State of Alaska, Got Gas?

Sure do, in abundance.  Oil too for that matter.

It is a long and winding path that has led to the current state dilemma of (1) providing public services in the face of a crippling fiscal deficit, (2) reducing a bloated government, and (3) striking a balance in a state deeply divided on the political front.

The Political Environment  

The state has no mode of delivery to move gas to market on its own terms, nor the resources necessary to build the gas line we need to generate a new revenue stream for public services, create jobs, or provide affordable energy for home or business (the deficit, or drastic drop in oil tax revenues); thus, how we proceed with the partnership created under SB138, is good fodder for a political debate.

How the long sought, and badly needed, gas line moves from a pipe dream –  to reality – is a very political issue.

Voters are split almost down the middle on its chosen leadership as evidenced in the very narrow margin of victory from the recent general election.  The majority of voters, 48.10%, chose Governor Bill Walker to former Governor Parnell’s 45.88%.  A small share of votes, 6.02%, went to others.

Not much changed in the House and Senate.  Only eight new Representatives were sent to the House to sit with 32 others.  Governor Walker won the popular vote in 12 out of 20 senate districts, leaving 8 districts that wanted the Parnell administration to continue.

To make matters worse, only six senators come up for re-election in 2016.  Two are from districts where the popular vote was for Parnell.  If either of these two want to get re-elected, it is their constituency that must like what they do now, during Session 29.  Those two are Senators Charlie Huggins, GOP Leadership – Rules, and Senator Lesil McGuire, Judiciary Chair.  It will be interesting to see how these two senators cooperate, or resist, the ideas put forth by Governor Walker this session.

Other factors adding to the state’s political environment include a voter initiative passed in 2002 when 138,000 Alaskans said they wanted Alaska to build a gas line to tidewater.  Since then, the state was redistricted (some say gerrymandered, some say engineered by Parnell).  In any case, redistricting effectively killed the initiative and the project.  Last year, Governor Parnell and the super majority created the infamous, over sized public/private partnership under SB-138.

This year, oil prices took a nose dive, and that brings us to the current state of affairs.

Connect the Dots

The state finds itself with a crippling fiscal deficit, natural gas is still stranded, it is neck deep in an inappropriate public/private partnership with the Big 3 oil producers, and TransCanada, which is going nowhere fast.  Communities are still in critical need of affordable energy, especially home heating fuel.

These state issues are exacerbated by its sovereign responsibilities to tax and regulate every industry in the best interests of its people.  This public responsibility is not shared by for-profit entities.  Therein lies the root of my conflict with the SB138 partnership; where the state sidles up for a minority share with the for-profit private sector to build the Alaska Gasline.

I think we all agree we need a pipeline for jobs, new revenue, and affordable energy for residents.  However, when one connects the dots from SB21 to SB138, one can see that the current paralyzing deficit dominating the news is a reflection of past legislators’ disregard for responsible fiscal management as it relates to the oil tax revenue.  Past actions have been shortsighted at best.

Now we have Legislative Session 29.  It is critical to our future.  It will be a pivotal session in state history and it is time for vision and leadership from the elected body.

Senate President Kevin Meyer recently announced that all items to address the deficit are on the table.  I say, prove it.  Open oil tax and tax credit legislation and fix it.  The current deficit resulting from SB21 and other factors needs to be addressed this session under “Unfinished Business.” If the legislature would address the tax and cooperate with downsizing of government, already initiated by Governor Walker, it would take care of the deficit without crippling the state.  Obviously, the state cannot cut its way to reach an acceptable level of spending.

There really is no other long term future for Alaska without adjusting oil industry taxes and/or tax credits.  In three years the savings will be gone, and the state could enter into a severe depression.

We have a bloated government and a false economic bubble that is about to burst with this year’s budget cuts, a situation which has landed squarely on Governor Walker’s shoulders.  This is not fair, and the Legislators need to step up to the plate and do their part.

The state’s thinking must run independently from the private sector to define its needs, know its revenue streams, and approve its spending plan within the parameters of self-governance; not in partnership with the private sector.

The private sector is beholding to its shareholders and must produce the best bottom line possible.  It is all about profits; that is what corporations do.  We must remember corporations are not people.  Oil industry public relations departments would have us believe it has been a good corporate citizen; that is spin.  Good public relations is good for the bottom line.

It is foolhardy to expect industry motives to be about anything other than profits.

I remember with great sadness the Exxon Valdez oil spill when Prince William Sound was befouled with crude oil.  I remember birds and sea animals blackened and dying from oil pollution.  Since then, Exxon (a partner under SB138) has screwed Alaskans over damage claims for the last 20 years and counting.  Pay up Exxon, settle your debt with Alaskans.

I also remember a day not that long ago when television news crews showed the FBI storming and confiscating bankers’ boxes full of evidence from Legislative offices in Juneau.  The industry and the Corrupt Bastards Club stole away our representative form of government with bribes.  Small bribes.  It was an embarrassing and sickening scandal.

More recently, oil industry giants spent millions to buy the vote on the referendum “Vote No on #1”.  Major industry contributors wanted to insure the favorable taxes secured under SB21 remain the law of the State.

The state, on the other hand and unlike the private sector, has public responsibilities.  For example, this State cannot stand by and watch a village run out of fuel exposing village residents to freezing temperatures in the winter – and do nothing.  The State cannot stand by knowing people are being forced to choose between buying fuel or groceries – and do nothing.  The State cannot knowingly allow small economies to dry up because of unaffordable energy – and do nothing.

As public servants, state officials cannot, or should not, do things common in the private sector, like enter into secret agreements.  Furthermore, the state should not compromise its sovereign role as it applies to industry taxation, property assessments, or the development of regulations needed to protect workers, general public, or environment.

It is my expectation that elected leadership maintain a robust vision for all Alaskans as it looks for solutions to these and other issues in its precious role of governance and public service.

As a good example, Governor Walker is breaking ground by exploring alternatives aimed at easing home heating costs in Fairbanks.  The Interior is in dire need for affordable, clean, energy.  When accused of state overreach, the Governor said it best in this Newsminer article   “We don’t believe we’re in any sort of overreach situation,” he said. “It’s time that somebody reaches out to Fairbanks, and that’s what we’re doing. Any reaching we’re doing is reaching out to the Interior energy consumers to bring some relief to them.”

http://www.newsminer.com/news/local_news/gov-bill-walker-says-gas-still-is-possible-mixed-opinions/article_d0570d28-a927-11e4-bc43-ff2671435fb5.html

That’s vision.  That is what I want from leadership.  Thank you Governor Walker for taking the lead.

However, we all know the devil is in the details of a project like this.  Alaska has many subject experts to work out the details as, and if, this goes forward.  They surely have their work cut out for them.  As just a layman, many questions come immediately to mind.  I’m sure thousands more will come.  All the alternatives must be vetted; a thousand questions must be answered.

The first questions about this project, or any big project, always go to the costs versus benefits issues.

  •  Will the proposed gas grids ever pay for themselves? If not, will the utility forever remain a publicly subsidized utility?  Is that okay with voters?
  •  Will the proposed gas line infrastructure produce clean convenient gas cheaply enough to compete with free wood and/or low cost wood pellet heating for a relatively small pool of potential customers?

Implementation and long term delivery plans must be considered.

  •  Might propane be a logical first step toward cleaner affordable fuel while the gas utility is being built?
  •  If so, how might the utility and the Alaska Energy Authority get propane to Galena, Ruby, Tanana, and Ft. Yukon for the long term?
  •  Can propane be safely shipped up river in the summer? What about winter transportation?
  •  Does using the railroad to move propane to customers make economic sense?

Home conversion costs for the customer is a subject unto itself.

  •  If ever natural gas is available at an attractive price, what is the estimated cost of home conversion from wood and/or propane to natural gas?
  •  If the cost of home conversion is prohibitive to individuals (thousands $$), might the state provide individual grants to offset the costs; much like the federal weatherization subsidies? Are agency specialists looking into this option?

And, finally, legal aspects will surely impact users.

  • Will the state and/or local government write laws that mandate people not heat with wood due to air pollution and federal standards?
  • If people on the grid cannot afford to convert to gas and then pay unaffordable imposed monthly gas bills (like energy bills have been imposed in many rural villages), might the state then send people to jail?  Or, bankrupt them with fines?

It is my hope the general public pays attention, stays involved, asks important questions, and supports the needs of community. What’s good for the Interior, is good for the rest of us.  In reality, we are a very small state.

I support affordable energy for the Interior.  The next community in crisis may be my own.

Sincerely,

LeadDog Alaska

©Alaska, Got Gas? February 2015

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