Oil production in Alaska is drying to a dribble. North Slope industry investment is stagnant. Exploration has fizzled. Alaska's Clear and Equitable Share oil rip-off is strangling the state. Hey, let's go on a road trip, yeah, a "Norway Policy Tour."
Fourteen of Alaska's lawmakers planned to jet off with business and community leaders to do just that. They wanted to get a feel for how that small, but rich, nation handles Arctic issues, manages its very fat sovereign wealth fund and deals with economic and energy development.
Let's be clear. The trip, postponed because of the special legislative session, is not a junket. It will entail torturous, 11-hour days, eating of vast quantities of lutefisk and the ritual wearing of Elmer Fudd hats. The it's-not-a-junket tour is being put together by the Institute of the North. Its managing director, Nils Andreassen, is not amused with the junket shots.
"This isn't fun," Andreassen told the Associated Press. "It's work."
The story is that Norway and Alaska are much alike; that we can learn something from a country that boasts among the world's highest standards of living; a nation that provides "free" health care and education through graduate school; that has a highly integrated welfare system; that provides "free" pensions.
In countless ways that count, Alaska and Norway are, indeed, alike -- in topography and timber and oil and coal and fish and minerals. Both are wealthy; both depend heavily on oil to fuel their economies. Norway is heavily invested in hydroelectric power; Alaska would like to be.
Among the myriad similarities is one stark difference. Alaska is a sovereign state in a free republic. Norway is a socialist welfare nation with a mixed economy and heavy state ownership in strategic sectors. It's like comparing apples to pinkos. Everything springs from that crucial difference.
In Alaska, the state sold leases competitively on the North Slope and oil is produced by private industry, with profits paid to shareholders. Alaska regulates the industry. Companies pay a royalty to the state and can face a marginal tax rate up to 92 percent when oil prices skyrocket. Most of the oil revenue funds government, but 25 percent is routed into the Permanent Fund, which today has about $40 billion and pays an annual dividend to Alaskans. The state's oil production is dropping and its vast fields of stranded North Slope gas remain stranded. So far, Alaska has produced 17 billion barrels of oil and received $161 billion in revenues.
In Norway, government calls the shots. StatoilHydro is 67 percent owned by the Norwegian government but controls 80 percent of the country's oil and gas production. Major oil companies must partner with StatoilHydro to work there. Its oil fields are aging and production is sliding.
Because there is no profit to speak of, most oil revenue in Norway is socked away in the huge state petroleum fund -- established in 1990 and now Europe's largest investor. The nest egg was renamed the Pension Fund, which it is, and contains about $400 billion. Norway also controls more than 30 percent of its publicly listed companies.
When you add revenue from Norway's oil and business ownership to its painfully aggressive tax structure -- designed to aid in social engineering and wealth redistribution -- it is no surprise government can squirrel away vast amounts of money for "free" services.
Unless our wandering legislators want help nationalizing the oil industry and creating an even more socialist Alaska, they are barking up the wrong tree in Norway. They should be visiting closer to home, a place with a sizzling economy and a bright future -- North Dakota.
With a population the size of Alaska's, North Dakota is booming because of the Bakken Shale deposit, which could hold 4.3 billion barrels of oil. It was nibbled at for years; now advancing technology is allowing the field's development.
There is more work than workers and state government is running a budget surplus. North Dakota's lawmakers fret the state's 11.5 percent oil extraction tax, the highest in the Lower 48 and less than half of Alaska's, hinders its competitiveness with other states and plan changes. North Dakota lawmakers say they need more competitive taxes to ensure industry investment.
If Alaska lawmakers could get the knack of fair taxes and competitiveness, a trip to North Dakota would be worthwhile -- but, admittedly, not much of a junket.
Nice hat. Pass the lutefisk.
Paul Jenkins is editor of the AnchorageDaily Planet.com.
PAUL JENKINS
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