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Ralph Nader > In the Public Interest > Political Payoff in Making

Suppose a group of very rich financiers came to your community and made this offer to your city council: “We the financiers will build a fuel plant on condition that when the foundations for the plant have been completed, the future consumers of the fuel will start paying for the costs of constructing the plant. If the plant is never completed, the consumers will continue nonetheless to pay for the unfinished part over the next 20 years. Consumers who pay for the plant will receive no dividends, no votes and no other rights of ownership because all ownership and profits will reside with us, the very rich financiers.”

Then suppose the financiers, to ensure the city council’s approval of the deal, spread campaign finance money around like loose gravy and hired your community’s leading Republican and Democratic law firms to swing their influence.

Would you be upset? Would you do anything about it? Well, it’s about to happen to tens of millions of American families and businesses who use natural gas. The gigantic oil and gas company taxation of American consumers to pay for the Alaskan natural gas pipeline already has been approved by Ronald Reagan and the Senate. Only the House of Representatives, which will vote on this scheme around Dec. 9, can stop this great Reagan-oil industry grease machine.

The chairman of the giant pipeline consortium, John McMillian, is betting that natural gas consumers won’t catch up with his behind-the-scenes lobbying and campaign finance maneuvers in Washington. McMillian has kept a low but powerful profile. He has hired two powerful Washington law firms, whose senior partners just happen to be Walter Mondale and Robert Strauss, to give the right signals to Speaker Tip O’Neill and other Democratic leaders of the House. One congressman told me that passing this pipeline financing deal could mean $10 million more to the Democratic Party coffers. One only can imagine what it will mean to the more demanding coffers of the Republican Party.

McMillian himself has contributed $5,000 to Mon-dale’s party fund-raising organization. Last summer he purchased a $10,000 table at a dinner held by the Democratic Congressional Campaign Committee.

It was just four years ago that McMillian specifically told Congress that his affluent consortium could build the pipeline without any federal loan guarantees and without any payment imposition on consumers. Now he sings a different song. The pipeline project is estimated to cost $50 billion—making it five times more expensive that the next-most-expensive completed construction project in the world—the Alaskan oil pipeline. The natural gas bearing this kind of cost burden—and the final cost is expected to go even higher—will come to market at an oil equivalency price of $69 to $107 per barrel.

Sen. Howard Metvenbaum (D-Ohio) valiantly tried to stop this proposal on the Senate floor. He calculated that Ohio residential gas consumers would pay as much as $114 to $125 more per year and that Ohio inĀ­dustrial users would pay $16,294 to $32,411 more per year on their gas bill. He pleaded his fellow senators: “The concept of consumers being forced to pay for the pipeline’s cost before any gas service is provided is an anathema to anyone who believes in fair play and freer enterprise.” He challenged his fellow senators to a debate in their own states. Seventy-five senators proceeded to ignore Metvenbaum and went along with the financiers who the Ohio senator paraphrased as saying, “Consumers, you underwrite it. You are rich, consumers, and the poor oil companies are not so rich.”

But those 75 senators did more than waive the 1977 legislation about who was going to pay for this pipeline, whether completed or not. These senators waived the 1977 ban and permitted Exxon, Arco and BP-Sohio—the Alaska gas producers—to own as much of the project as they want. These senators also (1) limited the authority of the Federal Energy Regulatory Commission (FERC) to adjust the project’s rates and regulate its construction once initial tariffs and conditions are set; (2) eliminated the public hearing requirements on FERC; and (3) allowed a $6 billion conditioning plant owned by the oil companies to be paid for in advance by consumers.

The oil company moguls are drooling. Why shouldn’t they? An October government report estimated that the three oil companies producing the gas on this project would receive an internal rate of return of more than 70 percent a year, if they merely obtain a 30 percent ownership in the pipeline.

Your average member of the House of RepresenĀ­tatives probably would be surprised to hear from you. But the politicians in Washington might well vote for consumers against this outrageous heist if you let them know that you know the cat is out of the bag.