Gov. Mike Dunleavy and officials of the state-owned Alaska Gasline Development Corp. are wrapping up their Asian tour trying to collect pledges of financial support for the Alaska LNG project.
I think the best one-sentence summary about the politics of this enterprise came from the Korea Times on Thursday March 27: “Alaska Gov. Mike Dunleavy emphasized that Korea’s commitment to purchasing liquefied natural gas (LNG) from his state is essential for the fourth-largest economy in Asia to achieve favorable outcomes in its ongoing trade negotiations with the United States.”
In other words, buy LNG from Alaska to placate President Donald Trump or else.
As I’ve written here before, I don’t believe that the attempt by Trump to blackmail Asian nations to pledge their support for the giant Alaska project will work. It will produce promises of future cooperation and a desire to study all the details and keep the lines of communication open. It will produce flattery and handshakes.
It will produce non-binding letters of mutual appreciation, but it will not create the basis for a long-term financial commitment for companies to risk tens of billions over decades.
Trump has proclaimed Wednesday as “Liberation Day” and is threatening to punish U.S. trading partners with tariffs that will lead to higher prices in the United States on everything from cars to gas pipelines.
If you want the strongest argument for why a giant Alaska gas pipeline is not closer than ever—contrary to the repeated claims from Alaska’s political leaders—you’ll find him living in the White House.
The erratic and incoherent approach to economic policy from Trump will not be lost on any nation being pressured to sign onto the Alaska LNG project. No one can say what he will do from one day to the next, so he can’t be trusted. The best thing then is to delay things for as long as possible.
I think there is a big difference with Taiwan, so far the only nation that has signed a non-binding letter of intent to try to reach agreement on buying LNG from Alaska and investing in the gas pipeline.
The ever-present threat from mainland China to Taiwan makes it easy to imagine why it is a priority for the island’s leaders to try to please Trump.
While in Taiwan, Dunleavy met with Taiwan President Lai Ching-te, who said Taiwan is interested in buying natural gas from Alaska.
“I am sure that Governor Dunleavy’s visit will help us explore even more opportunities for cooperation and continue to deepen Taiwan-United States relations,” Lai said.
Lai’s office quoted Dunleavy this way: “The governor said that we are creating a new world for the next 50 years with the new administration in Washington, and this is an opportunity for us to reevaluate and reinvest with our friends for the next 50 years in each other, our futures, and our security.”
One of the biggest challenges of the Alaska LNG project is that the buyers have to think 30 to 50 years ahead, but there may be lower-cost alternatives available now or within a few years. Trump’s fiscal uncertainty regime makes it all worse.
The negotiations that are to follow the Taiwan letter of intent and any that follow from other countries will last for years.
Trump is pushing Taiwan to spend more on defense, which Lai says he will do. The Taiwanese president will do whatever he can to work with Trump.
Linking Alaska LNG to the complicated mix of issues about the future security of Taiwan makes this even more difficult to navigate and suggests the negotiations will not be quick.
Bill McKibben, a veteran writer and specialist on enviromental issues, said the pressure by the Trump administration to get LNG buyers is a protection racket.
Writing for the Asia Sentinel, Jens Kastner said the Taiwan letter of intent with Alaska was an attempt to keep Trump committed to Taiwan against China and avoid tariffs.
“This is like me helping you to build your restaurant so that you can sell me an overpriced meal,” he quoted Angelica Oung, founder of the group Clean Energy Transition Alliance as saying. “But if loading up on Freedom Gas is what it takes to prevent Trump from selling Taiwan down the river, then it’s cheap at even US$12/mmBTU, compared to Qatar’s US$8/mmBTU.”
Alaska politicians are looking at all of this and saying once again that a gas pipeline is closer than ever and the stars are aligned. What they aren’t saying out loud is that their new confidence is based on the dream that Trump’s blackmail threats will work.
I think their confidence is entirely misplaced. The stars have failed to align.
A gas pipeline is a long-term proposition that requires stable and coherent U.S. policy based on trust, not wishful thinking and blind obedience to the mad king.
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