The governor made no reference to any of Kvisle’s remarks. It was as though she didn’t even know he’d made them. Indeed, she seems to have a remarkable capacity for hearing only what she wants to hear. She may not be “a fucking psychopath,” as one very prominent Alaskan told me she was, but Palin does seem prone to what psychologists call magical thinking. At its most basic level, this is a tendency to believe that you exert more control over events than you actually do. It is the irrational belief that thinking is the same as doing, that you can actually cause a circumstance or an event to occur simply by wishing for it. It is common and natural in young children. Believing that you will become president of the United States someday simply because you want to would be an example of magical thinking. Another example would be believing that you can make a gas line happen, if only you want it badly enough and—as Palin has done—you ask schoolchildren to pray for it. Believing that as governor of Alaska you can bend Exxon Mobil to your will is magical thinking in the extreme.

I came back from Alaska with the sense that the further Palin goes, the more she resembles not Joan of Arc but Eva Perón. In their book Evita, Nicholas Fraser and Marysa Navarro wrote of Perón that “the only people with whom she felt totally at ease were those who accepted what she was doing unconditionally” and that eventually “there was no one left around her capable of criticizing anything she did.”

That seems to be the way Palin wants it. It’s almost as if, long ago, she adopted as a personal motto Mark Twain’s sardonic observation “All you need in this life is ignorance and confidence, and then success is sure.”

Events, however, are not as easily manipulated as people. The price of oil has fallen by more than $100 a barrel since the halcyon days of August, when the Alaskan legislature approved the $500 million payment to TransCanada. The state now faces a 2009 budget deficit of $1.65 billion—four times as much as Palin’s Department of Revenue estimated in December but still only half of what Finance Committee co-chairman Hawker foresees. That $500 million no longer looks quite so much like chump change.

And the pipeline? In her annual State of the State address to the legislature on January 22, Palin saw only clear skies ahead. “In Alaska,” she said, “all roads lead—well, really, we only have the one—north. But it leads to the North Slope and to the central importance of our North American gas line. America’s security, Alaska’s revenue, Alaskan careers, affordable fuel…all these hinge on the success of this great undertaking. I assure you: The line will be built. Gas will flow. Alaska will succeed.”

She made no reference to the irony of putting America’s security and Alaska’s future in the hands of a foreign company. The same day, however, at an oil-service-company conference in Anchorage, a couple of people who seemed to have a firmer grip on reality were not so sanguine.

“It’s certainly going to be taken off the urgent list,” said Ed Kelly, vice president of Houston-based energy consultants Wood Mackenzie. Brian Frank, president of BP, was even gloomier. “It’s not a pretty story right now in terms of North American natural-gas markets. Without stakeholder alignment, it’s difficult to

visualize the project going forward.”

“Stakeholder alignment” means the state of Alaska and the companies that control the natural gas on the North Slope coming to terms, something Palin continues to resist. “How do you know the economics for your project if you don’t know what you’re going to pay in taxes?” Frank asked.

Palin had no answer. She was off to the Alfalfa Club dinner in Washington, and then she was busy endorsing Texas Governor Rick Perry in that state’s Republican gubernatorial primary. As Palin put it, “He walks the walk of a true conservative, and he sticks to his guns. And you know how I feel about guns.” Then she was sending an email to new members of SarahPAC—the political action committee she formed after the election—assuring them that she would maintain her national presence.

The Obama administration may want to prioritize construction of the Alaska natural-gas pipeline. And even in the deteriorating economic climate, the Denali project of BP and ConocoPhillips is moving forward. But Trans­Canada is hedging its bets, now saying that, in order to proceed, it may need Congress to authorize even more than the $18 billion it has already set aside to reimburse the pipeline builder, should the project fail after construction. “We need to encourage the U.S. government to perhaps increase the size of the loan guarantees,” CEO Kvisle says. Given the staggering sums the government has already committed to propping up failing U.S. companies, a commitment of more billions to a potential future bailout of a Canadian corporation seems about as likely as a sunrise over Prudhoe Bay on Christmas morning.

The bottom line is that for all her posturing, and as much as she might wish it were not so, Palin’s only accomplishment in two years of work on the pipeline project has been to give $500 million from Alaska’s budget to Canadians and to leave Alaska, once again, at the not-so-tender mercies of Big Oil.

And with Palin’s attention shifting several thousand miles to the southeast, Alaskans are starting to catch on. In its January 27 edition, Bradners’ Alaska Legislative Digest, a publication that had long been supportive of Palin, had this to say: “The problem we see is that we continue to see Governor Palin as not really interested in governing, not interested in chasing an issue to the bottom. Further, our assessment is our governor just doesn’t understand the difference between campaigning and governing. We increasingly suspect that Governor Sarah Palin now has a focus that is Washington D.C. beltway politics, and Alaska may pay a price for pandering to interests quite far to the right of center.”

Looks like the great white whale wins again.