Posted Thursday, January 19, 2017 - 11:37 am
The last-minute decision by President Obama to indefinitely ban any future offshore energy activity in the U.S. Arctic should be reversed by President Trump, soon — within the first 100 days of his term.
Why? Obama's decision was taken with no public comment or consultation ahead of time. Resources worth more than $1 trillion at today's low prices were put off limits to human use.
Large supplies of natural gas, mankind's "bridge fuel" to lower-carbon power, including recent discoveries, were locked away — while Russian Arctic gas, much further away from world markets, continues its march toward production.
Take away development and the effect is to dampen Arctic research, monitoring and infrastructure development — things we need to establish leadership in this newly accessible ocean.
But there's one more reason the ban should not stand: It was probably illegal. The state of Alaska's equities in law were never met. This can be rectified by court decisions if the state challenges it in court — but America's energy future is too important to tie up for years in litigation.
Only a few months ago, I — a pro-production, pro-conservation Republican — would have said that President Obama executed an Arctic policy based on balance. I joined an October Atlantic Council conference where a senior White House official publicly noted that "responsibly developing Arctic oil and gas resources aligns with United States' 'all-of-the-above' approach to developing domestic energy resources."
And yet in the space of eight weeks the White House performed a stunning about-face, first removing the Arctic from the next offshore leasing program, and then delivering the coup-de-grace by killing any prospect of future development. Suddenly the Arctic ecosystem was simply too fragile to even consider domestic energy development, irrespective of past exploration. We had adopted a "drain Russia first" energy policy for the Arctic.
So what changed in the space of those two months? Looking at these decisions, it's hard to reach any other conclusion than that the White House was reacting to the November election.
Under the new reality of President-elect Trump's stunning victory, the administration decided to toss every land mine it could to slow or prevent oil exploration and production in Arctic waters.
It blew up the bridges to the state of Alaska, the Alaska Native community, and to other Arctic nations pursuing offshore development that its own policy had built.
The "leave-it-in-the-ground" crowd had crowded out the "all-of-the-above" policy, and in a manner that was most undemocratic and unfair. Keystone Pipeline got eight years of extended hearings before Obama killed it. Alaskans who had worked out how to explore the Outer Continental Shelf got no public process, not even a tweet.
A detailed analysis of the Outer Continental Shelf Lands Act and its previous applications highlights three primary difficulties with the White House's order; that there's no precedent to show a ban should be permanent, there is nothing to suggest a subsequent White House cannot overturn the decision, and that the administration's application of the rule conflicts with previous uses and several of the act's wider specifications.
The relevant language permitting a moratorium on energy development sits in section 12(a) of the act and states that the president may "withdraw from disposition any of the unleased lands of the outer continental shelf." Crucially the law never suggests that these withdrawals should be considered "permanent" or "irreversible," a point the White House tacitly admitted when it termed the decision an "indefinite" action. That argument is corroborated by past applications of the rule, which in each case have included a specified time limit.
Nor is there anything to suggest that a 12(a) ruling will handcuff subsequent administrations. After President George H.W. Bush implemented a ban on Atlantic and Gulf of Mexico waters, President George W. Bush used the rule to remove restrictions, effective immediately on his order.
Put simply, precedent suggests that if one president has been able to use an executive memorandum to implement a ban, that president's successor should be able to use the same authority to repeal the regulation.
Finally there are numerous issues with the way the administration has applied the regulation.
According to its text, the act was explicitly designed to ensure that the Outer Continental Shelf is "available for expeditious and orderly development." Previous restrictions have reflected this point and protected specific, discrete areas of the continental shelf with special characteristics.
In contrast the Arctic moratorium covers almost the entire Beaufort and Chukchi seas, a combined area of more than 125 million acres. It is hard to argue that President Obama's use of the rule fits with Congress' intent of ensuring access to the continental shelf.
Similarly, the OCSLA also requires that the federal government consult with the governor of any state where restrictions are under consideration. Alaska state officials have already noted that the administration failed to conduct any such discussion with them, a point borne out by Gov. Walker's comment that the decision "marginalizes the voices of those who call the Arctic home."
I hope Alaska sues.
As recent polling has indicated, Alaskans overwhelmingly support offshore energy development in the Arctic, a point the administration appears to have been cognizant off when it neglected to discuss the ban.
President Obama's decision to implement a ban in the Arctic poses several troubling realities. Any attempt to cut carbon should be applied fairly, with public input, with maintaining American energy independence in mind. Technology development, including finding ways to decarbonize hydrocarbons, is the best approach.
But because the Obama administration appears to have actively chosen to re-interpret the intention and application of the original act, its decision is clearly beyond the scope of executive control.
It ignores the spirit of previous rulings, disregards state and regional authority and has no historical parallel. President Trump should overturn it as a priority in his first 100 days in office.
Mead Treadwell served as lieutenant governor of Alaska, 2010-2014, and as chair of the U.S. Arctic Research Commission, 2001-2010.
Posted Wednesday, January 18, 2017 - 12:20 pm
We aren’t hearing much from the opponents of the 2013 oil tax reform lately.
Facts tend to get in the way of rhetorical hyperbole, and it appears that reality has finally caught up with Democrats and Gov. Bill Walker, who collectively agitated for the repeal Senate Bill 21 in a 2014 voter referendum.
Losing that fight didn’t end the debate, however.
Nor did the undisputed evidence from Walker’s own Revenue Department that SB 21 was bringing in more money than the previous system as prices started to slide late in 2014.
Record employment and record drilling on the North Slope in 2015 didn’t stop the noise, either.
The 2016 fiscal year increase in production — the first since 2002 — was barely noted as the news came amid a chaotic end to the session and Walker vetoing some $1.3 billion in spending on June 29, about half of which was cutting the Permanent Fund Dividend to $1,000.
The calendar year also closed with an increase in production, which followed by only a couple weeks the third-best lease sale on the North Slope since the area-wide offerings began in 1998.
Now comes the news that ConocoPhillips has followed the Nanushuk formation now under development by Armstrong Energy and Repsol with one of its own in the same play that holds 300 million barrels of oil that could flow at a rate of 100,000 barrels per day.
The Armstrong-Repsol project in the neighboring Pikka Unit could flow at a rate of 120,000 barrels per day.
Those two projects combined are a bit less than half of the current fiscal year average through the Trans-Alaska Pipeline System of 510,000 barrels per day, and both companies are further exploring their acreage this winter with the belief there’s even more to be found.
Add in ConocoPhillips’ Greater Mooses Tooth 1 and 2 now in construction and permitting, respectively, and that’s another 60,000 barrels per day with GMT-1 to provide half that total beginning late in 2018.
Should the more longshot prospect being explored by Caelus come to fruition with up to 200,000 barrels per day from Smith Bay, we now have developments that nearly equal the current throughput potentially coming online by the early 2020s.
As we ring in the new year with the state expected to lose 7,500 jobs in 2017 and the sharply divided Legislature convening with its last best chance at fixing a $3 billion-budget deficit, it is the oft-maligned oil industry that is providing a lone ray of hope for the Alaska economy.
When the Legislature inevitably takes up oil tax policy this session, it is important to remember who was completely wrong about SB 21. All of the current developments and the 2016 increase in production would have been at risk if the Democrats and Walker had their way in 2014.
Walker, for his part, had a convenient case of amnesia in responding to the ConocoPhillips announcement after he proposed tax increases on the oil industry just last session.
“It demonstrates that Alaska remains an attractive place to do business and look for oil,” Walker said.
Certainly it does “remain” attractive, but that’s no thanks to Walker or Democrats whose preferred policy resulted in continued annual decline and no discoveries.
It is not hard to draw a straight line from the change in policy in 2013 with the increase in activity and possibly the biggest find since Kuparuk on the North Slope with the Nanushuk play.
ConocoPhillips drilled no exploration wells in 2010, 2011 or 2012. It drilled three last year, made a big find and snapped up hundreds of thousands of acres around its discovery in December despite losing billions in 2015 and 2016 as prices cratered.
The only good thing about that was a temporary pause in Sen. Bill Wielechowski’s banal quarterly press releases pointing to ConocoPhillips profits as a reason to jack up its taxes.
“There is a direct correlation between investment and tax policy,” ConocoPhillips Alaska President Joe Marushack said on Jan. 13 as he described the company’s process for allocating capital between Alaska and the rest of its global portfolio.
“If the tax changes, the economics change, the allocation changes,” he said. “It’s very simple.”
So simple even the Democrats and the governor should be able to get it.
Andrew Jensen can be reached at [email protected]
Posted Tuesday, January 17, 2017 - 4:45 pm
Dear Alaska Legislators,
We know each of you wants to do what is best for our state's long-term future. We all want jobs for Alaskans, a healthy economy, a stable state fiscal structure that helps attracts private investment to Alaska, and quality education and public services to serve the needs of our residents.
We are encouraged when we hear legislators talk about Alaska's long-term economic health. But we are discouraged that we are running out of time to accomplish the one goal that must underpin all the others — a stable fiscal structure for our state treasury.
We write you today to once again offer our encouragement, with an emphasis on the urgency of the situation as you prepare for the 2017 legislative session.
We are sharing this with the public because Alaskans need to understand this is a critical time for our state. We've grown wealthy from oil development, and we all hope for decades more of oil and gas production in Alaska.
But the time has come for a diversified revenue stream into the state treasury, and Alaskans must support their legislators in making the hard decisions ahead.
The facts are clear:
• The fiscal 2017 state unrestricted general fund budget is about $4.36 billion.
• Even with higher oil prices of recent weeks, it looks like the FY17 draw on savings to cover the budget will total close to $2.92 billion.
• With that math, the state expects to start the fiscal year 2018 on July 1, 2017, with perhaps $3.7 billion remaining in the Constitutional Budget Reserve.
• Prudent fiscal and cash management requires we keep at least $2 billion in the budget reserve, which means Alaska must make changes to its fiscal structure during the 2017 legislative session.
• If the budget reserve disappears as an option for covering the state's needs, the Permanent Fund earnings reserve becomes the only alternative.
As of Nov. 30, 2016, at approximately $8.8 billion in realized gains, that reserve account looks healthy but is always susceptible to investment volatility, and any unplanned withdrawals could jeopardize the Permanent Fund dividend.
It appears to many Alaskans that nibbling at the edges of the problem in the 2017 legislative session and drawing $2 billion to $3 billion from the budget reserve for one more year would bring the state perilously close to writing unplanned checks out of the Permanent Fund.
It's time for a managed answer, not a default answer, and we urge you to take action and assure you we will support you in that effort.
The options for a long-term fiscal plan are the same ones Alaska has been looking in the past several years. We see four major pieces to any solution:
• An orderly, responsible, managed use of Permanent Fund earnings, including a change in how the dividends are calculated. We cannot spend the same dollar twice, which means a dollar that goes to schools, roads, troopers, the courts and other public services cannot also go to dividends. Legislators are fully aware that choices must be made. If, for example, the Legislature adopted a percent-of-market-value approach to limiting the annual withdrawal from the Permanent Fund, and if that were set at 4.5 percent of the fund's average market value looking back five years, the maximum draw for fiscal 2018 would be about $2.43 billion. And if, for example, you wanted to maintain a $1,000-per-person dividend from that total, that would leave about $1.73 billion for public services.
• An orderly, responsible, managed examination of state spending and potential for further budget reductions in the range of $250 million to $500 million implemented over two to three years to lessen harm to the economy and allow the public, municipalities and businesses time to prepare for reduced services.
• A responsible broad-based tax, such as a modest personal income tax on Alaska's higher income earners and/or a sales tax that would accomplish several goals: 1) Give all Alaskans a personal stake in how state money is spent; 2) Collect income from nonresidents who come to Alaska to work, and go home to spend their money; and 3) Help diversify state revenues from our total dependence on natural resource prices and investment earnings.
• Excise and industry-specific taxes of perhaps $100 million a year on motor fuels, alcohol, tobacco, fisheries and mining.
Here is the math for the current set of options:
$4.36 billion fiscal 2018 state unrestricted general fund budget using fiscal 2017 as the base.
• $1.59 billion in general fund revenues (assuming today's improved oil prices remain)
• $250 million to $500 million in additional budget cuts, including re-examining oil and gas tax credit policy
• $1.73 billion in Permanent Fund earnings, after paying a $1,000 dividend
• $500 million in new revenues (income and/or sales tax, higher excise taxes and industry taxes, including expansion of the corporate income tax to cover LLCs and S Corps.)
That still leaves a $40 million to $290 million shortfall, which we could work to close over the next few years.
By taking action on the major pieces above, we gain some time. Meanwhile, we should not forget that the state needs to deal with the hundreds of millions of dollars we owe to companies for unpaid oil and gas tax credits. We need to resolve that debt if we're to truly solve our fiscal problems.
And we need to remember that, because it will take time to implement any new taxes and to collect on other changes in Alaska's tax structure, we should expect a larger drawdown on our budget reserves in fiscal 2018 as the changes take effect.
The budget reserve, however, can only afford a limited future drawdown, so we need to make the big decisions in 2017 that will extend the life of the reserve to give us the time to put our state on a path to fiscal stability.
There isn't enough time for new oil or triple-digit prices to save us. That's wishful thinking, and we need responsible decisions based on today's reality.
We support you in the challenges ahead, and urge you to make those decisions in 2017. Anything else puts the future of our state at risk.
Ed Rasmuson is a retired banker. Bill Corbus is a former commissioner of the Alaska Department of Revenue. Jeff Cook is an energy consultant. Gail Schubert is CEO of Bering Straits Native Corp. Mike Navarre is mayor of the Kenai Peninsula Borough.
Posted Wednesday, January 11, 2017 - 12:48 pm
Since 2002, the soap opera that has become Alaska’s natural gas pipeline hopes has been never ending. Today, just the Alaska LNG Project 3.5-billion cubic feet pipeline proposal remains, with the Alaska Gas Development Corp. trying to bring the project to fruition under Gov. Bill Walker.
The Dec. 30, 2016 press release from AGDC continues the soap opera with AGDC extolling the “concluded agreements … “with the Producers … that will enhance AGDC’s ability to commercialize Alaska’s North Slope natural gas resources.”
The next two pages have sections labeled “Cautionary Statement” by each “partner” in the project that are basically disclaimers with respect to anything actually happening … ever. Nothing new there.
In the meantime, massive shale play discoveries and discoveries around the world, increasing export capacity in the Lower 48 and the ongoing development of the Kittimat, British Columbia, proposed LNG and oil terminals are further eroding any hope for Alaska to move its natural gas to market.
An increasing project cost that has risen from $24 billion in 2010 to the present $45 billion to $65 billion has further complicated the marketing of North Slope natural gas to a world market — a world market that has contracted due to economic conditions that are not improving.
There is some glimmer on the horizon with the conversion of more coal power plants being converted to natural gas both in the U.S. and abroad, but not enough to give rise to the market prices for LNG that existed prior to the energy crash in 2014.
BP plc recently announced its partnership with Kosmos Energy Ltd. for development of deposits of gas and oil offshore Mauritania and Senegal estimated to comprise with present knowledge 15 trillion cubic feet to 50 trillion cubic feet of natural gas, and 1 billion barrels of oil.
Both ExxonMobil and ConocoPhillips have major oil and gas developments in the Pacific and off Australia that are intended for Asian markets. ConocoPhillips supplies an estimated 14 percent of Japan’s LNG market with natural gas from Qattar.
Probably the biggest blow to the Walker Administration’s dreams of a natural gas pipeline and a serious investment by the producers to increase oil production on the North Slope is the 20 billion barrels of oil and 16 trillion cubic feet of natural gas discoveries announced in November 2016 in the Texas Wolfcamp shale formation.
In 2015, the state of Ohio announced another 5 trillion cubic feet of natural gas discoveries in its Utica shale play. The finds continue in the shale plays.
Meanwhile, in Alaska, two weeks ago, more layoffs on the North Slope.
With a hostile regulatory environment and litigious opposition, how is that our governor and the Legislature think that Alaska can complete with domestic sources of oil and gas?
Where the shale plays are located, the driller can literally make a deal with the farmer who owns the land without government interference or the threat of public interest litigation, and have a drilling platform on-site and working within 30 days of the initial handshake.
In Alaska, that same progress takes at least 10 years or more, given the ever-present threat of public interest litigation by the anti-development Outside environmental interests.
The investment in Alaska to start of activity would be upwards of $100 million and a decade in lost time by the time the drill platform is finally on the property and the first pipe stem begins a long trip downhole.
This is why elephants are preferred in Alaska to smaller field development. This situation must change if Alaska is to compete in a world market.
If Alaska is expected to receive continued oil and gas development in this state with any degree of priority, given the world market and the economic downturn, fiscal certainty is an idea whose time has come.
Otherwise, Alaska can sit and watch while massive foreign and domestic finds receive the money that would, could have gone to Alaska’s fields and prospects.
The producers and new companies in the Alaska oil and gas development have continued to ask the Legislature for “fiscal certainty” before there is any firm contract to move forward with further oil and gas development, including the natural gas pipeline project.
Fiscal certainty is simply a guaranteed, fixed tax and royalty structure that could be negotiated per development. The bar is that Alaska’s Constitution does not allow one administration or Legislature from enacting law that binds a future state government. It is time to remove this impediment.
If Gov. Walker and the Legislature want to keep Alaska in competition for resource development investment, it is time this “we are owed” mindset ends.
Deregulate and reduce taxes in face of the current recession, and stop growing government. Our economy is slowing, there is a worldwide depression; it is time to face reality.
Provide “fiscal certainty,” or watch the money go to other developments outside of Alaska.
Larry Wood is President of Terra Resources, Ltd., a 62-year Alaskan and former Valley Coordinator for the Walker 2010 and 2014 campaigns.
Posted Thursday, January 05, 2017 - 9:59 am
A brutal year in the Alaska oil patch ended on a positive note as calendar year 2016 followed the fiscal year trend with an increase in North Slope production.
Amid the worst price environment since the late 1990s resulting in thousands of layoffs for the oil industry, production grew in the fiscal year ended June 30 and for the calendar year ended Dec. 31.
With an average of about 514,000 barrels per day for the fiscal year and 517,000 for the calendar year, the state’s most recent production forecast for the current fiscal year predicting a drop to 490,000 appears extremely conservative.
After many recent production forecasts have overshot estimates, the state adopted a new, in-house approach that officials acknowledge will result in lower predictions.
Considering the state’s budget woes, erring on the conservative side is certainly not a bad thing. It will also leave room for a pleasant surprise by the end of the fiscal year.
Current North Slope production from July 1 through Jan. 2 is averaging 507,000 barrels per day, far greater than the forecast as the traditional peak production winter months await.
At 490,000 barrels per day, total fiscal year production would amount to nearly 179 million barrels of oil.
At the current production average, the Slope producers have already pumped 94.4 million barrels through Jan. 2.
What that means is that production would have to average 472,287 barrels per day for the rest of the fiscal year to hit the state forecast of 490,000 per day.
While there has no doubt been a pullback in drilling and well workovers from record levels in 2015, there is as of yet no indication that the production will fall by that much from the current daily average.
In the 2016 period from Jan. 2 to the end of the fiscal year on June 30 while prices averaged less than $40 per barrel, North Slope production averaged nearly 527,000 barrels per day.
That means that to hit the state’s production forecast, the daily average would have to drop by about 55,000 barrels per day during the same period of 2017 — a 10.4 percent decline — even though prices have rebounded to better than $50 per barrel since OPEC announced it would cut production back in November.
There is a conspiracy theory out there that the state is intentionally lowballing price and production forecasts to make the state’s fiscal situation appear more dire than it is — and it is dire — in order to make a harder sell for its package of revenue measures and the use of Permanent Fund earnings to plug the budget deficit.
There is no need to go there, but there is a need to push back on those who keep advancing the idea — including Lt. Gov. Byron Mallott — that the state’s days as an oil realm are drawing to a close.
Given the production increases, the third-best lease sale in decades in December and strong prospects under development, the evidence does not back up those who are spinning the end-of-oil narrative.
Gov. Bill Walker has not exactly expressed enthusiasm for prospects by independents Caelus and Armstrong, and his Natural Resources Deputy Commissioner Mark Wiggin reacted to questions about the 2016 production increase not with celebration but with an Eeyorish comment about how we’re not heading back to our peak production days in the late 1980s.
Production increases should be welcomed, not downplayed, and momentum established after the passage of Senate Bill 21 should be sustained rather than stifled.
The North Slope producers gave the state something to feel good about to end the year, and beating the ultra-conservative forecast in the new year would result in a much-needed boost to the bottom line.
Andrew Jensen can be reached at [email protected]
Correction: The original version of this column attributed a statement about not returning to late 1980s production levels to Tax Division Director Ken Alper. The statement is actually attributable to Natural Resources Deputy Commissioner Mark Wiggin.
Posted Wednesday, December 28, 2016 - 12:10 pm
Not unlike an evicted renter who plugs the toilets and punches holes in the drywall in a petulant rage against the homeowner, President Barack Obama appears intent on causing as much damage as possible before he’s finally forced to exit the White House on Jan. 20.
In between pointless musings over whether he’d have beaten Donald Trump in a hypothetical matchup for an unconstitutional third term and scapegoat-seeking for Hillary Clinton’s well-deserved loss on Nov. 8, Obama has been wreaking havoc on American industry and our closest ally in the Middle East as his eight disastrous years come to an end.
Ten days after voters rejected Obama’s preferred successor in favor of his complete opposite, he yanked the Beaufort and Chukchi seas from the five-year outer continental shelf leasing plan as a precursor to his near-complete withdrawal of the areas a month later that he and his green mafia believe can’t be reversed under a President Trump.
He’s ignoring the law and the permitting process in an attempt to shut down the Dakota Access Pipeline while his agencies continue to promulgate ridiculous “midnight” rules in defiance of Congress.
It’s nothing new for Obama, who took the shellackings he was handed in the 2010 and 2014 midterm elections that cost him the House and the Senate, respectively, not as a message to change course but to continue pushing his rejected agenda on an American public that took its revenge by electing Trump and preserving Republican control of the Senate.
Obama’s policies both domestic and foreign have been a disaster, from the unaffordable “Affordable Care Act” to Libya, Syria, Iraq, Iran and the infamously failed “reset” with Russia that sees him leaving office accusing the dictators he once buddied up to of meddling in the election to defeat Clinton.
The free-wheeling and unfiltered Trump has rattled nerves with his tweets about nuclear arms and actions such as taking a phone call from the Taiwan president, prompting the more hyperbolic to claim he’s going to start World War III with a 3 a.m. Twitter rant.
Instead it is Obama who seems determined to leave Trump with a world teetering on the brink of major conflicts as he floats sanctions against the Russians and stabs Israel in the back with a twist of the knife from the can’t-be-gone-soon-enough Secretary of State John Kerry.
Make no mistake, Israel will not abide by or respect the U.N. Security Council resolution declaring its settlements illegal and Jerusalem to be occupied territory, nor any plans Kerry has for laying out a vision for a peaceful solution after eight years of Obama betraying Israel at every turn and bending over while the Iranians pursue a nuclear weapon.
Israel will not allow itself to be threatened, sanctioned or attacked by its enemies, yet Obama has made another of his endless series of miscalculations in the Middle East that make a widespread conflict more likely, not less.
At least Israel knows it will have a staunch ally once again when Trump takes office, and we will see how far he goes to restore the relationship and whether Congress will follow through on calls from some to defund the U.S. contribution to the United Nations budget.
A better idea couldn’t be imagined than that by columnist Charles Krauthammer that Trump should find a way to kick the U.N. out of New York City and turn the building into condos.
At this rate, President Bill Clinton’s staff taking all the “W” keys off the computers and stealing furniture looks downright cute next to the malevolent Obama as he leaves office filled with anger at the American public who elected a man determined to undo his failed legacy.
The “undo list” is getting pretty long, and Jan. 20 can’t get here soon enough.
Andrew Jensen can be reached at [email protected]
Posted Wednesday, December 21, 2016 - 2:35 pm
The next year could be even wilder than 2016, if that’s possible.
In less than a month, Donald Trump will be sworn in as the 45th president of the United States and the Alaska Legislature will convene in Juneau for its last serious crack at addressing the state’s burgeoning budget deficits.
It’s almost appropriate that one of Gov. Bill Walker’s last acts of the year was to kill the Juneau Access Project, because the Legislature has run out of road to kick the can.
The state’s savings won’t last more than another year and we’ll have to wait and see whether the dynamic of a three-way power struggle between the Republican Senate, Democrat House and independent governor forces a solution or only produces gridlock worse than what we’ve witnessed in the last two years.
Still, the ringing in of a new year is supposed to bring optimism and in that spirit here is a wildly optimistic wish list for 2017:
Stop pandering and fix the problem
This goes for both the budget hawks and the tax credit hawks heading to Juneau. To the budget hawks: Stop pretending there are hundreds of millions of dollars still to be cut out of the budget.
No doubt there are cuts that can be still made, and efficiencies to still be found, but none of it will add up to enough to avoid using Permanent Fund earnings, and thus reducing the dividend, or raising additional tax revenue.
There was bipartisan squealing when Walker cut the PFD appropriation by $666 million, but nobody on the right or the left side of the aisle ever put forward a plan to reduce the budget by that much.
Any tax increases, however, should go to the right places in the budget. Raising the fuel tax makes sense if it helps the Department of Transportation budget. The same goes for fish taxes.
To the tax credit hawks (and Walker): Pay the state’s bills. It doesn’t matter where you come down on the credit issue; this money is owed and it has to be paid sooner rather than later.
Democrats, and the Republicans who switched sides, are doing great damage to the state by demagoguing this issue as credits versus PFDs.
By all means, find a way to replace the credit program with something else that will still encourage development such as royalty modification (if they want to forgo future revenue to avoid the up-front development costs), but the state must get right with the companies it owes.
Democrats howl about “Big Oil” benefitting from the credits but in fact it’s “Small Oil” that is getting screwed and being forced to sell off credits to the majors to raise cash, and therefore reducing future state revenue.
The best thing the majority leadership has done is put Reps. Andy Josephson and Geran Tarr as co-chairs of the Resources Committee. They both seem to get that the state has become an unreliable partner to industry, and that whatever changes take place must first do no harm. Paying the bills would be a good place to start rebuilding the state’s reputation.
Tax and regulatory reform
On the federal side of things, we’ll see if noted budget guru House Speaker Paul Ryan has the stuff to finally fix our bloated and onerous tax code.
Corporate tax reform should be a must. Ours is the highest in the world and yet accounts for less than 10 percent of tax receipts.
That’s because corporations do everything they can to minimize their bills, often paying effective rates far less than 35 percent through deductions and exemptions, keeping their overseas profits offshore, or up and moving completely out of the U.S.
For those who complain about the influence of lobbying in D.C., you could probably wipe out half the lobbyists, lawyers and accounts there if you cut the corporate rate to 15 percent and removed all the incentives to game the system.
The same goes for regulatory reform. The bigger the government gets, the more big business gets to take advantage. Dodd-Frank is a prime example of how a regulatory reform kills small players and benefits the big hitters.
A smaller government is less influenced by big money.
The word is the Republicans have a plan in place to repeal it. Whether they have a plan to replace it is less certain.
One easy fix should be on the table, as should one fundamental one.
The easy fix is knocking down the state line barriers to buying coverage. Nobody understands this better than Alaska, where we’re left with just one provider in the individual market because our small population is almost impossible to manage as a risk pool.
Put us in a pool with 300 million other Americans and premiums would drop instantly.
The fundamental fix should be transferring to a system where all individuals own their policy and don’t depend on an employer to provide it.
Nobody loses their car insurance or life insurance or home insurance if they lose or leave a job. A system where you own your health policy and can shop for it in a national marketplace like every other insurance product would go a long way toward finally putting the “Affordable” in the Affordable Care Act.
If the legislators in Juneau and the new Congress and president could pull off this wish list it’s going to be Merry Christmas indeed in 2017.
Posted Friday, December 16, 2016 - 12:12 pm
President-elect Donald Trump reportedly offered defeated Democratic nominee Hillary Clinton five cents on the dollar for the fireworks victory display she canceled at the last moment, but he could save all his money and just watch liberals’ heads explode as he fills his cabinet.
There’s a saying that you can judge someone by the company they keep, which is true, but sometimes it as just as useful to see who are their adversaries.
Consider the latest statement from Greenpeace regarding the choice of Rep. Ryan Zinke, R-Mont., a 23-year veteran of the Navy SEALs, as his choice for Interior Secretary:
“Trump is on record calling climate change a hoax, and his proposed cabinet is filled with climate deniers, oil and gas industry shills, and hateful bigots. Climate-denying Montana congressman Ryan Zinke will fit right in. Zinke never worked for the people of Montana. He works for the fossil industry and coal companies, shilling for coal export terminals in disadvantaged communities in states he does not even represent.”
Gee, Greenpeace, how do you really feel?
It goes on:
“If climate change denial is going to be the official position of the Trump White House, then relentless resistance will be the official position of the American people.”
It’s cute that Greenpeace thinks it speaks for the American people. Cute like how little kids can’t pronounce “spaghetti,” with the only difference that kids eventually grow up (or don’t, if you look at the Play-Doh, coloring books, safe spaces and therapy dogs deployed on college campuses after Trump’s improbable win).
What a year it has been.
Here in Alaska it began with Gov. Bill Walker picking a fight with the producers over the Prudhoe Bay Plan of Development and is coming to a close with the CEO of one of those companies now poised to become the unlikeliest choice for Secretary of State by the unlikeliest president in U.S. history.
Rex Tillerson of ExxonMobil, who famously called Alaska “its own worst enemy” in September 2015, is about as unconventional a choice as Trump could make and although at first impression it was a head-scratcher on second thought there is likely no CEO with more diplomatic experience than Tillerson.
Who is better equipped to deal with the Russian strongmen like Vladimir Putin or the corrupt oil emirs of the Middle East than a man who actually has to do business with them?
An account of Tillerson in Forbes described him as the most “no nonsense” CEO the writer had interviewed in 17 years, as a man who still lists Eagle Scout on his resume and actually lives by the Boy Scout motto.
The left is howling about ExxonMobil’s Russian business interests after just voting for a candidate who whored herself out all over the world trading political favors and influence in exchange for Clinton Foundation donations that kept her, her husband and daughter living a luxurious lifestyle far beyond anything they’ve rightfully earned on merit.
He’s also a major step up from the feckless John F. Kerry, who has gotten rolled time and again like an Atlantic City tourist sitting at the poker table in the famous scene out of “Rounders.”
Put it this way: Nobody is going to look around the table at Tillerson and peg him for the sucker.
Rick Perry at Energy. Zinke at Interior. Rep. Scott Pruitt at EPA.
The media is aghast that Trump is nominating people who have blasted the agencies they are set to lead, which just goes to show they still don’t understand what’s going on any more than they did on Nov. 7.
The federal bureaucracy, which became a weapon under President Barack Obama as he failed to get anything through Congress, needs to be reined in and the people who are most familiar with its worst excesses are best positioned to do it.
The Energy Department doesn’t produce any energy. The EPA stands for Everything’s Prohibited Agency. The Education Department was formed in 1977 and we’re barely in the top 20 of math and science scores among global peers.
We can only hope that the polling that as much as 35 percent of the federal workforce would quit if Trump won was even half accurate. It would be a good start.
Posted Thursday, December 08, 2016 - 2:11 pm
The consequences continue to reverberate after Gov. Bill Walker’s veto of more than $600 million owed to independent explorers and producers in the last two years.
A pair of stories in the last week detail one company trying to meet its loan obligations to the state even as the state refuses to make good on its obligations to the company, and the other reveals that the major North Slope producers are now buying up the vetoed credits for pennies on the dollar to reduce their future tax liabilities.
We can begin with BlueCrest, the Cook Inlet company that is now drilling into the Cosmopolitan prospect from its onshore rig on the southern Kenai Peninsula.
The State of Alaska currently owes BlueCrest about $17 million in credits, which are rebates for prior spending on exploration and development.
BlueCrest intended to use the money owed by the state to fund a reserve account that was required to have $15 million in it as of this coming Dec. 31.
Shifting IOUs from one pile to another is a fine example of what’s become a tangled web of state loans and subsidies to the independent players from the oil and gas industry that were successful in attracting them to Alaska but have now become financially unpalatable in the throes of a budget crisis and radioactive when it comes to support from the Legislature.
Walker believes he had no choice but to veto $430 million in the payments from the current fiscal year budget based on the state’s burn rate through its savings and he does correctly note that his original budget submitted last year intended to get right with our bills to the independents.
But when the Legislature failed to enact any part of the long-term budget plan proposed by Walker that included the use of Permanent Fund earnings and new taxes, he slashed the PFD by half and the credit appropriation by 93 percent to its statutory minimum of $30 million.
Penny wise and pound foolish pretty much sums it up.
While Walker feels justified in the short term for stiffing companies on money owed because of the budget deficit — and will gladly point out that interest does not accrue on the state’s debts even as it continues to accrue for BlueCrest’s and other companies’ loans — he is sabotaging Alaska in the long term.
Roughly every $1 the state agreed to reimburse companies for exploring and developing in Alaska was being matched by $2 in financing from the private sector.
In some parts of that sector the state is now known as “Alaskanistan.”
Walker can aim his pique at the Legislature for failing to act until the sun shines all day again in Utqiagvik, but the fact is he himself and his administration officials assured the financial world that his 2015 veto was a one-off.
So he saved the Constitutional Budget Reserve a few hundred million dollars, but the result is that many of the financiers he’s depending on to invest 100 times that in the Alaska LNG Project now don’t believe the governor of a sovereign state can be taken at his word.
(About this point the zealous defenders of the PFD will probably come around arguing that veto is worse for the Alaska economy. From this perspective it’s more likely that the 5,300 people who lost their jobs in the year before the PFD was vetoed would probably rather have a paycheck than an extra $1,000. The combination of depressed oil prices and the state’s new lack of creditworthiness is going to be far worse for long term growth and investment than a reduced PFD.)
To the second consequence of vetoing the credit appropriation, Walker has now, probably unintentionally, given the major North Slope producers a cheap way to reduce their future tax bills by snapping up the certificates from the suddenly distressed independents that need cash.
Tax Division Director Ken Alper told the Resource Development Council that future credit obligations have been reduced in the last month by more than $100 million because of such transactions.
Now, this may get the Legislature off the hook for actually appropriating the money at some point, but it will be absorbed through reduced tax revenue from the majors who are already paying billions less as the price per barrel hovers around the breakeven point.
Walker has not only damaged Alaska’s reputation in financial circles through his credit veto, but he has also sharply titled the state playing field to the majors’ advantage at the expense of the independent companies he once said he wanted to see 50 of on the North Slope.
Had Walker made good on the state’s debts, that money would have circulated back into the Alaska economy as projects continued to develop and attract investment from the private sector while the Legislature pursued a more sustainable solution that wouldn’t harm potentially large discoveries on the Slope by Caelus and Armstrong.
Instead, the legacy producers got an inexpensive windfall of a tax break that won’t benefit Alaska at all.
Andrew Jensen can be reached at [email protected]
Posted Thursday, November 17, 2016 - 6:18 am
To quote Slim Pickens’ Taggart from Blazing Saddles, “What in the wide world of sports is a-goin’ on here?”
In the decades since before and after Alaska statehood, the universal refrain among citizens and politicians is that the biggest hurdle to developing our vast natural resources is Washington, D.C.
Federal overreach. DC bureaucrats. Broken promises. Treehuggers.
After Donald Trump’s victory in the Nov. 8 election that carried several endangered blue state Republican senators to new terms, the GOP now holds unified control over Congress and the White House.
Sen. Lisa Murkowski, who along with junior Alaska Sen. Dan Sullivan renounced their support of Trump in October, will retain her powerful chairmanship of the Energy and Natural Resources Committee.
While we don’t yet know who the new secretaries of the Interior and EPA will be, it is safe to believe that the last eight years of federal agencies actively working against Alaska’s interests are over for at least the next four.
As the results became apparent at Murkowski’s victory party at the 49th State Brewing Co. in Anchorage, the wish lists started forming.
The King Cove Road.
There was an almost giddiness as supporters brought these topics up with her, but she did sound a hint of caution.
“This isn’t Christmas,” she said. “We still have to govern.”
As a member of the Senate the last time the GOP held Congress and the White House, Murkowski saw firsthand how Republicans blew it and ended up turning over both houses to Democrats in 2006 and losing the presidency two years later.
Not even 15 hours later, however, we learned that three Alaska House Republicans were joining up with the Democrats to form a new majority whose membership on resource development is mixed at best.
It seems an amazing position for Alaska to be: with D.C. removed as an obstacle the biggest problem for resource development in the state could end up being our own legislators and Gov. Bill Walker, who has rattled the oil industry by vetoing more than $600 million worth of tax credits owed in the last two years and introducing proposals to raise production taxes that are supported by many in the new majority.
His close friend Robin Brena, who bought Walker’s law firm and office and has penned opinion columns claiming there’s $1 billion to $3 billion being left on the North Slope table, led an effort spending hundreds of thousands of dollars to unseat Walker’s opponents that was unsuccessful in the Senate but did succeed in flipping the House by knocking off two rural Democrats and Anchorage Republican Rep. Liz Vazquez.
That’s the pessimistic take.
The optimistic take is the words of new House Resources co-chairs Geran Tarr and Andy Josephson of Anchorage to be found here.
The pair, who also served on the committee last session, are sounding the absolute right notes on how the 30th Legislature must approach both tax credits and the Alaska LNG Project.
It is refreshing, to say the least, to hear Democrat leaders recognize that the state cannot damage the prospects for discoveries by independents Armstrong and Caelus on the North Slope that have the potential to produce hundreds of thousands of new barrels for the Trans-Alaska Pipeline System.
No less refreshing is Tarr’s statement that the state is looking like an “unreliable” partner to industry and that has to be fixed in short order.
The co-chairs are also rightly skeptical about what is going on with AK LNG, how state leadership is going to take shape in the coming year and whether the Legislature is going to keep funding the effort without tangible progress.
So, in the spirit of what few cool-headed opponents of Trump there are, the new House majority needs to be given a chance to lead as well. On resource development, the early signals are positive.
Posted Monday, November 14, 2016 - 12:00 pm
It should not have happened, if the opinion polls were to be believed. Yet Trump performed an amazing triple-play. He tarnished the legacies of the Bushes, the Clintons, and President Obama in one swoop.
The pollsters had it wrong, big time.
Data gathering and statistical analysis is an art as well as a science and it is fraught with subtle biases. To be good at it, one must be able to distinguish between information and noise, have a solid sense of history, and an imagination for the future courses of events.
Not an easy task because we are a nation which relishes our biases. We can self-select cable news stations and social media which slant one way or the other. And our internet search engines can pick up on our biases and feed us webpages which make us happy. Our biases can stay satisfied within this cyber-bubble. After a while, any opposing view we might come across can sound like heresy; a shattering of faith.
Despite the heated rhetoric and all the mudslinging of both campaigns, the election of Donald J. Trump as the 45th President of the United States of America is actually a moderating factor for the country. To paraphrase conservative icon William F. Buckley, much of the electorate looked at the course of history and yelled “Stop!”
What was quite shocking to many was how Trump was able to re-write the rules of the election season. Relatively speaking, his campaign was run on a shoe-string, with very few high-powered surrogates to pinch-hit for him or deflect criticism from the media. He was considered coarse and vulgar, and constantly erupting with antics that his opposition assumed would sink him.
But what made it work was an entrepreneur’s sense of vision and just a few simple ideas - on immigration, foreign wars, foreign trade, and the Affordable Care Act- and a “feel good” delivery about making America great again. The campaign had a core concept for what was wrong and for what was right about the country, and the messenger was a comet because of his celebrity and his entrepreneurial spirit, a combination in politics to probably not be repeated in our lifetime.
An entrepreneur fights hard for his vision and never wavers (or as it’s known in the political world: flip-flop). With this, Trump took on and roundly beat 16 Republican challengers, Hillary Clinton and all her high-powered surrogates, and much of the overly biased news media which failed to remain objective or notice the rising tide.
Usually to be a winner one has to start out looking like a winner. Agree or disagree, Trump’s simple vision and stubborn determination were two important ingredients when an electorate is looking for change.
So, Trump is president-elect, and currently some Blue-color cities are seeing violent protests.
Recall the worry by Clinton’s supporters that Trump would not accept the election results? An economics professor at Yale even made the midterm exam optional for any students too “distraught” in the wake of the election. To me this is symptomatic of living in that bubble which never breaks and when it does, the student is ill equipped to become a productive member of society.
To take a phrase popularized by Obama, this could have been a “teachable moment” for those students supposedly too traumatized to take the midterm. (Technically, the phrase is attributed to Professor Robert Havighurst, a physicist who became an educator and emphasized the importance of timing and learning.) In other words, it’s time for learning and not mourning. In solidarity with all the working people who don’t have the luxury to take time off for political mourning I suggest all students take their tests when scheduled. After all, test-taking is not “working.” It’s “learning” - and we all benefit when someone takes the time to learn.
The bigger question now is how to bind the nation’s wounds and bring the country together. It won’t be easy when cities are violently erupting, and professors can’t keep a classroom in order.
What does it mean for Alaska specifically? If you asked me today, the answer would be a platitude. What will Trump do for the energy sector for example? What will he do in regards to federal overreach? He may open up the North Slope and ANWR. He may not. We have no idea who will be in his administration yet, so conjecture is just that.
In effect, the Trump comet could very well burn out, just as the Obama coalition could not transfer completely to Hillary Clinton. Of course, this is the danger when presidential candidates become so attached to the very brand they create; i.e., Obama’s “hope and change” and Trump’s “make America great again.”
One thing is sure, celebrity was a key ingredient in the rocket fuel both gentlemen used to power their rise. Time will soon tell if Trump will be able to transfer his entrepreneurial skills from campaigning to governing. If he can, he may be a very successful president. If not, the American electorate will vote for the next who promises change.
Darren J. Prokop is a professor of logistics in the College of Business and Public Policy at the University of Alaska Anchorage.
Posted Thursday, November 10, 2016 - 1:20 pm
When people tell me that Donald Trump’s election as the nation’s 45th president shocked them, I reply that they must not be paying attention to what goes on around them.
The nation is a mess — the economy is in the doldrums, most of the few available jobs are part-time and low-paying, the infrastructure is crumbling, the massive $20 trillion national debt is getting bigger, the $531 billion trade deficit is poised to go higher — and these are merely the most glaring problems that have festered under President Obama.
And since Democratic candidate, former First Lady, former New York senator, and former Secretary of State Hillary Clinton is inexorably associated with Obama, she started out with two strikes against her, even though the mainstream media led Americans to believe she was a lead pipe cinch to be elected.
Clinton’s third strike came in multiple forms — her personal server, deleted e-mails, lies she told to Congress, to the FBI and to the public in her campaign ads did her in. Fed up voters distrusted the political status quo that Clinton is an ingrained part of.
But Trump deserves credit for aggressively campaigning on an issue that has resonated with Americans for years. That is, enforcing immigration laws, and developing immigration levels that work for instead of against citizens.
Clinton has a diametrically different view about immigration than Trump. She’s on record as favoring open borders, vastly expanded refugee resettlement, and a path to citizenship for illegal aliens.
For more than five decades, American voters have urged federal and state candidates to formulate sustainable immigration policies.
And for each of those 50 years, voters have been rebuffed with empty, unfulfilled candidates’ promises that, if elected, the border will be secured.
Gallup polls have shown for decades that a substantial portion of the public, often large majorities, favor reduced immigration. In 1965, Gallup first asked the question: “Should immigration be kept at its present level, increased or decreased?”
Yet both the Republican and Democratic parties ignored the public’s desire for less immigration, but for different reasons.
The GOP’s Chamber of Commerce wing has relentlessly pushed for more guest worker visas and the cheap laborers to whom they’re are issued.
Democrats, on the other hand, have aligned themselves with illegal immigrants, possibly envisioning them as future voters.
New York Times’ David Brooks recently wrote that the federal government has asked a lot of suffering Americans to accept “extremely, radically high immigration levels.” Brooks wrote his op-ed before the election, but under-skilled, non-college graduate voters turned out in big numbers to vote for Trump.
Then, on Election Day, the Los Angeles Times interviewed Trump voter and Cuban immigrant Helen Hernandez who expressed her opinion that many Americans share.
Hernandez said that immigration “has gotten out of hand,” and that “...Everybody can come. It’s too much. There has to be some kind of restrictions, even for us, for Cubans, for everybody.”
Hernandez sees what Presidents Bush 41, Clinton, Bush 43, and Obama didn’t — that too much immigration is bad for everyone especially the most recently arrived immigrants.
In 2008, and again in 2012, Americans voted for change, but got Obama’s version which they hadn’t bargained for.
Consequently, in the Mahoning Valley between Ohio and Pennsylvania, an energized voter erected a homemade sign with a message directed to the elites and that summed up Trump’s victory: “You had your chance. It’s our turn now.”
Joe Guzzardi is a Californians for Population Stabilization Senior Writing Fellow whose columns have been syndicated since 1987. Contact him at [email protected]
Posted Saturday, November 05, 2016 - 11:35 pm
Voting “Yes” on Ballot Measure 2 is a no-cost option to the State that will save Alaskans their hard earned money by providing a tool to reduce interest rates for students.
Currently, the Alaska Student Loan Corp., or ASLC, issues revenue bonds that are solely backed by the loan repayment revenue from those who are borrowing. Ballot Measure 2 will change the Alaska Constitution to allow for general obligation, or GO, bonding for the purpose of postsecondary education. If passed, it will be the most viable option available to Alaskans to obtain lower interest rates by allowing the State to access bonds using its good credit.
These lower rates will then be passed on to Alaskan borrowers who are preparing to enter the workforce and contribute to a healthy Alaska economy. In addition to achieving lower interest rates, the state’s backing can make the loans available to a broader population of student borrowers.
Each year many Alaskans contact me regarding their student loan debt — the high interest rates and their struggle or even inability to repay the debt. In late 2013, I contacted and began working with the Alaska Commission on Postsecondary Education, the state agency responsible for funding and servicing state education loans, to address these concerns.
My goal was to identify fiscally responsible ways to make postsecondary education more affordable for Alaskans, and provide relief to those who are currently in repayment.
Over the course of the next few days many of you will enter the voting booth, cast your ballot and make your voice heard. I’d like to provide an outline of the benefits of Ballot Measure 2.
The language of the ballot measure states the amendment would “expand the State’s authority to incur debt…” which I believe may lead to misconceptions about what this measure does. As the co-chair of the Senate Finance Committee, I firmly believe the state must look closely at any additional debt we take on as we face a multi-billion dollar budget deficit.
However, while the State would be guaranteeing this debt, it would be repaid by students from the revenue of the ASLC.
The ASLC has been issuing bonds and repaying them for almost three decades and in that time, has never had to come to the State for financial assistance to repay its debt. I was able to support this proposal without reservation based on the fact it is anticipated to have zero impact on the state budget.
Passage of Ballot Measure 2 is simply accessing a financing option available to the ASLC that will reduce the cost of student loan interest rates. By law, there are safeguards that place limitations on the bonding process and Ballot Measure 2 does not approve any new debt for the State of Alaska. I urge my fellow Alaskans to join me in voting Yes on Ballot Measure 2.
Sen. Anna MacKinnon represents District G and serves as co-chair of the Senate Finance Committee.
Posted Thursday, November 03, 2016 - 12:19 pm
Alaskans have always risen to a challenge and raised expectations of what we can accomplish. Without high expectations, efforts often fall short of the mark. Without the support of the community, goals remain unfulfilled.
High expectations and community support can also enable our children to reach their full potential. That is why I support the 90% by 2020 community effort to improve high school graduation rates in Anchorage and why I am proud to be its co-chair.
90% by 2020 is a unique collaboration to improve high school graduation rates to 90% or above by 2020, and then continue to improve. We do that through a data driven effort to drive improvement in graduation rates.
We are a partner, not a substitute for the Anchorage School District and support a common mission of providing our children with a strong foundation from which to successfully move into a next phase of their lives. To support this, 90% by 2020 coordinates community efforts to improve student performance at four points, 1) kindergarten readiness, 2) 3rd grade reading, 3) 8th grade math and 4) high school credit completion.
Our data tells us that these four points have the strongest impact on high school graduation rates.
When people learn that I represent BP in 90% many are surprised that 90% includes not just many great non-profit and education organizations, but private industry as well. It is in BP’s interest to hire Alaskans. It is also in our own best interest to ensure we have a source of qualified talent for years to come.
Next year Prudhoe Bay and the Trans-Alaska Pipeline will celebrate their 40th anniversaries, and there are many years to come of oil production, and hopefully soon, gas sales. That can only happen if we have an educated work force.
That is why BP has agreed to support the Back On Track component of 90% by 2020 by donating $30,000. Back On Track is a partnership between United Way Of Anchorage, Covenant House Alaska and the Anchorage School District to provide credit completion options and wraparound services to 185 homeless and at risk youth to earn their high school diploma.
Alaska is my home. My wife and I have three children who attend public schools in Anchorage. We want them to be part of a generation of future Alaskans that is prepared to overcome challenges in the decades to come, some similar to those that this state has faced before and others that may be different and more complex.
That is only possible if we all commit ourselves to doing two things: 1) Raise our own expectations of what we expect from ourselves and our children, and 2) Provide students with the tools required to fulfill those expectations, starting with an earned high school diploma.
A young adult without a high school diploma will struggle to take a next step in their life, whatever that next step might be: a job, the armed services, trade school or college.
We must all raise our expectations of our community, our children and ourselves. Please consider what you can do to support our community by taking action. Tutor a fifth grader in math or reading. Donate to an organization that helps to prepare children for kindergarten (did you know that is one of the strongest indicators of high school graduation?).
Visit bethechange907.org and find out how you can volunteer in the community, and connect with an organization that could use your help.
Above all else, let’s raise our expectations of ourselves, our friends, our co-workers and be part of an effort to improve our community, our Alaska.
Damian Bilbao is the Alaska LNG Business Development Manager for BP Inc.
Posted Friday, October 28, 2016 - 12:33 pm
In the past few years, some of our state leaders, particularly when discussing the state's fiscal challenges, have been trying to convince the public that the days of oil pumping billions of dollars into the state's economy and coffers is over. This notion seems to have taken root in the current administration, as evidenced by the fact that Gov. Bill Walker has failed to discuss, as part of a broader fiscal plan, how we can get more oil running through the Trans-Alaska Pipeline System.
Walker's inability to develop policies that will result in additional production is odd given that more oil through TAPs means more funding for our schools, first responders and social service agencies. More oil would also bolster the Permanent Fund, provide good paying jobs, and pump billions of dollars into the Alaska economy.
Conversely, the continuing decline of oil production almost certainly guarantees that the state will never be able to balance its books, businesses will shutter, and economic opportunities will be lost.
But declining oil production, a contracting economy and a government unable to pay its bills do not have to be our fate.
Alaska's oil and gas endowment remains staggering. New discoveries on the North Slope, led largely by independent companies, demonstrate that oil production can continue to play a vital role in solving our fiscal crisis and reviving our economy. In particular, Caelus Energy, one of the handful of independents risking hundreds of millions of dollars in Alaska to find new oil, announced a tremendous discovery holding more than 2 billion to 3 billion barrels of recoverable oil on the North Slope, which would make this field the second largest discovery in Alaska's history. This follows the announcement that Armstrong Energy's Pikka Unit may hold over a billion barrels of recoverable oil and could be, according to the Department of Natural Resources, the third largest field ever discovered in Alaska.
These discoveries, coupled with the considerable amount of reserves in existing legacy fields and the new developments being pursued by ConocoPhillips, Hilcorp Energy and Brooks Range Petroleum Corporation could result in an additional 300,000 to 500,000 barrels of new oil production per day within the next five to 10 years.
Those kinds of numbers translate into billions of dollars for our state's economy, general fund, and Permanent Fund, thousands of jobs for Alaska workers, and a bright future for our children.
While the potential benefits associated with these new discoveries are huge, the challenges are daunting. To get the oil developed requires tens of billions of dollars in investment, thousands of trained Alaskans, permits from federal and state agencies, and fending off the inevitable litigation from environmental groups.
Perhaps the biggest challenge Alaska faces is attracting the capital required to develop these projects. Anyone who has ever tried to get projects developed in Alaska knows that investors are reluctant to spend money here because of high costs and long timelines and because projects become imperiled by permitting delays, litigation, and shifting state tax policies that make it impossible to determine the economics of a particular development.
Unfortunately, Walker is not rising to the challenge to develop credible policies that will ensure these new fields move into production in a timely manner. Instead, Walker has been spending all of his time on a liquefied natural gas project and issuing statements about how he is going to convince the Obama administration to open up the Arctic National Wildlife Refuge. Although most Alaskans can agree that both of those would be a good thing, none of this will happen anytime soon, if ever.
Further, his erratic attempt over the past two years at tax reform has spooked investors who have frozen lines of credit to the companies exploring and developing our state's resources. This in turn has resulted in hundreds of millions of dollars that were poised to be invested in Alaska fleeing the state with lenders blackballing Alaska and, as they leave, swearing never to invest here again.
Most troubling of all, the Walker administration has proposed additional changes to the tax regime that would destroy the economics of many new oil developments and would force the new independents to delay investment decisions, or leave the state, because they cannot find investors willing to risk money in Alaska. Walker's proposed tax reforms, unfortunately, suggest an unfamiliarity with a fundamental law of economics: Companies are not going to be able to raise the capital necessary to pursue risky projects that our tax laws have made unprofitable.
This is not to say that we cannot change our tax laws — it is apparent that changes need to be made to create a more balanced system at all price levels. But we must be careful that any changes do not drive away investment and delay the development of projects that will rejuvenate the state's economy and help pay for essential services.
The bottom line is that in recent years independent companies have made significant oil discoveries on the North Slope that could keep oil flowing into TAPS for years to come. The development of these fields will also ensure that the state has a vibrant economy, a competitive North Slope, and the money to help close the deficit. Walker's actions, however, indicate an indifference to whether these discoveries move into development in a timely fashion. Worse, he has embraced tax policies that kill the economics of these projects and that will result in returning control of the North Slope to the three legacy producers.
Moving forward, the choices facing Walker are simple. He can either continue on the present unproductive course of discouraging investment and keeping our resources buried in the ground or he can advocate for tax policies that create a positive investment climate and promote responsible development of our natural resources. Walker's legacy will largely be determined by which option he chooses.
Jonathan Katchen works at a law firm in Anchorage that represents independent oil and gas companies operating in Alaska.
Posted Wednesday, October 26, 2016 - 1:05 pm
“Winning isn’t everything, it’s the only thing.”
The well-known motto of the late great Green Bay Packers coach Vince Lombardi is a philosophy Democrats understand and practice ruthlessly.
The GOP, on the other hand, is content to play the Chicago Cubs’ role of lovable losers, but without the lovable part.
If that wasn’t apparent before, it should be obvious now as we lurch toward the end of a presidential campaign pitting the Worst Candidates of All Time.
In a matchup of the crude versus the criminal — and depending on the day you can decide which is which — there is only one side that is determined to win no matter how horrible, awful and downright terrible their candidate is.
There’s no other way to explain anti-Wall Street crusader Elizabeth Warren rallying with Hillary Clinton, the candidate who’s taken more money from Wall Street than anyone in history.
How else to figure the once-revolutionary Bernie Sanders telling his supporters to forget about Clinton’s coordination with the Democratic National Committee to ensure his loss in the primary or ignore the revelations about what she’s said behind closed doors for millions of dollars in “speaking fees” that would be known as bribes in a quainter time.
Women by the thousands still gather to cheer wildly for Bill Clinton despite his 40 years of history abusing them while his wife quarterbacked the destruction of his victims.
Republicans, meanwhile, are falling over themselves in a stampede to the microphones to express their distaste for Donald Trump and assert their sacred honor that amounts to little more than a naïve and ultimately futile belief that doing so will ensure they can retain some entrée into the cool kids club of the D.C. establishment.
Fighting on your opponents’ terms and their ground is the surest way to lose, but the GOP is incapable of even holding the high ground it possesses when Trump alleges that the election is rigged.
The faux fainting spells of the Democrats over this supposed threat to our system would be laughable were it not for every Republican politician on the planet lining up with their opponents to denounce their own candidate.
This is the party who claimed for eight years that George W. Bush was an illegitimate president who was “selected not elected” by his daddy’s appointees to the Supreme Court and his brother’s administration in Florida. This is the same party that floated conspiracy theories about Diebold voting machines in Ohio being no doubt manipulated from Dick Cheney’s underground lair to defeat John Kerry in 2004.
For years the likes of Sanders and Warren have been shouting about a system being “rigged” in favor of the so-called 1 percenters.
Yet rather than throw all this back in the Democrats’ faces as shameless hypocrisy, the Republicans play along with their game.
Let’s get real.
The IRS is rigged. The Department of Justice is rigged. The EPA is rigged. The VA is rigged. The FBI, in making the most political decision in its history to not forward a case against Hillary Clinton for her multiple and years-long violations of basic record-keeping and national security laws, is rigged.
Oh, but Trump is dangerous?
What’s dangerous is that electing Clinton is a complete abdication of the idea that we have a rule of law that’s applied equally.
What’s dangerous is the weaponization of the federal bureaucracy against the political out-party that has permeated the Obama administration and will no doubt expand under a woman who will stop at nothing to win power and use anything at her disposal to silence, threaten and punish her enemies.
What’s dangerous is that what’s left of the opposition party has thrown their lot in with her in the name of preserving some kind of integrity or status they never had.
Ask John McCain, who was once a favorite of the media and Democrats (but I repeat myself) as long as he was a thorn in the side of Republican leadership. By the time they were done with him in 2008 he was a doddering old fool who couldn’t work email or even remember how many houses he had.
Ask Mitt Romney, quite possibly the nicest and most decent human to ever run for president, who by the end of 2012 was an Ebenezer Scrooge caricature of a robber baron intending to ship every job out of the U.S., give the newly unemployed cancer and strap Hispanics to the top of his car as he drove them back into Mexico.
We don’t even need to get into the Democrats’ portrayal of George H. W. Bush and his son as evil incarnate. Now all these Republicans are suddenly the Democrats’ favorites because they’ll throw shade on Trump.
The fact is it doesn’t matter who the GOP nominates, this year or ever. The Democrats and media are going to destroy them.
It’s better to go down swinging than to try to curry favor with an approved opinion in the false hope you’ll be the last to swing.
Trump at least understands this.
The GOP would rather lose with honor, but they’re still going to be losers.
Andrew Jensen can be reached at [email protected]
Posted Monday, October 24, 2016 - 4:07 pm
Wow! You can’t turn on the radio or TV these days without hearing a negative campaign ad.
The election races this year are more heated and hateful than we have seen in years. It’s easy to recognize that much of what is being said in the ads is nonsense, but nonetheless, people and political action committees are spending a huge amount of money to get us to believe things that just aren’t true.
So I have to ask, what’s in it for them? What do they get in return for the “free” advertising supporting certain candidates, and how is any of this good for Alaska?
This is an incredible period in our young state’s history. Budget deficits are high and state cash flow is at the lowest level in decades. The near-term outlook isn’t rosy either, as oil prices are predicted to stay lower for longer.
If you believe the barrage of campaign ads, the problems that Alaska faces today were caused by a handful of current Legislators in Juneau, rather than being the result of sudden price collapse in the largest sector of Alaska’s economy – oil and gas development – which generates nearly 90 percent of the state’s income.
Those paying for all the campaign attack pieces don’t want you and I to think rationally and try to solve the state’s problems with common sense solutions and good business practice. Instead, they want us to react emotionally and behave like school kids circled around the playground bully chanting “fight, fight” while he kicks dirt in the face of the class nerd.
That makes great theatre, but it doesn’t solve Alaska’s budget problem and it doesn’t make the state a better place to do business or raise a family.
What does make Alaska better is having strong leaders and elected officials who aren’t afraid to look past the drama and do the hard work necessary to find real solutions and fix the problems we face. There is no magic bullet or quick fix here.
Alaska has got to reduce the size of government, especially in those areas that do not generate revenue for the state or serve a core government function like education or public safety. And Alaska has got to have a stable, balanced tax policy that lets the oil industry know that we very much want them to be here, but that we have got to mind our own checkbook, too.
Yet it seems those behind the campaign attack ads want us to believe that no one in Juneau has been working to find solutions, and that simply is not true.
During the last Legislative session, members of the House and Senate took action to reduce the size of government and cut reimbursable oil and gas tax credits that had simply gotten to be too much for the state to bear. Sen. Cathy Giessel and Sen. John Coghill both worked to find a comprehensive bill that overhauled the oil and gas tax credit system, yet retained incentives critical to advancing new oil developments on the North Slope.
This approach also allowed Alaska to maintain its reputation and credit worthiness. Strong, resourceful leaders like Giessel and Coghill are just the people we need to keep in Juneau. People who aren’t afraid to take some heat doing what is right for Alaska, even if it means facing a firestorm of political ads aimed at twisting the truth and scaring us into believing that new taxes and changing the Permanent Fund are the only solutions.
So, the next time you hear another attack ad on the radio, stop and ask yourself what those who paid for that ad stand to gain from unseating someone like Sen. Giessel.
Do they really have your interests and the interest of a thriving Alaska at heart, or are they just trying to load our Legislature with people they can manipulate?
Corri Feige is a geophysicist and former Director of the Division of Oil and Gas for the State of Alaska.
Posted Friday, October 14, 2016 - 10:08 am
“Going Bulworth,” if you don’t know, is an expression for politicians who say what they actually think. It comes from the 1998 movie starring Warren Beatty about a disillusioned U.S. senator who starts drinking at campaign events and rapping about single-payer healthcare.
Gov. Bill Walker went Bulworth in front of the Alaska Chamber.
At its annual meeting in Kenai on Oct. 12, Walker took the podium unshackled from any need to impress a group that was among those who gave him a grade of “D” on its business report card from the 2016 legislative session.
“Don’t give me grades,” Walker said at one point.
Minus the inebriation and the rapping, that was Walker, who angrily told people not to criticize his cabinet officials, said he doesn’t care about approval ratings, promised to introduce tax increases next year that will be bigger than those he proposed this year, and then cried poor about the pay cuts he and his appointees have taken to enter public service.
Walker, who sold his law firm to Robin Brena upon taking office, said he’s taken a “90 percent” pay cut to be governor. He said he’s convinced people to take less pay to leave the private sector to join his administration.
Yes, Walker said this in front of a room full of people from the oil industry that has shed 3,000 jobs over the past two years while state government payrolls haven’t been cut by a tenth of that.
We don’t know exactly what Brena paid Walker and his wife Donna for the firm, but financial disclosures put the number between $200,000 and $400,000 for the firm and that they sold the downtown office for between $400,000 and $1 million.
We do know that Brena, who was the chair of Walker’s oil and gas transition committee, is working to defeat pro-business candidates in the Nov. 8 election and recently wrote a newspaper column claiming that there’s an additional $1 billion to $3 billion to be wrung out of the North Slope oil producers who’ve been bleeding cash all year.
Walker had to be prompted through questions to simply acknowledge the Oct. 4 announcement by Caelus Energy executives that believe they’ve discovered a huge oil reservoir at Smith Bay that could produce 200,000 barrels per day.
The governor downplayed the find, saying it’s at least 10 years away from production and located far from the trans-Alaska Pipeline System.
From the governor’s perspective, a project that needs a 125-mile pipeline to reach existing infrastructure to deliver to established markets is a longshot but his $45 billion-dream of an 800-mile gas pipeline with no existing market has been “ignited” and is full steam ahead now that the state is in charge.
It’s clear Walker hates talking about Caelus, or the Armstrong Energy project at Nunashuk that could produce 120,000 barrels per day. The two projects combined represent more than 60 percent of current TAPS throughput, so why could this be?
The answer isn’t difficult to figure.
When Walker is forced to talk about the recent discoveries, not only is it a rebuke to his desire to repeal the law that brought Caelus to Alaska in the first place, but it shines a light on his policies of raising taxes on production and shafting businesses out of hundreds of millions in tax credits owed by the state through his irresponsible budget vetoes in the last two years.
Regarding the tax credits, Walker said the state has to “balance our checkbook” and therefore vetoing the appropriation was the right decision. He said potential investors in Alaska want to see its fiscal house in order before putting money in the state.
How Walker is going to convince anyone that refusing to pay money owed is a sign the state is a safe place to invest is one thing, but more immediately it is oblivious to how companies who are owed money by the state — for Caelus, that’s $200 million — are supposed to balance their checkbooks.
Want more proof that Walker doesn’t want to talk about the positives in the oil business?
Since Aug. 24, his office has issued at least nine press releases with 2,267 words about the Alaska LNG Project that amount to little more than hope and a hill of beans.
When Caelus made its Oct. 4 announcement about Smith Bay, Walker issued a three-sentence statement totaling 65 words.
Two days later when ConocoPhillips announced it has ordered a new extended-reach drilling rig from Doyon Ltd., Walker managed a whopping 63 words.
Walker opened his remarks to the chamber by saying he’s happy to take all the blame for unpopular decisions while giving all the credit to others. He then proceeded to say how many people are thanking him for what he’s doing and went on to blame the Legislature for not enacting his fiscal plan.
No matter what Walker says about not caring about getting credit, the press releases from his office reveal he’s desperate to show how much progress he’s making on AK LNG.
The lack of enthusiasm for projects he can take no credit for — and is in fact actively working to undermine through his tax policies — also speaks volumes.
On Oct. 12 in Kenai, he delivered the message loud and clear.
Andrew Jensen can be reached at [email protected]
Posted Wednesday, October 12, 2016 - 12:30 pm
There’s a saying that goes “Get involved in politics or get out of business.”
That doesn’t mean you need to run for office, though many of you reading this would be good, no-nonsense politicians.
What it means to “get involved in politics” is to learn about the issues. It means getting to know who your elected representatives are and what they stand for.
If you agree fundamentally with them, then support them any way you can. That support can include contacting them and donating time to their campaign, a sign in your yard and attending a fundraiser or getting online to donate.
Most of all, vote for them. If you don’t vote for your own interests, who will?
The Nov. 8 election may be the most important election in recent years.
You hear that every election, but this one is different. It is important because we have the opportunity to change the direction of the country for at least the next four years, and hopefully beyond.
The national press will be calling the election long before the polls in Alaska have closed. But just because the presidential election will have been decided before our polls close, don’t let that stop you from voting. Alaska has a lot at stake as we elect a U.S. senator, a congressman and 50 legislators.
For the past few months, candidates have been spending afternoons, evenings and weekends walking, going door to door, knocking and talking, being received warmly or getting a door slammed in their face.
When they’re not walking, they’re home stuffing mailers in envelopes, studying precinct maps, answering the countless surveys sent out by as many special interest groups.
They’re making phone calls when they can’t walk and they are having fundraisers to help support their campaign. They’re going to so many events and meetings; they start thinking about joining Meetings Anonymous.
The Aug. 16 Primary Election had one of the largest slates of candidates we’ve seen in years. In 11 of the races, there was no opponent in either the primary or general election. Just filing for office in May made them a winner.
After the August primary, six others are unopposed on Nov. 8. Seventeen of the races are already decided, but that leaves 33 races that will be decided on Tuesday, Nov. 8. Some of these are hotly contested and will be close.
The August primary also had an unimpressive voter turnout. It’s not unusual to have less than a third of registered voters take the time to vote in an election.
History, especially recent history, is full of examples in which an election was decided by very few votes — even a coin toss in the case of a tie.
Voting is a right, a privilege and one of the most important freedoms we have. Unfortunately for many, it is more important to exercise the TV remote than the right to vote.
Why does it matter? In the 2012 Presidential election, there were 218 million eligible voters in the United States.
Only 124 million voted in the general election that year.
Fifty-one percent voted for Barak Obama. Doing the math, the direction of our country was decided by less than 30 percent of the eligible voters.
Look at a few key states where the electoral votes swung the election: a handful of additional voters in every precinct could turn the district which could turn the state, which could turn the election.
To paraphrase Edmund Burke: “All that is necessary for evil to triumph is for good men and women to do nothing.” There’s a lot of truth to that. Get involved!
Get informed on the issues and the candidates. Talk to your family, your friends, your co-workers. And all of you vote on Nov. 8. The rest of us are depending on you.
John MacKinnon is the executive director of the Associated General Contractors of Alaska.
Posted Thursday, September 29, 2016 - 4:49 pm
Alaskans will soon receive our annual dividend checks.
This year’s $1,022 check for every qualified resident will help Alaska families with things like winter fuel, food and clothes, holiday gifts, and saving for college. These checks will boost local businesses and increase local tax revenues.
At the same time, I am keenly aware that many Alaskans are disappointed — and some are angry — about the size of this year’s dividend. While the average dividend since the inception of the program has been $1,150, many were counting on a larger amount this year. Indeed, this year’s checks would have been $2,052 without my vetoes.
How did we get here? Why did I veto roughly half the dividend? The answer requires some context.
When I filed for office, state unrestricted general fund revenues were $7.5 billion. This year, they’re $1.2 billion. That’s an 83 percent drop.
Please consider that for a moment. Imagine your family’s income fell more than 80 percent. Or that your business lost 80 percent of its revenue.
You would probably start spending less. We have done that. Over the past four years, unrestricted general fund spending has dropped 44 percent — nearly in half. That’s according to the Legislature’s nonpartisan budget analyst David Teal.
The budget is now down to $4.4 billion. That’s below the spending level called for by the Alaska State Chamber of Commerce and others calling for big spending cuts. And we still have a massive deficit. We could close every school and every prison, and we still wouldn’t have enough money to pay for state services.
We simply can’t cut our way down to a $1.2 billion budget.
I come from a family of homebuilders. I’ve never built anything without a plan. And we can’t build Alaska back to prosperity without a plan.
In December I proposed a plan to balance the budget in a sustainable way. The plan called for a combination of budget cuts — including cuts to oil tax credits — along with modest tax increases and sustainable use of permanent fund earnings.
The idea was balance. We can’t do it with cuts alone. We can’t do it with taxes alone. For example, it would take a statewide sales tax of 19 percent to raise enough revenue to balance the budget. That’s a nonstarter. And I am not willing to balance the budget using permanent fund earnings alone. That would jeopardize our dividends and the fund itself.
Unfortunately, lawmakers failed to pass my plan or any other, leaving a nearly $4 billion budget gap. In the past four years we’ve drawn down our savings from $16.3 billion to an expected $3.6 billion at the end of this fiscal year. We’re burning through our savings at an alarming rate.
I therefore took action to extend the life of our fast-shrinking savings. In June I vetoed $1.3 billion, including $430 million in oil tax credits. My vetoes also included roughly half of the money for this year’s permanent fund dividends.
The vetoed dividend money is not being spent. It remains in the permanent fund earnings reserve, prolonging the state’s ability to pay dividends in the future.
I labored long and hard over the decision. It was by far the most difficult decision I have made to date as Governor. However, it is clear we can’t continue to use the current dividend formula.
In the past few years, revenues have plummeted while Permanent Fund investment earnings have grown. The current dividend formula would have us spending more on dividends than any other state service — including education. It’s not a sustainable path.
If we do nothing, the permanent fund earnings reserve will likely be depleted within four years. Then dividends will be zero. I don’t want that to happen.
My commitment to Alaska and Alaskans has never wavered. I believe we must find a balance between the wants of today and the needs of tomorrow. If we don’t make changes, we’re on a course to economic disaster. It’s a 100 percent preventable disaster, and I will do everything I can to prevent it.
Gov. Bill Walker, an independent, is the eleventh governor of the State of Alaska.