Monday, 04 August 2008

In Passing

Concentrating on the important stuff

Instapundit linked this one yesterday:

TransCanada Corp., Canada's largest pipeline company, won state approval and a $500 million subsidy to proceed with plans to build an estimated $27 billion pipeline that will carry natural gas from Alaska's Arctic region to U.S. markets.

The Alaska Senate voted today in favor of the proposal by Calgary-based TransCanada, following approval last month by the House.  The company will get a state license to begin studies and early work on the pipeline. -
Glenn says, “We need it,” and I agree, but one thing bothered me.  This project seems such a no-brainer: Why the heck should getting things underway require a $½-billion subsidy from the state of Alaska?  Well, read on...
The line would ship 4.5 billion cubic feet of gas a day over 1,700 miles (2,735 kilometers) through Canada to U.S. markets...

Under its license agreement with the state, TransCanada will get the $500 million subsidy in return for seeking federal [Meaning “Canadian and U.S.”
? - O.G.] regulatory approval for the project and finding customers for the pipeline.  The license doesn't guarantee construction of the project.
I suppose it could be argued that half a billion dollars isn’t excesive regulatory overhead for a project with a cost “at least $26.6 billion,” although, I’d note that the half billion is only “for seeking federal regulatory approval”[1] and that the project’s total “compliance” bill will undoubtedly be much higher.

But the more disturbing message I’m getting here is that, despite all the politicians’ talk of “energy independence,” the likelihood that this project would not receive governmental approval must be great enough that TransCanada wouldn’t touch it unless somebody else guaranteed that the company’s first $½-billion of expenses were covered.

Well, hurrah for regulation.  It’s so reassuring to know that, despite energy prices going up and up, there are still folks there to concentrate on the important stuff.  We may freeze in the dark, but we’ll take comfort in the knowledge that we got our money’s worth.

[1] IMO it’s probably safe to assume that should the pipeline get beyond the vaporware stage, “finding customers” won’t be a problem.

Posted by: Old Grouch in In Passing at 16:16:21 GMT | No Comments | Add Comment
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