Paul Fuhs

GUEST COMMENTARY: Blaming the Arctic won’t address climate change

It’s become very fashionable lately for politicians and ‘environmental’ groups to advocate against resource development in the Arctic, supposedly in the name of climate change. This includes canceling oil and gas leases, discrimination by banks against Arctic oil and gas projects, calls for huge Wilderness designations and boycotts against shipping on the Northern Sea Route. Do these measures make sense and do they do anything to respond to climate change? The answer is no. A well intentioned effort can still be completely misguided. Think about it. Shutting down Arctic oil and gas production in the Arctic will not result in even one drop less oil being burned. None. It will just be produced somewhere else, like the Alberta tar sands or Venezuelan heavy oil. Is that what we want? The current estimate of available oil from world proven reserves is 53 years. This does not include unproven reserves or new production technologies. The U.S. International Energy Agency predicts that by 2050, the world will still be 70 percent dependent on fossil fuels. Arctic oil and gas development can help meet this obvious need. Although the anti-Arctic development campaigns claim they are “saving the people of the Arctic”, stopping oil and gas development will only add to the impacts we are already experiencing from climate change by destroying our economies. Arctic economies, and certainly Alaska’s economy, are highly dependent on resource development. This fact is lost upon the vast urban populations of the U.S. that don’t have any idea where their resources come from. Gasoline just comes out of the pump. Electricity just comes out of the plug in the wall as you turn on your air conditioning. Products based on mining and timber just magically appear on the shelves of the vast big box stores. This disconnect is exploited by politicians and by groups pleading for funding from these resource-alienated urban masses. The same goes with the major banks discriminating against the Arctic in their public relations efforts to greenwash themselves. And this while they continue to finance coal and heavy oil production elsewhere. Likewise, we have the politicians with their virtue signaling decisions like cancelling Arctic oil and gas leases and pipelines across the U.S. The Keystone Pipeline is an excellent case in misguided, but politically expedient, policy. Besides eliminating thousands of working class jobs, canceling the pipeline will just mean that the oil will be transported by truck or rail, much riskier than a pipeline. Saving the planet? Or trading substance for symbols? In the meantime, the politicians are supporting Biomass Energy as “green energy”. This involves cutting down the forests and burning wood pellets which produces more CO2 than coal. I wonder if our new President Biden and his eager staff have thought about this? If the President really wanted to do something to reduce consumption of oil and gas, he would shut down all the electrical generating plants in his own state of Delaware, which are 70 percent fossil fuel. (the rest being nuclear). That would actually do something to reduce CO2 emissions. It’s also not going to happen for purely political reasons. No, it’s much easier to attack the Arctic with our small population. Climate change is a global consumption problem, not an Arctic production problem. It’s not the 4 million people producing oil in the Arctic, it’s the 7 billion people in the rest of the world and growing demand, especially in developing nations who strive for the American standard of living. It’s not right to blame them either. These people have rights as well and we identify with them. We are not blind to climate issues and deal with them daily as the Arctic warms up. We support renewable energy when it is practical and that’s not just talk. We have used our oil money in Alaska to invest heavily in renewable energy sources such as hydroelectric, wind and solar. We wouldn’t have been able to do that without producing our oil and gas. We are not sitting on our hands with regard to reducing our own consumption. Among the states, Alaska is one of the lowest emitters of CO2. It’s wrong to blame the Arctic and discriminate against us for a problem that is your own. We have the right to continue providing critical resources to our country and the world, while supporting our working class people and our economy. If you want to look for a solution to climate change, you might want to look into your own back yard. Or a mirror. Paul Fuhs is a former mayor of Dutch Harbor and a former Commissioner of Commerce and Economic Development for Alaska. He can be reached at [email protected]

GUEST COMMENTARY: Opportunities, challenges for Alaska as Northern Sea Route opens

I took this picture on Aug. 26 at the port of Petropavlavsk-Kamchatski. This is the Russian icebreaking containership Sevmorput loading containers of Russian Far East fish products for export to Europe. The fact that the containers are from Maersk Shipping Lines, the largest shipper in the world, is testament that the Northern Sea Route is developing into a true world shipping route. This presents both opportunities and challenges for Alaska and we need to manage both of these unless we want to be left behind. On the opportunity side is the potential for direct shipments to Europe for Alaskan products, from fish to timber to minerals. This could be especially beneficial to Alaska’s fishing industry that sells many of its products into the European market. It also represents a major opportunity for a container trans-shipment hub and fueling port such as The Aleut Corp. has proposed at Adak. On the challenge side is the risk of potential vessel casualties and pollution of Arctic waters. This clearly calls for strong prevention and response measures in a bilateral approach with Russia, which shares our common heritage of Arctic oceans. Ocean circulation patterns in the Arctic indicate that an incident anywhere could be carried across the entire Arctic. Fortunately, a public/private partnership, the Marine Exchange of Alaska, in conjunction with the U.S. Coast Guard and the State of Alaska has developed the most comprehensive prevention program in the world. This consists of 135 receiving stations throughout the coast of Alaska that receive the location data of vessels transmitted by the vessel’s AIS (automated identification system) transmitter. Vessel AIS transponder systems are required by international law. This data is monitored 24/7 by specialists of the Exchange, ensuring fidelity to offshore routing measures, identifying vessels in distress and nearby vessels who could respond, transmitting real time weather data and other safety information to the vessels via AIS. However, not all vessels are required to follow these safety measures, which points to the need for cooperation with Russia in protecting our Arctic waters, either through bilateral regulations or through proposals to the International Maritime Organization. There is currently an effort by Russian Far East regional governments and Alaskans to form the Bering Pacific Arctic Council, similar to the Barents Council, which can promote and oversee Arctic shipping prevention measures. Safe shipping measures are also supported by the Arctic shipping members of the Arctic Economic Council, so this should be a realizable goal. These measures will be necessary to answer critic’s consistent opposition to any development in the Arctic, no matter how misguided. A recent example of this was French President Macron’s announcement during the recent G-7 meeting in Biarritz, France, calling for no shipping the Arctic. He claimed this was because the faster, ice free route was the “consequence of our past irresponsibility.” Ironically, the vessels using the Suez or Panama canal routes instead of the Northern Sea Route will burn much more fuel and produce subsequent increased CO2 emissions. The French shipper CMA CGM then dutifully said it wouldn’t use the route, at the same time announcing conversion of many of its vessels to LNG fuel. Because LNG wouldn’t cause any pollution in the case of a vessel casualty and is an ideal fuel for Arctic shipping, it proves once again that once you get on the politically correct posturing train, the next station you inevitably arrive at is Stupid. And let’s not forget that Arctic LNG shipping as the Russians have developed may be the method we use to commercialize our North Slope gas reserves if a pipeline cannot be financed. Alaska and our Arctic neighbors can’t afford to let others who don’t live here and don’t understand us, or our environment, set the agenda for our future. We have to do that for ourselves. We have the tools. We just need to use them. Paul Fuhs is President Emeritus of the Marine Exchange of Alaska, and a consultant on Arctic port development. He was recently named as the US Coordinator of the Bering Pacific Arctic Council Working Group. He can be reached at [email protected]

COMMENTARY: Reinbold’s budget analysis omits critical information

Rep. Lora Reinbold recently wrote an editorial taking on her colleagues in the Legislature for not cutting the budget enough. Her analysis reflects a fundamental misunderstanding of the state’s budget and omits critical data to make decisions on the budget deficit. She criticizes them for focusing on “unrestricted general fund” cuts that have been fairly substantial, and not cutting “designated general funds” and “other state funds.” What do these terms mean? “Unrestricted general funds” come from resource rents and corporate income taxes. They are used to provide services available to all Alaskans. Services like State Troopers, education funding, plowing the roads, the courts, prison systems and Pioneer homes. “Designated general funds” are funds paid by Alaskans and Alaskan businesses for the specific services that they receive from government. When you buy a driver’s or business license, your fees pay for that employee working there. When a bank is audited for solvency to protect your deposits, the bank pays for that audit. When a fish plant is inspected to make sure it is not producing tainted food, they pay for that inspection. The amount that Alaskans pay for these services is huge, amounting to $877 million in 2016. When you pay for these services, you expect them to be provided. If you quit providing the service, you would also lose the revenue so you wouldn’t have done anything to address the budget deficit. The percentage of department budgets that are paid by these fees for services would surprise you. Department of Commerce: 80 percent. Department of Environmental Conservation: 80 percent. Department of Labor: over 80 percent. Fish and Game: 90 percent. In fact, almost the entire regulatory structure of the state is paid for by fees from the regulated community. Rep. Reinbold made a number of amendments on the floor attempting to reduce the fee for service budgets of these agencies, even though it would have done nothing to solve the budget crisis. Every one of these amendments was voted down by a bipartisan vote of 37 to 1, which I guess shows you that at least the rest of the Legislature understands this. “Other state funds” are contractual obligations of the state such as school bonds and other debt. The state can’t cut these without defaulting on our loans. These amount to $342 million per year which when combined with fee for service designated funds adds up to a whopping $1.3 billion per year. This is why the Legislature has had to focus on cutting unrestricted general funds which will amount to about a 20 percent reduction for this year and last. Rep. Reinbold asks: “When you talk about the budget for your household, wouldn’t you balance total expenditures against your total income?” Well not really. Consider this example: You have a regular job that provides most of your family income but you also have a side business cleaning homes after work. You also have a house payment. If you took Rep Reinbold’s approach you would say, “Well lets just cut all of our expenses for our house cleaning business.” Well… you could do that but you would also lose all the revenue. Likewise you could say “Well let’s just quit paying our house payment.” but your house would be foreclosed and you would be out on the street. The reasonable approach would be to make your spending match your revenue from your job, keep the house cleaning business and make your house payment. So yes, the state will have to make additional cuts and look for efficiencies, but we are down to core services with a few exceptions. If we only keep drawing from our savings accounts to fill the budget deficit and can’t draw from Permanent Fund earnings or institute general tax measures such as a sales or income tax, those savings accounts will be gone and we will really be up a creek without a paddle. We can’t cut the services that people are paying for. A sales or income tax would only provide a small percentage of the budget shortfall. We must turn our savings into revenue generating assets to have any chance of maintaining the core functions of government: public safety, education, transportation and health. If we don’t, these will be the first to go. Paul Fuhs is the former Mayor of Dutch Harbor and former Commissioner of Commerce and Economic Development for Gov. Wally Hickel.  
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