As your neighbors and friends bailed out, your property value tanked like Sarah Palin's approval ratings. Schools shut down. Services dried up. You are still working. For how long is anybody's guess. A state government once 90 percent fueled by oil is digging deep into your pockets to pay its bills. Local government eyes you like chocolate cake.
There is little hope. The oil industry, after all, gave up on Alaska because of punitive, greedy tax policies, leaving billions of dollars in oil stranded on the North Slope. The economic ripples across Alaska hit like tsunami waves.
Could it happen? If you close one eye and squint, you can see it already, like a slow-motion train wreck.
Alaska is an oil state. Like it. Hate it. It is fact. It has been since the state's first North Slope lease sale in 1964. Oil is us. Gas will not save us. Nor will fish or tourism. It is oil or nothing.
Our economy is twice as big as it would be without oil, richer and more stable, too -- and the gooey stuff underwrites scores of thousands of jobs Alaska would be unable to support otherwise. State taxes are the nation's lowest and spending per person the highest -- thanks to oil. A University of Alaska Institute for Social and Economic Research study concluded an Alaska family of four received, in various forms, about $22,000 from Alaska's oil wealth last year.
The problem is that we need more oil -- lots more -- but North Slope companies are not exploring. Rosy projections show new oil accounting for more than half the production in 2020. How? There is only one exploration well this year.
Without more oil to put into the trans-Alaska oil pipeline, Alaska is in trouble. Oil throughput since last fiscal year has dropped about 5 percent, faster than predicted a few years ago, to about 630,000 barrels a day. When it dips below 500,000, there could be engineering and structural problems with the line. At 300,000, Alaska may face an early pipeline shutdown. That would be catastrophic. State savings will dry up quickly.
How did we get here? Why are oil companies not exploring, investing and producing? Palin and the Legislature in 2007 exploited Alaskans' strange and strained relationship with the North Slope companies and put in place Alaska's Clear and Equitable Share oil tax. The levy contains a 25 percent base rate and progressivity that strips companies of most profits when oil prices are high and puts Alaska's marginal tax rate at the top of the heap worldwide. The companies end up taking all the risks and, essentially, working for the state when prices are high. Alaska no longer is competitive.
The lawmakers driven to stall or torpedo Gov. Sean Parnell's House Bill 110, aimed at fixing the mess, defend ACES. First, they say, reform would cost Alaska up to $2 billion a year -- as if the state has a right to the money. ACES wrongfully strips that much from the companies each year.
Then, they worry: "But, gee, what if they do not invest in Alaska after we give them the reform?" No company can foresee the future. There are market conditions, oil prices and political situations to be considered. But the industry would be silly not to invest, explore and produce here because there is huge money to be made in a secure environment with existing infrastructure and stable, understandable and logical oil tax structures.
If lawmakers are fretting they will be double-crossed -- and they're so smart, how could that happen? -- they can simply undo the reform and go back to Square One. Simple. Too many of the arguments against fixing ACES sound as if some lawmakers are intent only on grabbing what they can now and the future be hanged.
If nothing is done, the industry will continue to focus elsewhere, something Alaska can ill afford for much longer. Many lawmakers get it. The oil industry gets it. Other states get it. Native corporations, business interests and other organizations get it. Most Alaskans get it, too. It is easy to understand.
If ACES is not fixed, and soon, the only winners will be folks who make "For Sale" signs.
Paul Jenkins is editor of the anchoragedailyplanet.com.
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