Joe McGinniss’s cover story in Conde Nast’s Portfolio on Gov. Sarah Palin is almost too well-researched to be dismissed as a hit piece. Over six pages, McGinniss, who covered Alaska’s oil boom in 1975, takes us deep into the world of the state’s oil-and-gas industry, the challenging terrain, the murky politics, and the Byzantine relationship between politics and big business. A reader who comes to the topic with no familiarity with the issue comes away more knowledgeable, and for that McGinniss deserves credit. But the article’s argument doesn’t always mesh with the details. To many readers of Conde Nast’s other publications — The New Yorker, Vanity Fair, GQ — the Republican star Palin is, ipso facto, a villainess. Had Portfolio run a story that reads, “Palin’s gas-pipeline plan has an element of risk but could work,” some readers no doubt would have complained that a previously respectable business magazine had suddenly scrapped its credibility by serving up a puff piece about the Cruella de Vil of the liberal imagination. (The cover photo has Palin in the snow in a fur-collared jacket.) Instead, the Portfolio piece follows a simple tune: Whatever decisions Governor Palin makes about this massive, complicated project, she is always wrong. Palin is accused simultaneously of empowering the oil companies and of being needlessly antagonistic to them; she’s the lone impediment to the project but foolishly overlooking numerous unresolved obstacles; she’s accused of making a risky bet on the future value of natural gas and simultaneously blamed for not acting quickly enough in light of the world’s rapidly expanding energy demands.

BIG OIL: VICTIM OR VILLIAN? At times, in Portfolio’s telling, Palin’s main motive is harming oil companies, no matter the collateral damage to her state. McGinniss charges that she “built a career out of puffing up dragons she could then slay.”

She saw the launching of a natural-gas-pipeline project as a God-given opportunity to prove herself bigger than Big Oil. . . . She felt that with [the Alaska Gasline Inducement Act], she’d stuck her thumb in the eye of Big Oil as no governor before her ever had. She was good, and they were bad, and she’d defeated them. She was Joan of Arc at Orleans. . . .
What Alaskans wanted to hear as Palin assumed office at the start of 2007 — what they’d been wanting to hear, in fact, ever since the Exxon Valdez oil spill in 1989 — was that Big Oil, especially Exxon Mobil, was evil. Looking back over their 40-year partnership with the oil multinationals, most Alaskans concluded that no matter how many tens of billions of dollars in revenue the state had received as a result of North Slope production, it should have gotten more. And it would have, according to popular sentiment, if the greedy, crafty, amoral, conniving, duplicitous, and nefarious oil companies hadn’t robbed Alaska blind — in many cases, with the illicitly bought-and-paid-for cooperation of the state’s elected and appointed officials.

Perhaps that derision is fair; Palin’s populist streak has always been clear, and she’s been accused of seeing the world in black and white. But when McGinniss needs to paint the big oil companies as bad guys, they suddenly cease being victims of a runaway populist fury. Then Palin’s wary stance sounds pretty well justified. The article refers to Big Oil as “the industry that had ruled Alaska like a colonial master for 40 years” and details bribery and secret deals:

Then-Governor Murkowski, who had been secretly negotiating a gas-pipeline deal with the oil companies, fired Tom Irwin, the commissioner of the Department of Natural Resources, after Irwin questioned whether Murkowski’s secret talks were legal. Six Irwin aides resigned immediately, the negotiations went nowhere, and Murkowski became as unpopular in Alaska as Saddam Hussein. Anger at the oil companies grew stronger still over the next two years. In 2007, an FBI investigation led to the conviction of a number of Republican political figures who had accepted bribes from the head of an oil-services company in return for their votes supporting oil-tax legislation and other favors.

McGinniss at first shakes his head at Alaskans’ resentment of oil companies and their belief that the industry exploited Alaska with the “illicitly bought-and-paid-for cooperation of the state’s elected and appointed officials“ and then, two paragraphs later, details . . . illicitly bought-and-paid-for cooperation from the state’s elected and appointed officials. HAVING IT BOTH WAYS A key factor determining the project’s future is, naturally, its estimated profitability. The article explains that if natural gas is selling for less than $2 per million British thermal units (MMBtus), the pipeline won’t turn a profit. The article notes that natural gas was at $12 last summer, but by February it was down to about $4.75. This week, gas futures were trading at $4.31. Natural gas prices are affected by a variety of factors — weather, the U.S. economy, how much is in reserves, and the price of energy alternatives. If natural gas is going to be at $2 or less in the future, then yes, the pipeline project is in deep trouble. But we’re still double that $2 level right now, 15 months into a fairly severe global recession, with drastically reduced consumer demand across a wide variety of sectors. Beyond that, we should keep in mind that the pipeline won’t be operational until 2018. If energy demand hasn’t increased by then, the most likely explanations will be that the world has ended in the interim or that cold fusion has been perfected. Similarly conflicted is the question of the project’s impediments. In a damning, eye-catching quote that launches the meat of the article, Mike Hawker, the Republican co-chairman of Alaska’s House Finance Committee, is quoted as saying, “The only thing standing in the way of an Alaska gas pipeline is the Sarah Palin administration.” But the first sentence of the story reads, “For more than 30 years, a natural-gas pipeline had been the great white whale of Alaskan resource development.” A sharp editor would have noticed the discrepancy between these two sentences, six paragraphs apart, and asked the author if Palin began impeding the pipeline at age 14. Secondly, the tagline for the article offers a simple tale: “Sarah Palin says she’s building a $40 billion gas pipeline, which even President Obama wants. The only problem: It isn’t there. And it’s her fault.” Perhaps this reflects the work of an overzealous copy editor, who wanted to lure readers in with a simple morality tale. But McGinniss points out that the project has been held up for decades, for a variety of reasons, including a complicated regulatory process:

The first thing I learned about the pipeline was that the reason nobody had built it in 30 years was that nobody could have made any money by doing so. Here’s how it works: You decide to build a pipeline to carry gas from Point A to Point B, and you spend a couple of years scoping out a route and putting together a cost estimate. Then you have what in the gas business is called an open season, when you try to persuade whoever has gas to commit in advance to shipping it through your pipeline for, let’s say, 25 years. Once you’ve signed up your shippers, you go to a bank, and the bank loans you the money you need to build the pipeline. Once you have your financing, you go to the Federal Energy Regulatory Commission in Washington and ask for a permit. They check your shipping commitments, your financing, and about a zillion other things, and if they like the way things look, they issue the permit. Then you build the line, and the gas starts to flow and keeps flowing for 25 years or more, and everybody makes a ton of money.

McGinniss’s article details many potential obstacles to the pipeline – the recession’s impact on Alaska’s budget, BP and ConocoPhillips’s threat to build a rival pipeline, pipeline builder TransCanada’s desire for more loan guarantees from the U.S. government — but leaves out TransCanada’s negotiations with Native Americans situated along the proposed route. All of this is good detail, but it erodes the argument that Palin is “the only thing standing in the way.” Beyond the above contradictions, Palin spokesman Bill McAllister argued that McGinniss got some facts wrong as well. Challenging McGinniss’s assertion that “Palin has virtually ignored the pipeline issue since returning to Alaska in November to focus instead on her 2012 presidential campaign strategy,” he writes:

Show me one shred of proof for either part of that statement. The governor had a nearly daylong meeting with her gas line team the week after the election, and of course those consultations have continued. In early December, she arranged an event in Fairbanks to present the AGIA license to TransCanada. She has gas line-related funding requests pending before both the Congress and the Legislature. This is “ignoring”? McGinniss notes “her absence from major oil-company summits.” She had Exxon in her office last week. Not sure what his point is there. McGinnis calls AGIA a blunder, but every lawmaker but one voted for it, and a majority voted to stay the course over a year later and give TransCanada a shot.

To his credit, McGinniss does quote some of Palin’s supporters. Economist Gregg Erickson, founding editor of the Alaska Budget Report, calls the plan “the most brilliantly executed piece of political and economic strategy I have seen in my lifetime,” because it has brought three of the four key players into alignment: the U.S. government, the Canadian government, and the state of Alaska. “The fourth player, the producers, are going to have to deal with that reality.” The plan entails risks, obviously. By moving forward with plans to build a pipeline without an agreement with the companies that own the gas — Exxon Mobil, BP, and ConocoPhillips – Palin and the state are taking a gamble that, if and when the pipeline is completed, the companies won’t respond by saying, “We’re not interested in selling our natural gas to you — we’ll just keep using the gas to pressure our oil wells.” In a CNN interview, McGinniss argued, “In fact, the companies — Exxon, BP, and Conoco — that have the natural gas to have to go into the pipeline are simply not going to do business with Sarah Palin, because she won’t tell them the rate at which she’s going to tax that gas. As long as she takes a stand against sharing tax information with the big companies, they’re simply not going to put their gas in the line, and she has nothing to put into that line but hot air.” But the tax issue will be resolved, at some point, because all of the parties will have so much at stake. Sooner or later, at least one of the companies will realize the difficulty of explaining to shareholders why they are refusing to convert gas in the ground to cash in their pockets. The Alaskan, U.S., and Canadian governments will want the pipeline put to good use, and no party will be able to afford a stalemate. Every reporter aims to make a splash with his articles, and McGinniss has done so with this piece, putting the spotlight on a thorny, complicated dispute that’s holding up a major project. But the human ego and universal desire for credit is ever present. In his CNN appearance, McGinniss said that “less than 24 hours after the piece came out, she called a press conference in Juneau to announce that she was reversing her policy against sharing tax information with the oil companies. So, I think, up in Alaska now they’re calling this ‘The Portfolio Pipeline.’” Tax information gets shared, a dispute gets resolved, and the project lurches forward once more. We will see the day the gas starts flowing whether the locals end up calling it the Portfolio Pipeline or the Palin Pipeline. — Jim Geraghty writes the Campaign Spot on NRO.