Paul Jenkins: New Senate should rekindle Alaska oil industry

commentBy XxxxNovember 17, 2012 

With voters finally seeing through the "bipartisan" working group sham in the state Senate and returning control to Republicans in both legislative chambers, perhaps Alaska can reopen for business before it is too late -- and time, make no mistake, is ticking away.

The former union-run coalition of Democrats and Republicans was spawned in a power play six years ago and continued after the 2008 elections with an unfortunate 10-10 split in the Senate. It existed simply to ensconce some senators in powerful leadership positions and milk the North Slope oil industry of every possible cent, while keeping the grossly unfair Alaska's Clear and Equitable Share oil tax intact.

That monstrosity -- with its 25 percent base rate and ratcheting increases -- steals $2 billion a year from North Slope industry shareholders. Instead of going into the private sector to build wealth and create jobs, the money underwrites indefensible government spending.

While the House sensibly approved House Bill 110, Gov. Sean Parnell's ACES revamp, the Senate coalition unabashedly blocked revision at every turn. It did so with union help and cash. A propaganda campaign shrilly demanded industry promises of more production and jobs in return for any tax cut. (I wonder why lawmakers have not tried government by outright theft with the other industries that offer Alaska zip in tax receipts.)

The campaign appealed to the brain dead with cries that "it's our oil" and we need a better deal -- despite pesky long-term contracts and such. Its story line was that returning the $2 billion stolen annually by ACES would amount to a "giveaway." It was très fashionable to pretend coalition senators were "heroes" who were "standing up for Alaska."

In reality, they were flim-flammers stripping ordinary Alaskans of jobs and a healthy economy. All they really wanted was increased spending for bigger government, fat capital budgets and their union pals -- and the future be hanged.

The idea was -- and is, among our more myopic lawmakers -- to bleed industry now because there may not be much left later and none of the signs is good. North Slope production? Down. Exploration by the Big Three? Down. Investment? Down. Throughput in the trans-Alaska oil pipeline? Down -- and slowing to a dribble at 6 percent a year. That throughput, by the way, underwrites 90 percent of Alaska government spending.

As throughput dries up, there are increasing worries about the aging pipeline. With it transporting about 560,000 barrels a day -- down from more than 2 million a day in 1988 -- there is concern that if flow drops to about 350,000 barrels daily there will be serious engineering and maintenance issues.

Worse, the nation's oil production, led by shale oil recovery, is surging on private land unfettered by government interference, but it's tanking here. As the nation is poised to surpass Saudi Arabia as an oil producer, Alaska, with perhaps another 10 billion or so barrels of oil beneath state land on the North Slope, is taking a powder.

Because of ACES and its recalcitrant fans in the Senate, jobs and investment dollars have sprinted to places such as North Dakota, with its 11 percent in oil taxes and a stovetop-sizzling economy. Alaska is yesterday's news. Irrelevant. Impotent. Stagnant.

Some of us who remember what the mid-1980s looked like are antsy, but it would only take a rational and fair tax policy to rekindle Alaska's economy and the North Slope oil industry.

That job falls to the Legislature. Voters made it clear they want action; they want the years-long mess sorted out; they want the Senate to get off its duff and fix Alaska. They gave the Republicans a 13-7 edge at the polls on election day. The new Senate swiftly organized and with the addition of two Democrats the Republican-dominated majority stands at 15-5.

The new Senate president is Republican Charlie Huggins of Wasilla, a proven leader. He says we are at a "critical juncture" of declining oil prices and production. He wants to get more oil into the pipeline and has people already at work. "If they win," he says of the industry, "we win."

The future is anybody's guess. Perhaps this time around -- with the fiscal handwriting on the wall -- a majority of senators will not be so intent on bleeding dry the state's primary economic partner. Perhaps this time we will have a Senate focused on Alaska's future.

What a welcome change.

Paul Jenkins is editor of the AnchorageDailyPlanet.com.

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