AJOC EDITORIAL: ACES works...for North Dakota

Here’s a headline from Bloomberg you won’t see the Juneau spendaholics touting as they run their dishonest campaign against the recently signed oil tax reform bill: “Alaska North Slope Premium Drops to Lowest Level in 16 Months.”

Because West Coast refiners lack access to the more extensive pipeline infrastructure of the Midwest and rely heavily on imports, Alaska North Slope crude has long traded at a premium compared to West Texas Intermediate, or WTI, crude.

However, as Bloomberg reporter Eliot Caroom documented, that premium spread is shrinking. On May 28, the premium between Alaska North Slope crude, or ANS, and WTI was down to $8.90. That’s the lowest it has been since Jan. 4, 2012.

A few months ago, on Feb. 25, the premium between ANS and WTI was $18.75.

What’s going on is simple, and it’s not good for Alaska in more ways than just the drop in prices.

“ANS has weakened against WTI and Bakken this year as refiners including Phillips 66 announced they would move more oil to their West Coast refineries from North Dakota,” Caroom wrote.

Caroom then quotes Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York: “The rail movement from the midcontinent west is competing with ANS,” Lebow said.

“With the additional rail capacity, it makes sense that WTI-ANS has tightened.”

Well, it makes sense to anyone with a basic working knowledge of global markets, supply and demand, or math.

So don’t bother telling Les Gara, Bill Wielechowski, Hollis French, or any of the other economic illiterates who don’t understand anything except playing political games with Alaska’s future and who are recklessly injecting at least another year of uncertainty into our state business climate with their foolhardy drive to repeal SB 21.

While Gara and the Gang mug for cameras and spread their horse pucky, the Bakken fields in North Dakota that now surpass the North Slope in daily production are not just taking jobs and investment away from Alaska anymore.

Now the cheaper Bakken crude is taking away Alaska’s market share on the West Coast.

But don’t worry, I’m sure Wielechowski will have a press release out soon explaining why all this is proof ACES works. Yeah, ACES works great, if you’re a senator from Bismarck.

05/30/2013 - 7:21am