[Poster’s Note: Alaskan energy policy is now a subject of national interest. Expert insight into that policy and its history appears in the following note by my colleague, George Washington University Law Professor Richard J. Pierce, Jr. A leading authority on law and public policy in a wide range of fields, including energy, Dick lived in Alaska for years in the 1960s, tried the case that authorized construction of a gas pipeline from Alaska to the lower 48 states in 1978, and more recently testified as an expert witness in cases involving the value of Alaskan oil and gas. Thanks to Dick for allowing me to post this note, which I’ve edited slightly for length.]
Energy policy in Alaska is much more like the United Arab Emirates than the United States. Almost all Alaska’s revenue comes from state taxes on oil produced at Prudhoe Bay. Every Alaskan citizen gets an annual state check for a share of oil revenue.
When oil was discovered at Prudhoe Bay in the 1960s, the reservoir contained lots of gas, plus oil. The producers began to construct both oil and gas pipelines to the lower 48. With difficulty, and at a cost ten times the original estimate, they built the Alyeska line to transport oil.
The gas line is more difficult. Laying a chilled, high pressure gas line in permafrost raises daunting geotechnical, metallurgical, and environmental issues that the oil line did not . A gas line would be some three times longer because of the difficulty of transporting gas by tanker. A gas line also requires a certificate of public convenience and necessity from the Federal Power Commission (now the Federal Energy Regulatory Commission) under the 1938 Natural Gas Act.