protested, initially threatening to reject a third of $930 million due to Alaska. She later relented but still refused $28.6 million. Those rejected funds were earmarked to help weatherize buildings and develop renewable-energy projects. Only five states pay higher retail rates for their electricity than does Alaska, whose 14.4 cents per kilowatt hour is 5 cents higher than the national average. Republican and Democratic leadership in the state has urged Palin to reverse her decision, citing the high energy rates.
Palin stood her ground, saying she believes accepting the funds would force the state to comply with strict federal codes on energy-efficient construction. But Alaska already has one of the stronger energy-efficiency codes in the country, and Alaska's Senate Resources Committee was assured by the Department of Energy that the codes already in place would qualify the state for ARRA funds. The legislature has scheduled a special session on Aug. 10 to override her veto, which Palin dared them to do.
Obviously, if Alaskans are weatherizing their homes and using sources like wind for energy, it will decrease the demand for oil and gas. This would be disappointing news for companies such as Exxon, Shell, and BP, which all had plans at one time for drilling and pumping in Alaska -- which Palin banked on for her agenda.
Since the beginning of her term, Palin has practically begged companies to drill along the north coast. A ban on oil drilling in Alaska was lifted by President George W. Bush in January 2007. Since then, Shell Oil has invested over $3 billion in the area, mostly in leases purchased for drilling. Much to Shell’s chagrin, though, the U.S. Court of Appeals for the D.C. Circuit ruled that those leases, and all others sold to companies in the region, were improperly granted by the Department of Interior's Minerals Management Service. The MMS did not consider the environmental impact of drilling where threatened polar bear and whale species are fighting to survive, the court said. Many Inupiat Alaska Natives’ livelihoods would also be harmed, given they subsist off of fishing and hunting in those lands.
Secretary of Interior Ken Salazar decided on May 8 that he would allow drilling anyway, but it was too late. Just two days earlier, Shell had already cancelled their exploration plans citing the court challenges. They hope to present a scaled-back exploration plan in 2010. Given Salazar's decision, Shell and other oil companies could pursue drilling plans more aggressively now. But they fear lawsuits, which compounded with the billions already invested without a return puts profits out of reach. Without Shell, Palin's "drill baby drill" is going nowhere.
With the legislature upset with Palin over her rejection of stimulus money, and her hands tied on drilling, Palin's final power play was the Alaska Gas Inducement Act passed in May 2007, which would create the "largest private energy project in the world," according to her office, in the form of a natural-gas pipeline that would pump from northern Alaska to the lower 48 states. When -- if -- built, the 1,715 mile pipeline is expected to pump 4.5 billion cubic feet of gas a day. If Palin had broken ground on this in the summer of 2008, as she professed after taking office, it would have been a game changer for energy policy.
The plan a had a shaky genesis, even though Palin promised "swift movement" on the deal after taking office. Last summer, the government was just getting around to picking the lead company on the project, TransCanada. Alaska will supply $500 million in matching funds to TransCanada as a down payment on what ultimately is projected to cost $30 billion to build. On June 3 of this year, Palin lauded her partners in the AGIA deal saying they were progressing "without any need to seek publicity" and "without grandstanding." A month later, she announced her resignation as governor. By July 11, she was using a Washington Post op-ed to publicize and grandstand about the pipeline project and at the same time complain about the "federal bureaucrats" blocking drilling in Alaska.
If the federal government truly is imposing its energy-policy will on the states, as Palin fears, then perhaps she believes she would be more effective in executing her will from the federal rather than the state level. Her op-ed confirmed that U.S. energy policy is where she will be focused. The man she's left in charge of governing Alaska, Sean Parnell, is cut from the same cloth and is expected to autopilot an office programmed to Palin's settings. With her resignation the fact remains, though, that of three major policy decisions, two are headed for failure with one in question. As she sets her sights on disrupting President Barack Obama's plans for a clean-energy policy, we can only hope her record of failure follows her.
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