Source: KTUU Anchorage
Petroleum Economist Roger Marks claims the Palin administration used "faulty accounting" when it awarded a license to TCPL under the AGIA. According to Marks, the AGIA is based on the "flawed conclusion that a pipeline owned by a third-party would be more profitable than one owned by major gas producers..."
What Marks is either forgetting or deliberately ignoring is that pipelines and producers are regulated under completely different structures, and that pipeline companies tend to do a more efficient job of operating (and building) pipelines than oil companies do.
He also manages to miss the fact that because these companies operate under different regulatory environments, pipeline construction presents a much different risk to the shareholders of TCPL than it would to those of the gas producers.
EDIT: With original Marks piece from AlaskaDispatch.com
I read this piece when it was originally posted, and probably should have commented on it. Marks' comments seemed to not only be based on a worst-case scenario, but on assumptions that are patently untrue. Marks' argument seems to come down to this: that if the producers are able to negotiate enough "certainty" in taxation with the state of Alaska, that they will choose to build their own line rather than using TCPL's. If this happens, the terms of the AGIA dictate that the state will have to pay TCPL treble damages. Marks claims this could be as much as $2 billion if TCPL claims gross expenses. However, the Revenue Commissioner that helped draft the AGIA legislation says that even TCPL's lawyers agree that given this "worst-case" scenario that only net expenses would qualify, cutting the bill to $400 million.
Still not chump change for a state with only a million or so population, but nowhere near the $2 billion Marks claims they're risking.
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