POLITICAL REBOUND
LESS THAN EIGHT YEARS AFTER THE EXXON VALDEZ SPILL, THE OIL INDUSTRY ENJOYS SMOOTH SAILING IN JUNEAU, FAVORED BOTH IN THE LEGISLATURE AND THE GOVERNOR'S OFFICE.

By STAN JONES
Daily News reporter

ANCHORAGE- The Exxon Valdez oil spill sent Alaska's oil companies into five years of political exile.From 1989 to 1994, the industry that pays 80 percent of the tab for state government suffered a string of megabuck defeats in the state capital, ranging from enactment of a law that raised future taxes to approval of another that raised interest charges on unpaid past taxes.

But Big Oil is back. For two years, the oil agenda has led a charmed life in Juneau, with one favorable law after another coming from a state government dominated by oil-friendly legislators of both parties and an oil-friendly Democrat in the governor's mansion.

So potent has oil's punch become in Juneau that last year the state gave financial concessions to British Petroleum at its Northstar oil field despite the fact that BP, Alaska's biggest oil producer, said no breaks were needed to make the field profitable.

While people differ on why and how the oil industry found its way out of the political desert, most observers agree things are far friendlier today between the state and the oil companies that do business here.

''There's a much better relationship now than there was even before the oil spill,'' said Jim Palmer, head lobbyist for BP Exploration (Alaska) Inc. ''We've lived though the controversies we've had in the past, and we've all realized there's better ways of getting these things resolved.''

''We really do have a new era of partnership between the oil industry and the state,'' said Gov. Tony Knowles. ''The partnership is very healthy for Alaska. We have to partner with industry to produce the jobs.''

Others think things have gone too far.

''It was bad enough when the Republicans were pandering to the oil-company interests,'' said outgoing Rep. David Finkelstein, D-Anchorage. ''Now we've got Democratic legislators competing with them as to who can pander the most. It's a pretty scary world.''

As the comments from Knowles and Finkelstein suggest, there's much disagreement on whether the new coziness between oil men and politicians is good for Alaska, not surprising in a state where oil pays so many of the bills, where a single vote in the Legislature can erase millions of dollars in state revenue and convert it into millions of dollars in oil-company profits, or vice versa.

''They need us and we need them,'' said former Gov. Walter Hickel. ''But they don't own us, and we don't own them.''

Although there's general agreement that oil has made a strong political rebound, there's less agreement on how it happened. But most theories about it fall into one of two broad categories.

One view holds that converging political currents -- including the oil companies' long, patient and expensive cultivation of both candidates and public opinion -- helped the industry restore its clout.

The other view holds that the state's new willingness to meet the industry's demands is a reasonable response to the new economic realities of the Alaska oil business: increased exploration opportunities overseas made possible by the fall of communism, plus the early-1990s downturn in Alaska that saw North Slope producers lay off more than a thousand workers, plus the fact that most new fields on the Slope are expected to be far smaller than giants like Prudhoe and Kuparuk River that turned Alaska into a world energy capital two decades ago.

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