Tax incentives needed to encourage building of North Slope gas line

The headlines are saying what Alaskans have been trying to guard against for years: The nation is now paying sky-high prices for natural gas and looking at an imminent shortage of the clean-burning fuel.

Yet many Lower 48 politicians and even President Bush continue to argue against granting tax incentives to spur construction of a pipeline to bring North Slope natural gas to the troubled domestic markets. They wrongly adhere to a philosophy of not interfering with a free market.

It's wrong when that philosophy can lead to a recommendation to import more natural gas from such places as the battle-ridden Middle East and when it forestalls progress on construction of a gas line that can reduce our reliance on such foreign gas.

To reduce such reliance, the United States will need a combination of new natural gas sources: yes, from further imports of liquefied natural gas but also from Alaska's North Slope. The problem for a gas line from the North Slope, however, is time, ports and economics. LNG is available now from overseas yet there are few ports in the nation to receive it. But additional ports can be built faster than the Alaska natural gas line, which at its most optimistic would not be in use until 2011. Others say it will be at least 2020 before a line can carry gas south. Meanwhile, natural gas producer companies need assurances of a set return on their investment in a project as costly as the gas line, which is why Alaska has already renewed its own incentive regarding tax payments.

Federal Reserve Chair Alan Greenspan raised the profile of the natural gas market's turmoil recently when, in testimony to the House Energy and Commerce Committee, he suggested a major expansion in the capacity of LNG ports the nation has only four. He made no mention of a pipeline from Alaska's gas fields but did acknowledge the nation has a substantial number of untapped gas sources.

The gas industry's difficulties received another look Thursday when, driven by the market's flux, the Energy Department opened a one-day summit to talk about the present and the future. With imports expected to double this year and experts saying the rate could rise 1,000 percent by decade's end, it's about time those minding the market behaved like this was a crisis.

Thursday's gathering, while good, is perhaps indicative of the short-sightedness that sometimes plagues Washington's energy policies regardless of who's in power.

An executive with the respected firm Cambridge Energy Research Associates noted that the prospect of heightened natural gas imports from a volatile region has come as a surprise to the political system. Greenspan noted that the market's current condition has been a long time in coming and is not likely to revert to abundant supplies and low prices anytime soon.

The natural gas market's condition doesn't surprise Alaska's leaders, who should seize the moment to press all out for the incentives needed to encourage construction of a natural gas line along the Alaska Highway route and into the Lower 48. Maybe now the president and others in Congress will listen.

Fairbanks Daily News-Miner

June 27