Port Mac Rail Extension Money Pit

In recent weeks, the Frontiersman published a story on the continuation of the Port Mac rail extension. This undertaking will have a capital cost of $272.5 million, plus $1.5-2 million per year in maintenance costs. A University of Fairbanks study argues that over a 50-year period, the rail line is expected to provide a 23-fold return on invested state dollars if it’s fully utilized. However those estimates assume three proposed projects will be built: a gas line from the North Slope, three new coal strip mines in the valley, and a new cement plant near Fairbanks. Just looking at the real numbers, the rail extension would in effect subsidize the export of coal.

News surrounding the coal market recently gives further cause for concern. According to Reuters, the coal market will remain oversupplied this decade as demand dwindles with prices already 30 percent below a 2011 peak. As China grapples with rising pollution, shifting production from coal, the buyers for these proposed coal plants are leaving the table and our State government is leaving us with a growing money pit instead of a stronger economy.