New student housing plans to cut fossil fuels

Jack Hebert has been building houses a long time, but with a twist. The president and CEO of the Cold Climate Housing Research Center has a plan to build new student housings units that will become a standard in construction techniques. The four 1,500-square-foot homes are called the University of Alaska Fairbanks Sustainable Village for a reason. The Cold Climate Housing Research Center, which is building the village, intends for these to help pave a path toward cutting fossil fuel use in the homes and getting them to maintain themselves through other energy means. “The importance of this sustainable village is to show in a more accessible location what is possible in our severe environments,” Hebert said. “It’s a great way to show a holistic approach to community development.” These are research-based houses that will use a combination of renewable energy rather than fuel. Hebert said the idea is to develop the ground in a manner that impacts the natural environment as lightly as possible, including the location, house plans, infrastructure, transportation and access. The houses will employ a combination of architectural techniques to eliminate fossil fuel use. Solar and hydronic systems will generate electricity and heat, supplemented by pellets and other biomass energy that can be stored. The ultimate goal is for this village to be self-sustaining in heat and power generation. Hebert said this is a lofty goal that won’t be easy at the Interior, but he has high hopes. The houses will use an integrated water system in which the wastewater is treated onsite and in a manner to avoid negative environmental impact. Water use is a combination of delivered water with rainwater conservation and water harvesting. Everything — from the way the walls are built to the insulated glass used to the seasonal shuttering — is designed to increase efficiency and steer away from fossil fuels. The mechanical, heat and air quality systems are integrated to accommodate the tight space. Work is also being done on solar thermal capacity to store hot water. Hebert hopes to continue this research to come closer to storing ample hot water this way. “We’re integrating those systems in a number of different ways,” he said. “And this is a very dynamic approach so we are in a sense designing and experimenting and applying as we go.” Research is one of the primary goals of the sustainable village. The idea is to discover what works in sustainable green construction, especially with rough ground and climate matters prevalent in Alaska. Designs and building will be adjusted throughout the process, and those ideas will be used in future building projects. “What we really want to do is show the general public and the building community the techniques we’re using and test them for applicability and help move those technologies into common practice,” Hebert said. The UAF students and crew just ground broke ground on the houses, and now the clock is ticking to complete them. Each home will house four students in the fall, and so must be completed by August. The houses will go on campus land adjacent to the Cold Climate Housing Research Center. A student design competition was held last year to determine project plans. Skye Sturm, a continuing education student studying sustainability at UAF, was part of the winning design team. She said the first step was getting the foundations in. The degrading permafrost adds an extra challenge to this, which is what the designers wanted to face since this is a common hurdle in many Alaska areas. Sturm said two techniques will be employed to examine their success rates. The first option is driving steel piles into the ground for the foundations. The other is using raft technology that employs insulation to keep heat inside without affecting the frozen ground. “This land is not typical land to build and that’s sort of the idea,” Sturm said. “But it’s land we have to build on out in the bush.” Another point is to research methods of construction to build greener yet affordable houses that can be built in the private sector, said Sturm Each home at UAF will be in the $200,000 range. Students occupying them will pay rents comparable to other housing options. Hebert said these rents will support what would be conventional 15-year mortgage, paying off the building costs in that time. He said another advantage is that this is done by the private sector and eliminates the need for the university to ask the Legislature for more housing construction funds. These four homes aren’t the end of the project. Hebert envisions 40 homes in the future at the UAF Sustainability Village. Sturm hopes family housing units will be developed in the future. The Cold Climate Research Center is involved in about 20 communities statewide and has developed similar experimentation models to this, mostly in rural areas. Hebert describes this one as “starting with a blank slate” and a way to seek answer to cost of living challenges Alaskans face, both in urban and rural areas. The challenges are large. Rural areas have the added difficulties of increased costs for transporting materials and energy, as well as limited workforces and training opportunities. He said creative solutions to building can generate ways to build quickly and efficiently. For example, he said a good amount of materials can be generated locally, such as framing lumber, recycled material and insulation. “And the more money we can keep locally and as much local as possible is of course the best thing for all of us,” he said. Hebert said the research center has been able to reduce such energy use by 80 percent in some of the villages where they’ve worked, as well as reducing home costs and assembly times. He said if this works in rural areas, it should also be successful in the bigger cities. As far as saving money, he said these rural prototypes are saved from burning 200 gallons of fuel oil a year. “In our prototypes, we feel like we have had some significant success but it’s the beginning of the successes I think we’ll accomplish in the next few years,” Hebert said.

Lawmakers still juggling issues as session clock winds down

As the clock ticked down to their adjournment at midnight, April 15, legislators were still juggling all the major issues of the 2012 session, among them oil taxes, an extension of tax credits for film producers, new tax credits for high-tech startups, new incentives for oil and gas exploration, an energy voucher payment to citizens to help ease the pain of high fuel prices. Most important, the state capital budget, about $3 billion in projects, was still in play as the clock ticked down, with lawmakers and lobbyists jousting in the final days to squeeze projects into Senate Bill 160, the capital budget. Things were more settled with the state operating budget, in House Bill 284, as a House-Senate conference committee continued work to reconcile largely minor differences between the House and Senate versions. The only major difference in the operating budget was state money for state tourism promotion, which was $16 million in the senate version of the operating budget and about $9 million in the House version. As adjournment neared the House and Senate differences over the oil tax bill seemed irreconcilable. Senate Bill 192, developed in the Senate Finance Committee, would enact a complex mix of new mechanisms in the tax code to encourage new oil production but not reduce taxes on industry at current oil prices of about $110 per barrel. The version of an oil tax bill passed by the House last year, House Bill 110, would enact more sweeping changes and reduce taxes enough to spur new industry investment, oil and gas companies have told legislators. The decision on what to do about this lies largely with Gov. Sean Parnell. In the last week of the session legislators seemed to have little appetite for a simple extension for the session, one option available, because that would leave all unpassed bills in play and be a distraction from the unresolved oil tax issue. The best option seemed to be a special session called by Parnell either immediately following the April 15 adjournment or later in the summer. Parnell and supporters of HB 110, the governor’s proposal on oil taxes, may also decide to leave the issue until next year in the belief that the 2012 elections will produce changes in the Legislature and an environment more friendly to a significant tax reduction. Even though most of the major questions were still up in the air as adjourned approached there are many things that are known. The state will have another budget surplus, for example, although the amount is yet to be determined. The final numbers aren’t yet known but the House and Senate Finance committees have mostly held the line on the state operating budget for fiscal year 2013 at about $9.5 billion in total funds. That includes approximately $2 billion in federal funds with the remainder state funds, at about $7.5 billion. That’s about a 3 percent increase over current fiscal year 2012 spending in the operating budget, according to the Legislative Finance division. The revenue picture is still OK, although a drop in oil and gas revenues are predicted for next year. Total unrestricted oil income, from petroleum taxes and royalties, is forecast at $9.163 billion for fiscal 2012, but is expected to drop to $7.7 billion next year, mainly because of declining production. Non-oil revenues are about the same in both years, $553 million in the current year and $557 million next year. State investment earnings available for appropriation, not including permanent fund earnings that are restricted, total $154 million this year and $182 million next year. That totals $9.87 billion in unrestricted revenues in the current year and $8.44 billion in unrestricted revenues for next year. There are also substantial restricted revenues and federal funds received by the state, which must be spent on particular programs although the money is appropriated by the Legislature through the state budget. These will total $7.88 billion in the current year and $8.05 billion next year. Much of it is money spent on transportation projects under the federal highways and airports programs administered by the state. Money spent for the annual permanent fund dividends, which are typically about $1 billion year, are another kind of special program. In fiscal 2012 the state received $3.3 billion in investment earnings and this is expected to increase to $3.8 billion in fiscal 2013. Most of the investment revenues are earnings of the permanent fund, which are reserved for dividends or retained in the fund itself. In total the state will receive $17.75 billion in fiscal 2012 and $16.49 billion in fiscal 2013. A certain amount of this, yet to be determined, will be a surplus that will likely be held in the state’s reserve accounts, the Constitutional Budget Reserve and Statutory Budget Reserve, which currently total about $13 billion before any new deposits. Although the final list of capital projects in SB 160 was being worked out in the final days the governor’s proposed projects are agreed to by the Senate and will almost certainly be agreed to by the House. Many of these are continuing programs, like village safe water and wastewater projects funded at $51.5 million in fiscal 2013, most of it federal funds, and $32 million in sewer and water projects in lager municipalities, at $32 million, all state funds. The governor is also proposing to spend $25.8 million on energy projects through the Alaska Energy Authority and $25 million in grants for small alternative energy projects mostly in rural communities. One major item on the governor’s list is $23.9 million to catch up on major school maintenance projects around the state, $36 million for a major school renovation at Emmonak and $24.9 million for a school replacement at Koliganek, both Western Alaska communities. On the governor’s list is also $21 million for the Alaska Gasline Development Corp., the state corporation planning a 24-inch gas pipeline from the North Slope, $31.5 million for home and building weatherization projects and $20 million for the popular home energy rebates. The governor’s proposed roads to resources project will be funded, with $10 million for permitting of a road to Umiat on the North Slope, $10 million to extend the Elliot Highway from Manley Hot Springs toward Tanana, in the Interior, $4 million for planning for a road to the Ambler Mining District in the Brooks Range from the Dalton Highway, and other projects. Municipal harbors would receive $23 million under the governor’s proposals, The big-ticket transportation programs, mainly federal funded, include $230 million for statewide airport projects and $461.86 million for surface transportation projects, mostly for highways and roads.

State will receive $1 billion more in oil revenues, thanks to high prices

Alaskans are groaning at the gas pump, but those high prices are fattening the state treasury. State revenues from oil and gas are expected to increase by $1 billion this year compared to estimates made in December, the state Department of Revenue said in its latest revenue forecast. A revised forecast issued by the state April 6 estimates Alaska will now receive a $10.14 billion in oil and gas income, mostly from production taxes and royalties, in the current state budget year, which ends June 30. Most of the increase results from higher crude oil prices. “While higher than anticipated oil prices has given Alaska a strong revenue outlook, the long-term health of the state’s finances and Alaska’s economy depends on stemming the continued decline in North Slope oil production,” Revenue Commissioner Bryan Butcher said. Production from the Slope has been declining at about 6 percent a year, but the large producing fields have been declining at higher rates of 7 percent to 8 percent annually. The latest forecast assumes that Alaska North Slope oil prices will average $114.59 per barrel in the current fiscal year, compared to an $109.33 per barrel average assumed in the December estimate. Capital investment by the industry in the producing North Slope fields is expected to remain flat, at $2.3 billion in the current budget year compared with the previous year, the forecast indicated. Alaska requires producers to submit capital investment estimates when they file production tax returns. Operating expenses in the producing fields continues to rise. About $2.86 billion is being spent in operations this year compared to $2.61 billion last year. Operating expenses per barrel rose from $12.50 per barrel last year to $13.50 this year. When capital expenses are added, the total per-barrel cost rose from $22.60 per barrel to $24.50 per barrel, according to the forecast. The per-barrel operating and capital costs rise partly because production is declining and the costs, many of them fixed, are spread across fewer barrels being produced. While some capital costs are for projects outside the producing fields, such as for exploration drilling, the bulk of the costs are in the producing fields. Butcher said the flat capital investment in the face of higher prices is a real concern. “It reflects a lack of capital investment in the state,” by industry, he said. The commissioner blames lackluster investment on the state’s oil production tax, which takes an increasing percentage of net revenues as oil prices rise, dampening any incentive for producers to invest. Most of the capital investment in the North Slope fields is in maintenance and replacement of pipelines and production facilities and not in developing new oil, the commissioner said. Alaska Gov. Sean Parnell is pushing the state Legislature to modify the state production tax, but state lawmakers have deadlocked on the issue. The Legislature adjourns its 2012 regular session April 15.

EDITORIAL: Unfinished business: no justice in Sen. Ted Stevens case

Justice isn’t done in the federal case involving Alaska’s late Sen. Ted Stevens. The Justice Department has blamed the system’s corrupt practices for the injustice committed upon Sen. Ted Stevens. It held no one accountable. No one suffered sufficiently for the consequences of the department’s unethical behavior in the Stevens case. It appears that Justice and the people in its employ are above the law. Of all people, it should be those employed by Justice to uphold the law and to hold others publicly accountable who should be adamant about not only protecting the department’s credibility, but also the appearance of being credible. A jury convicted Sen. Stevens in October 2008 of accepting tens of thousands of dollars in home renovations and gifts. Stevens had sought — much to the surprise of Justice Department prosecutors — a quick trial in order to clear his name before that November’s election. (The timing of the charges so close to an upcoming election will prompt speculation about prosecutorial intent well into the future.) Months after the verdict, when evidence of prosecutorial misconduct emerged, U.S. District Court Judge Emmet G. Sullivan threw out the conviction. Sen. Stevens, who routinely won re-election with 70 percent of Alaska’s vote, narrowly lost his 2008 bid for re-election despite heartfelt proclamations of his innocence. Alaskans find it difficult to respect a Justice Department that betrayed them, destroyed the late senator’s career and changed the makeup of the U.S. Senate. So do other Americans. Lives changed forever, and not for the better, because of Justice’s handling of the Stevens case. Alaskans want to see evidence that the Justice Department not only recognizes that, but makes amends. It needs to take action in order to begin to rebuild the trust and confidence of the public. To date Justice has admitted it made grievous errors in the prosecution of Sen. Stevens. It has announced its intention to institute a new training curriculum for federal prosecutors to ensure ethical behavior. In other words, Justice says it will do better in the future. Federal penitentiaries are filled with those who say that — if the government just would release them from their punishment. That doesn’t begin to rebuild a sense of trust. Judge Sullivan, who seems to understand the severity of Justice’s disgraceful behavior, ordered a special investigation of the Stevens prosecutorial team. Two and a half years later, the investigator, Washington, D.C., lawyer Henry F. Schuelke III, produced a scathing 514-page critique of that team. The report says that the prosecutors withheld pertinent evidence from the Stevens’ defense team and the jury that by law they were required to provide. The evidence would have proven Sen. Stevens’ testimony to be truthful. The prosecution team was “permeated by the systematic concealment of significant exculpatory evidence which would have independently corroborated Sen. Stevens defense and his testimony,” the report concludes. The report also says that information withheld would have undermined the testimony of the prosecution’s star witness, Bill Allen. It noted that Allen, a convict on charges of bribery and conspiracy, provided information during the investigation. Allen’s initial story conflicted with his court testimony. But the prosecutors and FBI agent involved “forgot” about the earlier information. Schuelke pointed out that a “complete, simultaneous and long-term memory failure by the entire prosecution team” was “extraordinary” and “strains credulity.” The prosecution denied misconduct, or, in one case, denied intentional misconduct. All of them pointed at superiors for Justice’s failures. Schuelke wrote he couldn’t prove beyond a reasonable doubt the prosecutors’ intent in the Stevens case. As a result, he didn’t recommend criminal charges. But, undoubtedly, Judge Sullivan is reviewing the findings, and he might well come to a different conclusion. The judge who oversees a case has a view unique to all others involved or following proceedings. The Justice Department still could act beyond new training procedures, holding the guilty parties accountable. Dismissal from Justice might be an outcome. Disbarment is a possibility. Sen. Lisa Murkowski has introduced legislation, the Fairness in Disclosure of Evidence Act, to create a nationwide standard for disclosure of evidence that demonstrates the innocence of a defendant to defense attorneys in federal cases. Currently, there are almost 100 varying standards throughout the nation. The act is a response to the Justice Department’s failures in the Stevens case. “What happened in the trial of Senator Stevens is unfortunately not an isolated incident, but most Americans do not have the wherewithal that he did to push back against prosecutorial misconduct,” says Murkowski. “While I do believe most federal prosecutors are adhering to the law, it’s clear the rules in place are not preventing ‘hide-the-ball’ prosecutions in cases across the country. There are a few prosecutors out there willing to put a finger on the scales of justice to get more convictions — and this bill seeks to stop that. Justice should be blind, not blindly ignored.” Alaskans are pleased to see the Stevens case might result in improvements in the law and in the training that prepares federal prosecutors. But still the case isn’t over until guilty parties in the Justice Department — whether the lawyers in the trenches or their superiors — suffer the full consequences of their action or inaction. Then, and only then, justice will be served and the Justice Department can rebuild its credibility with the public and within the Justice Department itself.

Study says Midwest quakes 'almost certainly man-made' due to fracking

NEW YORK (AP) — Oil and gas production may explain a sharp increase in small earthquakes in the nation’s midsection, a new study from the U.S. Geological Survey suggests. The rate has jumped six-fold from the late 20th century through last year, the team reports, and the changes are “almost certainly man-made.” Outside experts were split in their opinions about the report, which is not yet published but is due to be presented at a meeting later this month. The study said a relatively mild increase starting in 2001 comes from increased quake activity in a methane production area along the state line between Colorado and New Mexico. The increase began about the time that methane production began there, so there’s a “clear possibility” of a link, says lead author William Ellsworth of the USGS. The increase over the nation’s midsection has gotten steeper since 2009, due to more quakes in a variety of oil and gas production areas, including some in Arkansas and Oklahoma, the researchers say. It’s not clear how the earthquake rates might be related to oil and gas production, the study authors said. They note that others have linked earthquakes to injecting huge amounts of leftover wastewater deep into the earth. There has been concern about potential earthquakes from a smaller-scale injection of fluids during a process known as hydraulic fracturing, or fracking, which is used to recover gas. But Ellsworth said Friday he is confident that fracking is not responsible for the earthquake trends his study found, based on prior studies. The study covers a swath of the United States that lies roughly west of Ohio and east of Utah. It counted earthquakes of magnitude 3 and above. Magnitude 3 quakes are mild, and may be felt by only a few people in the upper floors of buildings, or may cause parked cars to rock slightly. The biggest counted in the study was a magnitude-5.6 quake that hit Oklahoma last Nov. 5, damaging dozens of homes. Experts said it was too strong to be linked to oil and gas production. The researchers reported that from 1970 to 2000, the region they studied averaged about 21 quakes a year. That rose to about 29 a year for 2001 through 2008, they wrote, and the three following years produced totals of 50, 87 and 134, respectively. The study results make sense and are likely due to man-made stress in the ground, said Rowena Lohman, a Cornell University geophysicist. “The key thing to remember is magnitude 3s are really small,” Lohman said. “We’ve seen this sort of behavior in the western United States for a long time.” Usually, it’s with geothermal energy, dams or prospecting. With magnitude 4 quakes, a person standing on top of them would at most feel like a sharp jolt, but mostly don’t last long enough to be a problem for buildings, she said. The idea is to understand how the man-made activity triggers quakes, she said. One possibility is that the injected fluids change the friction and stickiness of minerals on fault lines. Another concept is that they change the below-surface pressure because the fluid is trapped and builds, and then “sets off something that’s about ready to go anyway,” Lohman said. But another expert was not convinced of a link to oil and gas operations. Austin Holland, the Oklahoma state seismologist, said the new work presents an “interesting hypothesis” but that the increase in earthquake rates could simply be the result of natural processes. Holland said clusters of quakes can occur naturally, and that scientists do not yet fully understand the natural cycles of seismic activity in the central United States. Comprehensive earthquake records for the region go back only a few decades, he said, while natural cycles stretch for tens of thousands of years. So too little is known to rule out natural processes for causing the increase, he said.

Hemp supporters say support growing in Kentucky

LEXINGTON, Ky. (AP) — Hemp isn’t legal in Kentucky yet, but the eclectic mix of people at a recent seminar in Lexington was evidence that support for the versatile plant may be taking root. One by one, elected officials stepped forward to promote the virtues of hemp production, staking out a position that once might have sown political trouble back home. They were cheered by liberals and libertarian-leaning conservatives alike. “We’ve come a long way,” said state Sen. Joey Pendleton, who has sponsored a string of unsuccessful bills seeking to reintroduce hemp in the Bluegrass state. “The first year I had this, it was lonely.” Kentucky once was a leading producer of industrial hemp, a tall, leafy plant with a multitude of uses that has been outlawed for decades because of its association with marijuana. Those seeking to legalize the plant argue that the change would create a new crop for farmers, replacing a hemp supply now imported from Canada and other countries. The plant can be used to make paper, biofuels, clothing, lotions and other products. Despite bipartisan support, the latest hemp measures failed again this year in the Kentucky General Assembly. But this time, hemp advocates think they have momentum on their side and vow to press on with their campaign to legalize the crop. Pendleton, D-Hopkinsville, urged his fellow hemp supporters to lobby hard in preparation for another push in 2013. “I think next year is the year,” said Pendleton, whose grandfather raised hemp in western Kentucky. Hemp bills have been introduced in 11 state legislatures this year, but so far none have passed, according to the National Conference of State Legislatures. The bills include allowing privately funded industrial hemp research, allowing hemp production under strict licensing programs and urging the federal government to allow hemp production for industrial uses. Hemp’s reputation has undergone drastic pendulum swings in the U.S. During World War II, the U.S. government encouraged farmers to grow hemp for the war effort because other industrial fibers, often imported from overseas, were in short supply. But the crop hasn’t been grown in the U.S. since the 1950s as the federal government moved to classify hemp as a controlled substance because it’s related to marijuana. Hemp proponents argue the plant contains little of the mind-altering chemical THC. Someone would have to “smoke a joint the size of a telephone pole,” to get high from hemp, Roger Johnson, a hemp supporter and president of the National Farmers Union, said in a telephone interview. Johnson has seen strong support for hemp in North Dakota, where he formerly served as state agriculture commissioner. Two North Dakota farmers received the state’s first licenses to grow industrial hemp in 2007, but they never received approval from the U.S. Drug Enforcement Administration. The farmers sued, but a federal appeals court affirmed a lower court decision dismissing the suit. “There’s no amount of talking, and believe me I’ve tried, that might convince them otherwise,” Johnson said of the DEA. “So short of the Congress passing a law defining industrial hemp differently from marijuana, I think it’s going to be a long, uphill battle to get anywhere.” The federal Controlled Substances Act does not differentiate between marijuana and hemp, said Barbara Carreno, a DEA spokeswoman. As a result, “we would not approve applications to grow hemp because it is marijuana,” she said. Because of that, Johnson called for a grassroots push for congressional action to legalize hemp production. Imports include finished hemp products and hemp material turned into goods. U.S. retail sales of hemp products exceeded $400 million last year, according to industry estimates. Pete Ashman, of Philadelphia, was among those at the Lexington hemp seminar, where he displayed a myriad of hemp products, from food, to toilet paper to shampoo. He claimed, “There’s nothing greener on God’s earth.” Republican state Sen. Paul Hornback didn’t go that far, but the tobacco farmer from Shelbyville said in a phone interview that he sees industrial hemp as an alternative crop that could give Kentucky agriculture a boost if it ever gains a legal foothold. Agriculture Commissioner James Comer also supports legalization, arguing that industrial hemp could yield more per acre than corn and soybeans. He sees hemp as a viable alternative to tobacco, a once-stalwart crop that has been on the decline in Kentucky. Comer, among the speakers at the Lexington seminar, said most Kentucky farmers have the equipment needed to produce hemp. He added that the crop needs no herbicides or pesticides, a plus for the environment and a cost savings for producers. Hemp production would spin off new manufacturing, Comer said, creating jobs in parts of rural Kentucky where a once-thriving garment sector disappeared after the North American Free Trade Agreement took effect in the 1990s. Once factories started churning out hemp products, farmers would flock to the crop, Comer predicted. Comer, a Republican, said he’s been contacted by three “very legitimate industrial prospects” that would consider opening hemp production plants in Kentucky if the crop becomes legal to grow. One company wants to use hemp to make vehicle dashes, he said. Another wants to make ethanol, the other cosmetics out of hemp, he said. John Riley, a former magistrate in Spencer County, sees hemp as a potentially lucrative crop that could become a renewable fuel source. It would be a big transformation for a crop once known as a major source for rope. “We’re not talking about rope, and we’re not talking about dope,” he said. “What we’re talking about is a serious agricultural product.” Still, the crop needs to overcome what Riley refers to as the “snicker factor.” Pendleton said he’ll keep pushing the economic benefits of hemp. “I look forward to continuing to fight the fight,” Pendleton said. “We can make this happen in Kentucky.”

Senate committee advances voucher bill

JUNEAU — The Senate Finance Committee advanced a bill Wednesday that would give every adult recipient of an Alaska Permanent Fund Dividend this fall a voucher to help address high energy costs. After changes made Wednesday, the bill would provide vouchers for 250 gallons of heating oil, 35,000 cubic feet of natural gas, 1,500 kilowatt hours of electricity or 31 million BTUs of hot water or steam district heat. Adults or emancipated minors who would have been eligible for a dividend but didn't apply could separately apply for a voucher. Vouchers aren't to count against benefits Alaskans would otherwise receive for certain public assistance or veterans' benefit programs. The voucher program is intended to be a short-term fix, coming after an especially harsh and cold winter across much of the state, and provide the equivalent of up to two months of energy, based on estimates of average statewide residential consumption. The bill also seeks a longer-term fix and calls on the governor to evaluate other alternatives to provide energy assistance. Gov. Sean Parnell has said he doesn't understand why Alaskans who aren't suffering from high costs should receive the same benefit as those who are. He said he is focused on longer-term solutions, and says he has spoken with legislators about regional solutions. The estimated cost of the vouchers is $328.3 million to $465 million.  

State decision expected soon on pipeline changes

JUNEAU — The state could decide this week whether to give TransCanada Corp. permission to shift its attention to a liquefied natural gas project, capable of overseas exports. TransCanada has asked the commissioners of Natural Resources and Revenue to allow it to "curtail" its work on a line that would run from Alaska's North Slope into Alberta, Canada, to focus on a liquefied natural gas project, said Tony Palmer, the company's vice president for major projects development. TransCanada's piece of that project would be the pipeline. Last week, the North Slope's major players announced that they were aligning with TransCanada to pursue an alternative liquefied natural gas project. Gov. Sean Parnell wanted the parties to get on the same page as a way to jumpstart seemingly stalled progress on a line. Parnell said that if the market had truly shifted from the Lower 48, he wanted the companies to unite behind a project that would allow for liquefied natural gas exports to the Pacific Rim. Deputy Natural Resources Commissioner Joe Balash said a lot of the work that has been done on the Alberta option — notably on its northern stretch — would be transferable to a liquefied natural gas project. TransCanada, which has an exclusive license with the state to pursue a line, had been focused mainly on the Alberta option but hadn't announced any agreements with producers for it. TransCanada in January filed environmental reports with federal regulators for the proposed line, and it faces an October deadline to apply to the Federal Energy Regulatory Commission for a certificate to build and operate the pipeline. Under terms of the Alaska Gasline Inducement Act, under which TransCanada has been proceeding, the company can change its plans due to factors unforeseen at the time of licensing or due to regulatory actions, but that is subject to approval by the commissioners. Any changes cannot diminish the value of the project to the state or diminish the project's likelihood for success. Balash said Wednesday that a decision could come yet this week. Among the issues that need to be addressed, he said, are the October filing deadline — TransCanada cannot deviate from it unless it's relieved of the obligation or the date is pushed, he said — as well as how TransCanada will satisfy its requirement to solicit the market every two years to gauge interest in a project. Balash said there's a "tremendous amount" of field work and engineering that would be needed if TransCanada were to complete its application by fall. TransCanada last solicited the market in 2010, holding what's called an open season for three months. TransCanada offered two options: a line through Alberta and a shorter line that would run from the North Slope to Valdez, Alaska, where gas would be liquefied at a facility that an unidentified entity would build and ship elsewhere. Another solicitation is planned for this year, Palmer said. While details of the solicitation are being worked out, he said TransCanada's intent is to offer an Alberta option and a liquefied natural gas option. Later this year, TransCanada hopes to have an initial assessment of a project, like its destination and volume, Palmer said. Balash said that if TransCanada were to shift gears, and work was to continue under the license, TransCanada would be limited to the $500 million in reimbursable costs from the state that it has been working with.

Parnell addresses oil tax rally

Gov. Sean Parnell vowed Wednesday that he would not accept a bill that cuts oil taxes but doesn't elicit pledges of new investment. Parnell addressed a friendly — and large — crowd at a rally for oil tax changes in Anchorage, hundreds of miles from where senators in Juneau are working on an oil tax plan of their own. Wednesday's "Make it Meaningful Rally for Reform" was sponsored by business and pro-development groups. The other speakers included former Gov. Tony Knowles, a Democrat who praised Parnell for setting "the right agenda" for Alaska by seeking to boost oil production. Knowles warned of an impending "train wreck" for the state if oil production continues to fall, and he called on the Republican Parnell and House and Senate leaders to have a united position on Alaska's "fair share" of taxes — and to stay in Juneau until the job is done. Alaska relies heavily on oil revenues to run, and high prices have helped to mask the impact of declining production. The decline isn't new; it's been happening since the late-1980s. Industry officials say Alaska should be enjoying a boom of activity, given prices, but isn't because of its tax structure. That structure features a 25 percent base tax rate and a progressive surcharge that is triggered when a company's production tax value hits $30 a barrel. Industry officials say the surcharge eats too deeply into profits when oil prices are high, and discourages new drilling and projects. The Senate Finance Committee plans to rework the current Senate proposal, SB192, and co-chair Bert Stedman has said he thinks there's agreement with the companies that the state's take at high oil prices is too high. One of the ideas that's been floated for consideration is freezing the percentage of government take at a specific point, meaning that at any point above that, the percentage that the state and companies would get would remain constant. The committee is also looking at ways to encourage new production. On Wednesday, signs declaring such things as "We want reform this year!" and "No go for status quo" were found in the ballroom where the rally was held. Parnell said billions of barrels of oil have yet to be recovered, and cast the current debate as an "epic struggle" for Alaska's future that boils down to whether those resources are tapped for Alaskans' benefit or remain "locked in the ground," undeveloped. He repeated his assertion that his plan has elicited commitments of $14 billion in new investment, while the SB192 has garnered none. Critics balk at Parnell's use of the word commitments, saying there are no guarantees of new investment. Two-and-a-half weeks remain in session, a "lifetime," according to Parnell, and he said he remains optimistic that meaningful change — the buzz term this session — can still be achieved. Last year, Parnell addressed a similar rally in the midst of debate over his tax-cut plan. That plan, which has industry support, later stalled in the Senate, where leaders said they didn't have the information needed to make a sound policy call and refused to be rushed into a decision.

Counsel: Prosecutors overzealous in Stevens case

WASHINGTON (AP) — A special counsel testified Wednesday that overzealous U.S. prosecutors were so intent on winning a corruption case against the late Sen. Ted Stevens that they intentionally withheld information they were obligated to give the defense. Henry Schuelke III told the Senate Judiciary Committee that high-level officials in the Justice Department's public integrity section failed to supervise the prosecution team, also a factor in the botched case that led a judge to dismiss Stevens' conviction. Senators acknowledged that they were personal friends with Stevens, an Alaska Republican who never got to see Schuelke's devastating report on prosecutorial misconduct released this month. He died in Alaska in August 2010. But committee members said they were just as concerned for all defendants who are convicted because of wayward prosecutors who break the rules, and suggested a law may be necessary to remedy the problem. Republican Sen. Lisa Murkowski, who represented Alaska along with Stevens, has introduced legislation to establish a universal standard for prosecutors, to ensure that they turn over information that could be favorable to a defendant. In one of the most embarrassing moments for an attorney general, Eric Holder — who was not in office when Stevens was convicted in 2008 — had to request that U.S. District Judge Emmet Sullivan dismiss the case. Sullivan did so in 2009 and then appointed Schuelke, a former prosecutor, to conduct his investigation. The judge had to learn of the misconduct from an FBI whistleblower. Schuelke's 525-page report released this month gave the most unflattering portrayal of the government's conduct toward Stevens, who was 86 when he died in a plane crash. Asked why he thought prosecutors would defy their legal obligations, Schuelke said: "That motive to win the case was the principal operative motive. I do not believe any of the prosecutors harbored a personal animus toward Sen. Stevens. I don't believe they sought fame and glory. They did, however, want to win the case." Sen. Al Franken, D-Minn., wanted to know whether the prosecutors' conduct was illegal. "What occurred in this case in a number of instances is a violation of an obligation imposed by the courts, interpreting the Constitution," Schuelke responded. "Using your term broadly, I would have to say it was illegal." Kenneth Wainstein, attorney for Stevens case prosecutor Joe Bottini, said that Schuelke "failed to cite any evidence that our client's errors were intentional." Wainstein, the former chief U.S. prosecutor for the District of Columbia, wrote Holder this month that Bottini "on seven separate occasions pressed his superiors at the public integrity section ... to voluntarily make a disclosure" of material favorable to the defense. Bottini, who was detailed to the Justice Department's anti-corruption section from the U.S. attorney's office in Alaska, "was rebuffed by the (public integrity section) supervisors at each turn," the letter said. The Justice Department is conducting its own internal investigation of the prosecution team, which department officials said is nearing completion. Sen. John Cornyn, R-Texas, a former state attorney general, asked how senators can believe the Justice Department's assertion that this case does not present an ongoing problem. "I do not believe, on the basis of our investigation, what happened in the Stevens case is representative of what happens in cases brought by the thousands across this country by the Department of Justice," Scheulke said. Sen. Dick Durbin, D-Ill., said after that assessment, "Pardon my skepticism." He said he's not sure that "we will ever avoid" zealous prosecutors seeking the outcome they're looking for. Schuelke said that if the judge had issued a clear order that prosecutors turn over favorable material and the government lawyers failed to comply, the prosecutors could have committed criminal contempt. Sullivan, however, said he saw no reason to do that because prosecutors knew the law.

Chinese firm surpasses Exxon in oil production

NEW YORK (AP) — A big shift is happening in Big Oil: An American giant now ranks behind a Chinese upstart. Exxon Mobil is no longer the world's biggest publicly traded producer of oil. For the first time, that distinction belongs to a 13-year-old Chinese company called PetroChina. The Beijing company was created by the Chinese government to secure more oil for that nation's booming economy. PetroChina announced Thursday that it pumped 2.4 million barrels a day last year, surpassing Exxon by 100,000. The company has grown rapidly over the last decade by squeezing more from China's aging oil fields and outspending Western companies to acquire more petroleum reserves in places like Canada, Iraq and Qatar. It's motivated by a need to lock up as much oil as possible. The company's output increased 3.3 percent in 2011 while Exxon's fell 5 percent. Exxon's oil production also fell behind Rosneft, the Russian energy company. PetroChina's rise highlights a fundamental difference in how the largest petroleum companies plan to supply the world as new deposits become tougher to find and more expensive to produce. Every major oil company has aggressively pursued new finds to replace their current wells. But analysts say Western oil firms like Exxon Mobil have been more conservative than the Chinese, mindful of their bottom line and investor returns. With oil prices up 19 percent in 2011, they still made money without increasing production. PetroChina Co. Ltd. has a different mission. The Chinese government owns 86 percent of its stock and the nation uses nearly every drop of oil PetroChina pumps. Its appetite for gasoline and other petroleum products is projected to double between 2010 and 2035. "There's a lot of anxiety in China about the energy question," says energy historian Dan Yergin. "It's just growing so fast." While PetroChina sits atop other publicly traded companies in oil production, it falls well short of national oil companies like Saudi Aramco, which produces nearly 8 million barrels a day. And Exxon is still the biggest publicly traded energy company when counting combined output of oil and natural gas. PetroChina ranks third behind Exxon and BP in total output of oil and natural gas. PetroChina is looking to build on its momentum in 2012. "We must push ahead," PetroChina chairman Jiang Jiemin said in January. PetroChina has grown by pumping everything it can from reserves in China, estimated to contain more than 6.5 billion barrels. It drilled thousands of oil wells across vast stretches of the nation's northern grasslands. Some of those fields are ancient by industry standards, dating close to the beginning of China's communist government in the 1950s. The commitment to aging fields distinguishes PetroChina from its biggest Western rivals. Exxon and other major oil companies typically sell their aging, low-performing fields, or they put them out of commission. PetroChina also has been on a buying spree, acquiring new reserves in Iraq, Australia, Africa, Qatar and Canada. Since 2010, its acquisitions have totaled $7 billion, about twice as much as Exxon, according to data provider Dealogic. Several other Chinese companies have become deal makers around the globe as well. Total acquisitions by Chinese energy firms jumped from less than $2 billion between 2002 and 2003 to nearly $48 billion in 2009 and 2010, according to the International Energy Agency. More times than not, the companies are paying above the industry average to get those deals done. It's making some in the West nervous. In 2005, for example, CNOOC Ltd., a company mostly owned by the Chinese government tried to buy American oil producer Unocal. U.S. lawmakers worked to block the deal, asking President Bush to investigate the role the Chinese central government played in the process. Chevron Corp. eventually bought Unocal for $17.3 billion. "There's a resistance to Chinese investment in (U.S.) oil and gas," Morningstar analyst Robert Bellinski says. "It's like how Japan was to us in the 1980s. People think they're going to take us over. They're going to buy all of our resources." That's unlikely to happen. It doesn't make economic sense to export oil away from the world's largest oil consumer. But the Chinese could make it tougher for Big Oil to generate returns for their shareholders. China's oil companies have been willing to outspend everyone and that drives up the price of fields and makes it more expensive for everyone to expand. "You now have to outbid them," says Argus Research analyst Phil Weiss. "If you can't, you're going to have access to fewer assets." Longer term, Chinese expansion globally will bring benefits to the U.S. and other economies. By developing as many oil wells as possible — especially in Africa, Iraq and other politically unstable regions — China will help expand supply. "Frankly, the more risk-hungry producers there are, the more oil will be on the market, and the cheaper prices are," says Michael Levi, an energy policy expert at the Council on Foreign Relations. Despite its swift expansion, PetroChina and other Chinese companies still have much to prove to investors, analysts say. PetroChina's parent, China National Petroleum Corp., for example, has spent millions of dollars in Sudan to provide highways, medical facilities and shuttle buses for the elderly. Oil companies typically don't do that. All of that increases the cost of business and minimizes the returns for shareholders. In 2009 and 2010, PetroChina's profit margins for its exploration and production business were only about two-thirds that of Exxon Mobil's. Its stock price has climbed less than 1 percent, in the past year, compared with a 3.7 percent rise in the stock of Exxon Mobil Corp. "You have to ask yourself: What is the purpose of PetroChina?" Bellinski says. "It is to fuel China. That's it. Although they're a public company, I'm very skeptical that they have any interest in shareholder value creation."

Rare whale swims up West Coast

An endangered western Pacific gray whale tracked from Russia to Alaska and along the West Coast to Baja Mexico is on the move again, apparently preparing to cross the Pacific Ocean again. The 9-year-old western gray whale dubbed Varvara, the Russian version for Barbara, had passed California, Oregon and Washington and was off northwest Vancouver Island, as of Saturday. She is moving about 100 miles per day. She is expected to turn left to head back to feeding grounds off Russia’s Sakhalin Island, said Bruce Mate, director of the Marine Mammal Institute at Oregon State University. “That’s going to be real exciting soon,” he said by phone. “One of the big questions is, will she retrace the route she came on, or will she take a different route home?” If she backtracks, Mate said, she will reinforce scientists’ theory that gray whales learn migration routes from their mothers as they move from a calving area to the mother’s foraging area. “But if she takes some other route,” he said, “then we’re going to have to attribute even more navigational skill to her than we’ve done in the past.” Varvara and two other western gray whales have already changed what scientists thought they knew about the migration routes, with their deep-water crossing of the Pacific. “We used to think of gray whales as near-shore oriented animals in the eastern North Pacific because that’s how they moved along,” Mate said. “It may be that that’s largely an attribute of trying to stay as clear of killer whales as possible. That’s certainly a strategy that mothers with calves use that we see in places where killer whales are abundant — moving to shore and defending toward the deep water is easier for moms with calves.” Another question that remains unanswered is whether whales off Sakhalin Island are a distinct population from eastern Pacific gray whales or an extension of the range of the latter, Mate said. Western Pacific gray whales were hunted, and by the 1970s, were thought to be extinct until a population was spotted off Sakhalin. Just 130 animals remain but they face threats from shipping and offshore petroleum development. Whales have been killed by fishing nets set off Japan. In contrast, California gray whales, also called eastern Pacific gray whales, are a recovery success story. Their numbers were decimated by whalers but are now estimated at 18,000. They were taken off the endangered species list in 1994. Mate is part of an international research team that includes the National Marine Fisheries Service, the A.N. Severtsov Institute of Ecology and Evolution of the Russian Academy of Sciences, the Kronotsky State Nature Biosphere Reserve and the Kamchatka Branch of the Pacific Institute of Geography. The team in September 2010 attached a satellite tag to a 13-year-old male whale named Flex to find out where western grays spend winters. The whale shocked researchers by swimming east across the Bering Sea through Alaska waters and then south off central Oregon, where the tag was lost. Researchers last September attached tags to six whales. Four quit working before whales left Sakhalin Island, but in late November, Varvara and another female, named Agent, crossed the Sea of Okhotsk. Traveling separately, they headed east across the Bering Sea toward Alaska, and both crossed the Aleutian Islands into the Gulf of Alaska in late December. Agent’s tag stopped transmitting during the first week of January when she was two-thirds of the way across the gulf. Varvara is the first western Pacific gray whale documented all the way to Baja Mexico, where most California gray whales breed and give birth. Scientists know Varvara did not give birth because she would have stayed in one place for four to eight weeks as the calf gained strength. She was, however, tracked to all three major breeding and calving areas for eastern gray whales, and she may have found a partner. The whale’s gestation period is about one year. “In good years, females are alternately calving and breeding,” Mate said. “Every-other-year-calving is a normal calving interval for healthy adult females when the environment is doing well for them.” The satellite tags average 123 days on a gray whale and the longest documented is more than 380 days. Varvara’s has been in place for 200 days. Mate hopes it will last for the crossing of the Pacific. The Sea of Okhotsk is frozen and scientists would like to see if Varvara heads for the Kamchatka Peninsula or for waters off Japan to approach Sakhalin Island from the south, Mate said. Either way, he marvels at the voyage. “Keep in mind that Varvara hasn’t fed since she basically left Russia,” Mate said. “So several months crossing to get over here, a month in the reproductive areas, several months back — she’ll be five months without food, so she’s having to do all this on whatever she put in her gas tank, so to speak, before she left Russia.”

Executives: Huge investment to stem oil decline

JUNEAU (AP) — It will take billions of dollars in additional investment just to stem the decline of oil production in the state, executives with ConocoPhillips Alaska said Wednesday. Bob Heinrich, vice president of finance, and Scott Jepsen, vice president of external affairs, testified before the Senate Finance Committee, which is working on an oil tax plan. The North Slope's other major players — BP and Exxon Mobil Corp. — are also expected to testify. Heinrich said a provision to reward new production in the current Senate plan, SB192, wouldn't incentivize the investments needed to offset the decline. Jepsen said a way to encourage that level of new investment is to change progressivity. Alaska's tax structure features a 25 percent base tax rate and a progressive surcharge triggered when a company's production tax value hits $30 a barrel. Industry says the surcharge eats too deeply into profits when oil prices are high and discourages new investment. Gov. Sean Parnell has proposed, among other things, giving new wells a break on the base tax, as well as capping the surcharge and changing how it's calculated. For example, different portions of the production tax value would be taxed at increasing incremental levels. The analogy that gets used is that of an income tax bracket. Industry has expressed support for Parnell's plan or another that officials say would be on the same order. To Jepsen, that means a bill that would include dealing with progressivity in a comparable way. A bracketing proposal was rejected in the Senate Resources Committee. Parnell's overall plan is a nonstarter in the Senate. The Senate Finance Committee does plan to work on the new production allowance, changing it to be more effective or scrapping it in favor of a similar provision, co-chair Bert Stedman said. The provision would reduce a company's production tax value by $10 multiplied by the number of barrels above the previous year's production. The Department of Revenue has estimated that this would reduce revenues to the state by less than $25 million total for all companies, for all years. Stedman said the worry at the committee table is that if a blanket adjustment is made, across all production, the state could "end up moving too much cash across the table."

Athena rocket deal gives life to Alaska Aerospace

JUNEAU (AP) — In the span of a few days, the state-owned Alaska Aerospace Corporation went from left for dead to ready for prime time. Rep. Alan Austerman described the future of the state-owned Alaska Aerospace Corporation as bleaker than commonly thought at a Feb. 28 press conference, and he caught some people by surprise. Austerman is the Republican House majority leader representing Kodiak Island, where the corporation's biggest project is located. He is a non-voting member of the corporation's board of directors, and he said a closure could be imminent unless the state pitched in $8 million in fiscal year 2013. Just three days later, on March 3, aerospace giant Lockheed Martin Corp. announced the Kodiak Launch Complex as its dedicated West Coast facility for Athena rocket launches. "My early comments were based upon the fact that we didn't have anything like this at the time," Austerman said. He said he was aware of the deal and hopeful the details would get worked out even when he made the headline-grabbing claim. The state will contribute $25 million this fiscal year, if the Legislature approves Gov. Sean Parnell's budget request. The cash would be used for up-front construction costs to make possible the launch of heavier rockets from Kodiak's spaceport. The facility is already capable of handling light rockets, up to 4,000 pounds but will be able to handle rockets with payloads up to 10,150 pounds when construction is complete. Lockheed Martin is pursuing $100 million of its own financing to contribute to the project. The move has been considered for a long time, said Gregory Kehrl, who runs the Athena mission for Lockheed Martin. He said people are often surprised to learn that, at least for the purpose of launching rockets, Kodiak has better weather than the two facilities Lockheed Martin currently uses for the bulk of its launches: Cape Canaveral Air Force Station in Florida and Vandenberg Air Force Base in Southern California. Lightning and hurricanes make Florida unpredictable. Seasonal ground-covering fog makes Southern California predictable in a bad way. Kodiak rarely has either of those weather patterns and is helped by generally-benign winds in the upper atmosphere. "We needed a robust West Coast site, and after considering our options we chose Kodiak," Kehrl said, adding that the location is ideal for polar flights and sun-synchronous missions. "Kodiak's only shortfall is that they're only set up to accommodate small launches ... but this opens the door to significant opportunity, and we are in discussions with several customers that have spacecraft ready to fly." Benefits to Alaska will start taking effect when construction finishes in late 2014, Kehrl said, and between then and 2016, as many as 10 missions are possible. He said that means an influx of around 40 workers to Kodiak per mission_a mix of outside groups experienced in building launch pads and local construction contractors_and a possible market for specialized parts and materials that would likely be centered in Anchorage. What else will happen at the Kodiak facility is difficult to predict, but the corporation's chief executive officer, Dale Nash, said his intent is to build a launch pad to accommodate the solid-fueled Athena III in a way that could also be used for liquid-fueled rockets in the future. "If we design it smartly, we could incorporate it in the future," Nash told the Kodiak Daily Mirror, which first reported the expansion project. He said the approach is similar to state investment in the Ted Stevens Anchorage International Airport. "They added another runway, and it helped them get UPS and FedEx to come into Anchorage," he said. "They're big tenants in there now." Nash and Craig Campbell, the corporation's chief operating officer, are shuffling around the country to finish the needed environmental and Federal Aviation Authority permits. Campbell said the point in this contract and others is to attract industry not traditionally based in Alaska. "This is a great opportunity," Campbell told The Associated Press. "Aerospace is part of our future."  

Stocks lower on worries over China slowdown

NEW YORK (AP) — Signs that China's economy is weakening and Europe is slowing hurt U.S. stock prices. Oil prices dropped 2.4 percent to their lowest level in a week after the reports of a possible global slowdown. That hurt oil stocks: Alpha Natural Resources, Consol Energy, Cabot Oil & Gas Corp. and Halliburton were all down 4 percent. The disconcerting news from overseas Thursday overshadowed reports showing the U.S. economy is gaining momentum. The Dow Jones industrial average fell 66 points to 13,058 at noon Thursday. The Standard & Poor's 500 index fell nine points to 1,393, while the Nasdaq composite fell 11 points to 3,063. Nine out of 10 sectors fell in the S&P 500, led by energy and materials. China has recently released a string of worrisome reports, the latest on Thursday, signaling that its manufacturing sector is contracting. A manufacturing index compiled by HSBC fell to 48.1 in March from 49.6 in February. Figures below 50 indicate that manufacturing is contracting. That's a negative sign because growth in China has played a key role in shoring up the global economy since the financial crisis of 2008. China is also the world's largest consumer of materials, so a slowdown there would affect U.S. materials companies. US Steel Corp. fell 4 percent, and copper wire and bar manufacturer Freeport-McMoRan Copper Gold Inc. lost 3.5 percent. It didn't help that another survey in Europe also showed signs that the economy there was also slowing. The purchasing managers index from Markit, a financial information company, fell to a below-forecast 48.8 points in March from 49.3 a month earlier. The index combines both the services and manufacturing sectors. Those signs of a slowdown in key global markets dwarfed the latest positive news on the U.S. economy. The number of Americans seeking unemployment benefits fell 5,000 to a four-year low last week, bolstering the view that the job market is strengthening. A measure of future U.S. economic activity, the Conference Board's index of leading economic indicators, rose 0.7 percent in February for the fifth straight month, more evidence that the economy is gaining momentum. The poor economic news from abroad also hurt FedEx Corp.'s stock, which fell 4 percent. Chief financial officer Alan Graf said the current economic environment and higher fuel prices are driving more customers to "trade down" or choose slower methods of shipping to save money, just like they did during the recession. His comments dwarfed news that its quarterly profit more than doubled between December and February after it shipped more packages and charged higher prices. While news out of China has been bad for stocks, it may provide some relief to consumers with oil prices falling. Gasoline has risen 59 cents per gallon since Jan. 1 and the average price nationwide is above $4 in at least eight states, plus the District of Columbia. In other corporate news: — Watson Pharmaceuticals Inc. jumped 3.6 percent on reports the generic drugmaker is in talks to buy European counterpart Actavis for about $7 billion. — Discover Financial Services stock rose 4 percent, a day after it reported a 36 percent jump in its first-quarter profit. Customers used its credit card more and racked up higher balances but also improved their payment habits. — Shares of Vantiv Inc. rose in their first day of trading on the New York Stock Exchange. Formerly a unit of Fifth Third Bank, the payment processor's stock rose 14 percent.

Stedman: No big changes to scholarship bill

JUNEAU (AP) — The co-chair of the state Senate Finance Committee said Tuesday that he doesn't anticipate major changes to a scholarship funding bill that Gov. Sean Parnell says alters the terms for achieving merit scholarships. Sen. Bert Stedman said a provision on GED tests will remain in the measure, despite criticism from Parnell. The committee only plans "wordsmithing" on the current bill, the Sitka Republican added. Parnell had proposed a fund to provide long-term support for Alaska Performance Scholarships, a pet project that he considers key to raising expectations for students and helping transform a public education system marred by lackluster graduation rates, truancy and dropouts. The Legislature last year approved $400 million to seed the fund, but the bill to establish the fund stalled in the Senate. Earlier this session, the finance committee added provisions that Parnell considered problematic, including letting students who take a high school equivalency exam qualify for scholarships and calling for the state education department to waive course requirements if that portion of the curriculum isn't available in a student's home district. Parnell pulled his support over those changes. He said he asked the committee to hold the bill, and that he talked with members to see if those provisions could be removed. Stedman said that the Legislature is separate from the executive branch and that he'd like to pass the bill from committee and let the process play out. If the bill were to pass the Senate, it would likely end up in a conference committee with House and Senate negotiators. While waiting for the fund to be established, Parnell has proposed one-year funding for scholarships. His request, $8 million, was included in the operating budget passed by the House last week. The Senate is currently considering the bill. As for the ongoing viability of the program, Parnell said Alaskans have deserved this opportunity, and he will keep fighting for it.  

Stock markets lack momentum amid growth worries

LONDON (AP) — Markets were steady on Wednesday, after big falls the previous days, as investors remained concerned about the outlook for the Chinese economy and the impact of sky-high oil prices on businesses. Over the past few weeks, stocks have been buoyant as U.S. economic figures were upbeat and concerns over Europe's debt crisis eased. Many stock indexes are trading at multi-month highs, while the main U.S. markets at their highest levels in nearly four years. But investors have grown skeptical this week that more gains can be sustained in the near term, especially as recent Chinese economic figures have been slightly disappointing. That's important for the world economy as China has helped cushion the blow from the financial crisis and the ensuing recession over the past few years. "While there have been few major developments on the data or policy fronts, Chinese and global growth concerns are contributing to market caution," said Vassili Serebriakov, an analyst at Wells Fargo Bank. In Europe, Germany's DAX closed 0.2 percent higher at 7,071.32 while the CAC-40 in France fell 0.1 percent to 3,527.37. The FTSE 100 index of leading British shares ended flat at 5,891.95 even though the annual budget statement from the George Osborne, the finance minister, was more or less in line with predictions. He cut the rate of tax for the country's wealthiest citizens but insisted the rich will pay more through a raft of measures to prevent tax avoidance and a punitive new charge on expensive property sales. In the U.S., the Dow Jones industrial average was down 0.1 percent at 13,158.95 and the broader S&P 500 index index was up 0.1 percent at 1,406.16. Figures from the National Association of Realtors, showing home sales fell 0.9 percent last month to a seasonally adjusted annual rate of 4.59 million, helped support markets somewhat after modest losses earlier. Currency markets were also fairly subdued, with the euro 0.2 percent lower at $1.3204. Earlier in Asia, worries over the pace of the slowdown in the world's No. 2 economy continued to weigh on sentiment. On Tuesday mining giant BHP Billiton warned that Chinese demand for iron ore — used to make steel — was flattening. And in another sign of cooling growth in the world's No. 2 economy, new home prices dropped in 45 Chinese cities in February as the government implemented measures to cool property speculation. The Nikkei 225 index in Japan, which counts China as its most important trading partner, fell 0.6 percent to 10,086.49, while Hong Kong's Hang Seng shed 0.2 percent to 20,856.63. China's main Shanghai index recovered 0.1 percent to close to 2,378.20, having dropped sharply in the previous session. The rising cost of crude is also a threat to the global economic outlook as it could spark inflation and hurt consumer spending. On Tuesday, China raised the price of retail gasoline for the second time in two months. Benchmark crude for May delivery was up $1.16 to $107.23 a barrel in electronic trading on the New York Mercantile Exchange.

Senate passes supplemental budget

JUNEAU (AP) — The Alaska Senate has unanimously passed a $72 million supplemental spending plan. House Bill 307 is intended to cover unanticipated costs for the current spending year. It has been billed as a fast-track bill, containing more time-sensitive items. It does not include everything the governor requested, but lawmakers say other items could be addressed in another spending bill. The bill, which passed the House earlier this month, includes $18 million to settle an education lawsuit, $300,000 for a lobbyist to fight base closures in Alaska, $600,000 for fast-ferry litigation and $5 million for the disaster relief fund. Sen. Lyman Hoffman says the measure also includes funding for a low-income heating assistance program. It also has money for emergency roof repair projects after heavy winter snowfall. The measure next goes to the governor.

Coast Guard issues report on Alaska copter crash

JUNEAU (AP) — A lack of communication and the pilot and co-pilot's failure to properly perform their duties contributed to a 2010 helicopter crash that killed three Coast Guard members, according to the Guard's final report released Monday. Vice Commandant Sally Brice-O'Hara's report came a day after the Guard's commander in Alaska found the actions of the sole survivor, co-pilot Lt. Lance Leone, directly contributed to the deaths of his colleagues and the helicopter's destruction. Brice-O'Hara found that pilot Sean Krueger and Leone were flying too fast and too low, creating "a situation in which ... even a momentary lack of attention increased the potential for a mishap." The report directed the Guard's Alaska commander, Rear Adm. Thomas Ostebo, to consider whether any additional personnel action would be appropriate. She said the commander of the Coast Guard Personnel Service Center also can decide whether to convene an aviator evaluation board to reconsider Leone's suitability to fly again. Leone was co-pilot of an MH-60 Jayhawk helicopter flying from Astoria, Ore., to the crew's base in Sitka, Alaska, when it hit an unmarked span of low-hanging wires and crashed off the Washington coast in July 2010. Killed in the crash were Krueger, of Connecticut, and crewmen Brett Banks, of Wyoming, and Adam C. Hoke, of Montana. Leone had recovered from his injuries and was cleared for flight re-training when he was charged last year with negligent homicide, dereliction of duty and destruction of government property. He was accused of not actively navigating or challenging Krueger's decision to drop in altitude seconds before the helicopter hit the 1,900-foot span of wires. The Coast Guard dismissed the charges earlier this month. Brice-O'Hara found that a lack of adequate markings on the power transmission lines — which were maintained by the Coast Guard — may have contributed to the crash. The wires, which were the site of at least two other accidents, sloped from 190 feet high to about 36 feet. According to testimony from a December military hearing on the incident, marking balls were not along the span at the time of the crash, instead pooled near a pole, above land, at a low point. The helicopter hit the wires at about 114 feet, according to testimony. During the hearing, the crash's lead investigator also called the lines a contributing factor but said there was no reason for the aircraft to be flying so low. Leone's civilian attorney, John Smith, argued that Leone had programmed the helicopter on a track that would have missed the wires, but Krueger deviated from it, dropping in altitude as he flew over a Coast Guard vessel in the channel seconds before the fatal strike. The report is not intended to assign blame but rather to find out what went wrong and what could be done to prevent future accidents. It included a series of recommendations, including a study of the feasibility of equipping Coast Guard helicopters with wire strike prevention systems. It did not incorporate testimony from the military hearing, which a Coast Guard spokesman called a separate process. Smith said that move made the report "flawed and biased." "Evidence showing the Coast Guard's callous disregard for the safety of aviators was developed and presented by the defense team," he said in a statement. "This evidence was not considered by the vice commandant. In addition, findings such as Lt. Leone 'failed to actively navigate' were debunked by evidence developed by the defense team" at the December hearing. Leone has refused to sign a document from Ostebo that noted his failure to perform required duties directly contributed to the crash. A Guard spokeswoman said Monday that it was an internal personnel matter but could not comment on the ramifications of Leone's refusal. Brice-O'Hara said the other contributing factors were a lack of proper communication among the crew, failure by Krueger and Leone to comply with altitude restrictions and policy for low-level flights and to maintain awareness, and Krueger's apparent decision to drop in altitude to fly over the Coast Guard vessel. She noted that the Sitka region often gets poor weather that requires low-altitude flights, and that there was evidence to suggest that pilots were encouraged to fly lower and slower to increase their familiarity with the weather. In December, the commander of Air Station Sitka, William Cameron, testified that, in Alaska, it was not uncommon to fly low along the coast. Cameron said Krueger — who, like Leone, had a list of Coast Guard awards and accolades — was comfortable at lower altitudes, but Leone had recently been assigned to Sitka. Had Leone been at his prior station, he probably would have asked questions, Cameron said. But he added that he didn't think it would have made a difference if Leone had questioned the drop in altitude. Brice-O'Hara's report noted the failure of the Guardsmen to follow policy and procedures and the "apparent complacency... and conduct" during the flight "must serve as a lesson for others."  

US stocks fall on worrisome signs from China

U.S. stocks followed world markets lower Tuesday after worrisome economic data out of China, whose blistering economy helped sustain global growth during the economic downturn. Asian stocks fell sharply after a report that home prices dropped in 45 Chinese cities last month, a result of government policies designed to reduce property speculation. Mining giant BHP Billiton said it expects weakening Chinese demand for iron ore used in steelmaking. On Wall Street, the Dow Jones industrial average and the Standard & Poor's 500 were both headed for their biggest losses in two weeks. "If there were skeptics out there that the market might have gotten a little ahead of itself, this was all the news they needed," said Brian Gendreau, market strategist at Cetera Financial Group, a brokerage. Gendreau said traders are increasingly concerned about slower growth in emerging markets — not just China, but India and Brazil as well. The Dow was down 73 points at 13,167 just before 1 p.m. EDT. The S&P 500 was down seven at 1,402. The Nasdaq composite index dropped 21 points to 3,058. Caterpillar, the maker of heavy equipment, led the Dow lower, sliding 2.9 percent after it said global sales are growing more slowly. Bank of America, by far the most heavily traded stock, led the Dow higher with a 1.7 percent gain. Mining companies, which have increasingly relied on rising demand from the developing world, plunged after BHP Billiton's grim report on Chinese demand. Cliffs Natural Resources Inc. dropped 3 percent, Peabody Energy Corp. 5 percent and U.S. Steel 2 percent. U.S. Treasury debt declined after a rally-busting overnight gain. Stronger demand had pushed the yield on the 10-year Treasury note down as low as 2.33 percent after nine straight sessions of rising yields. By midday, the 10-year yield had recovered to 2.36 percent, unchanged from late Monday. The dollar rose against the euro. Traders tend to buy what they consider safer currencies, such as the dollar, when they are worried about the global economy. The euro fell to $1.3218 in midday trading Tuesday from $1.3238 late Monday. Earlier Tuesday, the U.S. Commerce Department released a mixed report on the housing market. Builders broke ground on fewer homes in February, though they obtained more permits to build homes later in the year. Gendreau said the report's impact on trading was mild because most housing data in recent months have signaled a revival for the sector. The price of oil fell 2 percent after Saudi Arabia said it is ready to meet any shortfalls — real or perceived — in global supplies. New York crude was down $2.14 at $106.41. Oil prices have been spiking in part because of fears that a standoff over Iran's nuclear program could reduce oil production in the Middle East. European indexes fell sharply. Germany's DAX lost 1.1 percent, France's CAC-40 1 percent and Britain's FTSE 1.1 percent. Among the companies making big moves on Tuesday: — Jeweler Tiffany & Co. jumped 7 percent after the company said it expects profits and revenue to rise in 2012, despite weaker earnings in the fourth quarter. — Adobe Systems Inc. fell 4 percent after the software maker said that its fiscal first-quarter profit fell sharply as operating costs rose.  


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