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Maverick economist Arlon Tussing shaped Alaska energy policy

  • Author: Dermot Cole
    | Opinion
  • Updated: July 7, 2016
  • Published January 19, 2016

Long before the Permanent Fund dividend became the most popular part of state government, economist Arlon Tussing spoke of a revolutionary idea about handling some of Alaska's oil wealth.

"The only way to guarantee that the money does any good to most of us is to hand it out to the people," Tussing told a reporter for Time magazine in 1970. This was less than a year after a lease sale had generated $900 million, fueled by the discovery of the largest oil field ever found in North America.

"The state should form an investment company, something like a mutual fund, and distribute the stock to Alaskans on the basis of one share for every year of residence in the past 15 years. In this way, a family of five could expect an annual income of about $2,500 from the first $900 million lease sale alone," he said.

Tussing was only half-serious about the direct payment plan, Time said.

But Sen. Jay Hammond, later to become a two-term Alaska governor, was dead serious about what became the Permanent Fund dividend. He was an unabashed admirer of Tussing and praised his penchant for never telling people exactly what they wanted to hear.

At the conclusion of a series of seminars in 1969 in which Tussing and others helped participants brainstorm about Alaska's future, Hammond read a composition to the audience: "Now, the wisdom and words of one Arlon Tussing / seem to always engender contention and cussing / Personally, I rather like a guy / who bowls over idols and spits in the eye ..."

Tussing, who died Friday in California at 82, shaped public policy in Alaska for decades, developing ideas about the Permanent Fund and working to resolve key issues ranging from Native land claims to the economics of oil and gas development. Over the course of his career in Alaska, which started with teaching economics at the University of Alaska Fairbanks, he became the most influential social scientist in the state.

"Arlon was the best mentor a young economist could ever want. I owe him a lot. So do all Alaskans who ever got a PFD," said veteran Alaska economist and writer Gregg Erickson.

He gained national attention for his work on energy markets, particularly natural gas, and while some in Alaska criticized him when he pointed out how some popular projects didn't pencil out, his clients included governments and private industries. He served as a leading adviser to Sen. Henry "Scoop" Jackson of Washington during the debates on the pipeline and Alaska land issues.

In 1984, a Wall Street Journal reviewer praised his "accurate but controversial forecasts in the volatile world of energy price forecasting."

In the early 1980s, when some economists and oil promoters predicted a never-ending increase in the price of oil, Tussing correctly forecast a prolonged downturn. Some experts said Alaska oil production might climb to 3 million barrels a day by 2000, but the pipeline had been operating only for four years when he said, "There is not the slightest chance that all of the promising onshore and offshore areas of Alaska will even be leased, let alone explored and developed, in this century."

He predicted in 1981 that Alaska oil production would be about 800,000 barrels a day in 2000, about 200,000 barrels a day below what it turned out to be. While repeated attempts to build a gas pipeline generated lots of political cheerleading, Tussing focused on the underlying economics and market conditions that could only be ignored for so long. Nearly 15 years ago, during one period of gas pipeline euphoria, he said the pipeline "could be any time and no time."

His academic background was as unconventional as his unfiltered communication style. He left high school and entered the University of Chicago as a 15-year-old under a special program, mastering 22 hours of tests designed to assess his ability to think through problems and find solutions. He earned his first college degree at 16 and went on to work as a truck driver and in other fields before attending graduate school in Oregon and Washington.

In his youth he worked for the Socialist Party of the United States and he was a "mix of Leon Trotsky and Milton Friedman," according to a friend, wrote Vic Fischer, author of "To Russia with Love: An Alaskan's Journey." Fischer said Tussing could rub important people the wrong way, but they put up with him because they "respected and needed his skills."

Tussing's family and friends are planning a memorial service for him in late March.

In the preface to an "Arlon Tussing Sampler" compiled by economists Gunnar Knapp, Steve Colt and John Tichotsky when the University of Alaska Anchorage presented Tussing with an honorary doctorate in 2007, they said: "For his blunt and characteristically barbed assessments of the prospects for Alaska's economy and development schemes, Tussing was frequently reviled by boosters. However, read decades later, Tussing's assessments are remarkable for their correctness, prescience and continued relevance."

He wrote about 300 reports, articles and speeches that are "marvels of clarity," Knapp, Colt and Tichotsky said. "Perhaps less obvious to those who have not had the privilege of working with him is that he works very hard at his thinking and writing, sometimes spending hours on a single paragraph," they said.

"He has distinguished himself as a brilliant thinker and writer," they said.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)