Sen. Murkowski: Iran Oil Could Hurt U.S. Production if Prohibition on Exporting Domestic Crude Oil isn’t Lifted
Restrictions on U.S. Oil Trade Amount to “Domestic Sanctions”
Washington, D.C. – U.S. Sen. Lisa Murkowski, R-Alaska, today drew attention to the potential impact that ending sanctions against Iran could have on U.S. production if the outdated prohibition on exporting domestic crude oil is not also lifted.
“If sanctions on Iran are lifted, Tehran will be able to make money by selling their oil to our friends and may use that money to destabilize our allies,” Murkowski said. “If we lift the current sanctions on Iran while keeping in place our own domestic sanctions on crude oil exports, America’s ability to increase its domestic energy security and that of our allies will suffer.”
Adam Sieminski, administrator of the Energy Information Administration (EIA), testified before the Senate Energy and Natural Resources Committee on Thursday that sanction relief could result in as much as 1 million barrels a day of Iranian oil flooding the global market. Meanwhile, most U.S. oil production is blocked from competing on the world market by regulations leftover from the 1970s.
Murkowski, chairman of the energy committee, stressed the strategic benefits to the United States of rising domestic oil production, including providing flexibility in dealing with trouble spots such as Iran. “It doesn’t make sense that American producers are blocked by U.S. law from selling to the same markets that Iran could reach once the sanctions are lifted,” Murkowski said.
“It is important for us to recognize that if these sanctions on Iran are lifted and we in fact keep our own domestic sanctions in place it effectively ends up being a liability for us,” Murkowski said. “U.S. producers should be allowed to compete directly with Iran in the global market.”
EIA Administrator Sieminski said rising U.S. oil production – currently at 9.2 million barrels a day, its highest level since 1972 – has helped stabilize world markets and keep prices in check.
“The impact of U.S. production goes beyond just the Iranian sanctions issue,” Sieminski said. “Back in 2012 and 2013, there were some really serious interruptions in oil production in countries like Libya, Sudan, Yemen, Syria, and others. They add up to a huge amount of oil – over 2 million barrels a day, at one point approaching 3 million barrels a day. If it hadn’t been for the growth in shale production in the U.S. and production in a few other countries, including Canada, the price of oil would have been a lot higher. Obviously that would have been a benefit to producers but the overall impact on the economy could have been pretty devastating. The growth in production in the U.S. played an important role in stabilizing the global oil markets.”
Murkowski has long called for modernizing U.S. energy and trade policy to end the ban on crude oil exports. In March, she held a hearing looking at the economic and strategic benefits of ending the outdated export prohibition. Murkowski released a report last year on the need to liberalize America’s energy trade policies.
The end of week Consumer Energy Alliance energy links:
The Wall Street Journal: Obama Administration Proposes New Offshore Drilling Rules
FOR IMMEDIATE RELEASE
Governor Walker Secures Promise from Legislative Leadership on Confirmation Votes
April 17, 2015 JUNEAU—Governor Bill Walker today revoked his proclamation to convene the House and Senate into a joint session today at 10 a.m. to vote on his appointments.
“I just wrapped up a meeting with House Speaker Mike Chenault and Senate President Kevin Meyer,” Governor Walker said. “They gave me their word that each of the 89 appointments would be given an up or down vote on Sunday. I trust them.”
Governor Walker said revoking the proclamation is an important step toward a positive relationship with legislative leadership.
FOR IMMEDIATE RELEASE
Governor Walker Vetoes Bill That Ties Alaska’s Hands During Pipeline Negotiations
April 17, 2015 JUNEAU – Governor Bill Walker today vetoed HB 132, making good on a March 2 promise when the bill was introduced.
“This veto in no way means the end of discussions with legislative leadership,” Governor Walker said. “We continue to have multiple meetings to ensure AKLNG is successful and remains the priority while maintaining access to a backup option.”
HB 132 limits the Alaska Gasline Development Corporation (AGDC) from actively working on any gas line project other than the Alaska Liquefied Natural Gas (AKLNG) line. The State of Alaska is a partner in AKLNG along with TransCanada, ExxonMobil, ConocoPhillips and BP.
“We cannot have legislation that ties Alaska’s hands while we are trying to negotiate the best possible gas line deal for Alaskans,” Governor Walker said. “This bill prevents the state from having an adequate backup plan should the AKLNG efforts not proceed.”
Governor Walker also continues to meet with AKLNG partners to advance this project. Governor Walker has said multiple times AKLNG remains his administration’s priority and having a backup option with the ASAP line will not interfere with the AKLNG project.
(Attached: Veto letters to House Speaker & Senate President; Governor’s veto signature)
AJOC by Tim Bradner With about two weeks left on the clock, the 2015 session of the Legislature seems set to end with a big bang. A collision is shaping up between legislators and Gov. Bill Walker (NGP Photo) over the governor’s vision of a large state-led gas pipeline.
Notes from the road: We have little time to write while traveling (Today in L.A. on the way to Anchorage). We do note that as the Alaska legislative session comes to an end our greatest concerns are:
- Administration interference with Ak-LNG project by even talking about government involvement in a competing project; and
- Administration support for a poorly thought out, government sponsored Interior Energy Project; and
- Administration not using bully pulpit to support adequate spending cuts (i.e. the State Chamber calls them 'cosmetic') to create a sustainable government going forward...along with legislative proclivity to not cut spending due to last day 'trading' of special interest projects; and
- Legislative initiative to create requirements for Regulatory Commission of Alaska to approve expensive, non-economically feasible alternative energy projects, subsidized by utility ratepayers (HB 78); and
- In wake of low oil prices, lack of will to cut government spending, hostility of governor toward industry/legislature/Ak-LNG project, we anticipate the Governor working with certain constituencies to increase oil taxes within the next year or two. Hoping this to be incorrect but fearing it isn't, we could foresee an "economic death spiral" wherein lack of spending discipline begets higher oil taxes, which begets lower oil industry capital spending, begetting lower production, which begets even lower state revenue, resulting in higher oil taxes, and so forth.
- Faced with such challenges, we believe Alaska's bright future can only unfold with leaders possessing wisdom, a spiritual connection with our creator and a commitment to become honest, effective communicators.
(Readers will understand the importance of this alert after reading today's commentary, below. -dh)
Related Commentary: "The Sting"
"Today, we are releasing the first Report on the Implementation of the National Ocean Policy, which highlights the progress we’ve made since we released an action plan last year. From supporting the ocean economy to ensuring the security of our ports and waterways, and from improving coastal and ocean resilience to providing local communities with tools to plan for a better future, we’ve made tremendous strides in undertaking our role as responsible stewards of this Nation’s great oceans.
"Among the activities described are a host of steps to promote sustainable energy development and aquaculture practices—including ensuring that permitting processes for these activities are...."
This massive undertaking -- which will ultimately affect all waterways feeding the Great Lakes and Oceans -- is a regulatory monster created by President Obama early in his first term. See our original, 2009 report here. See strategy of NOAA support here.
The oceans, Great Lakes, and all waterways and lands surrounding them are destined to be regulated under a new regime called, ecosystem-based management (EBM).
Our astute, NGP readers can just imagine the havoc that Obama, Kerttula and their massive grass roots constituencies can bring to America's traditional use of our waters.
Not only does this effort threaten any natural resource activity in Alaska (i.e. which has 3/4 of America's coastline and over 3 million lakes, rivers and streams), but can severely affect every single American.
The direct effects will be felt by commercial fishermen and others who make a maritime living--and even farmers whose activity on private land can be deemed to affect waters leading into lakes and oceans.
Indirect effects will descend upon every American who will ultimately pay for the cost of this regulation and with more jobs exported to countries which do not have such regulatory obstacles.
The final insult to our way of life is that this whole, massive effort is unapproved and unfunded by Congress.
Obama has done it all by Executive Order and memorandum. It is run under the cover of the White House's Council on Environmental Quality and by his order, dozens of government agencies are indirectly funding the effort -- redirecting their own congressionally approved funds and people to this dangerous activity.
We believe that this is one of the greatest examples to date of Obama's unconstitutional usurpation of Congressional powers.
We also wonder why more Governors and Congressional Delegations are not literally handcuffing themselves to the White House fences until this sort of illegal activity ceases.
Until and unless relief from such usurpation comes from some as yet unidentified champion, we can only conclude that America's rule of law is finished and that we have entered a new era of elected fascists who create law out of thin air by the memorada edicts and Executive Orders.
Oh, and about DOI's affirmation of Lease Sale 193 yesterday, good luck.
Yes, we have been set up and stung again and again; and this is the latest sting by this administration.
American citizens have, indeed, been played for fools by those they elected.
Commentary: "The Set Up".
Yesterday, the Department of the Interior issued a Record of Decision affirming Chukchi Sea OCS Oil and Gas Lease Sale 193 and the remaining oil and gas leases issued in 2008 as a result of the sale. Press release (Comment: Now that DOI has finally validated its own lease sale (i.e. and long ago accepted payment by industry), observers will now watch carefully to see if the regulators deny access through the permitting process. We hope the outcome is not a statement months or even weeks from now to the effect that, "Our policy is that exploration and development should occur in these areas, but only under responsible conditions. To date, those applying for permits have not demonstrated that exploration -- much less development -- can occur responsibly in these areas. Accordingly, the applications for permits are denied." -dh)
The Alaska Senate passed a bill Tuesday that would temporarily restrict participation by a state-sponsored corporation in an alternate gas pipeline project proposed by Gov. Bill Walker.
The vote followed a failed attempt by legislative leaders and Walker to reach an agreement.
The vote was 13-7, but notice of reconsideration was given, meaning the bill could be voted on again before advancing. It passed the House last week.
Walker has said he would veto the bill. A legislative override would require the support of at least 40 legislators.
Our Quick Takes On Current Alaska Journal of Commerce Headlines:
Legislation introduced to level playing field on utility tariffs - Don't be deceived; a trick to get ratepayers to pay more for subsidized, alternative energy schemes. -dh
Several options on table for delivering gas to Fairbanks - The government presence and subsidies required make this more an experiment in socialism than a valid, market-driven project. -dh
ConocoPhillips moves ahead with Slope project at Kuparuk - Kudos to COP for patiently dealing with a difficult regulatory environment. -dh
Resources Committee takes up gasline board appointments The lack of experience of the new board members, compared to the ones Governor Walker fired, could make for troublesome confirmations. -dh
Caelus Energy sanctions development of Nuna - Could this be a much bigger find than is now known? -dh
Hilcorp Energy keeps up spending despite oil price slide - More respect and kudos to one of Alaska's great new companies. -dh
From Brent Greenfield, National Ocean Policy Coalition (Mentioned in commentary, right column. Please act today. Note that our preference would be to defund the entire, ocean policy process completely and surgically remove all funding from all agencies devoted to supporting this unfunded government program. You can support the NOPC letter but we would recommend separate letters to your Congressional delegations recommending total defunding. -dh)
Newsmax by Ken Mandel. The Keystone pipeline project transports oil from Canada to refineries in Illinois and Texas via eight U.S. states. Completed in 2014, a shortcut known as the Keystone XL was approved by Congress the next year, but vetoed by President Barack Obama.
The debate continues to rage. Here are eight quotes from oil company executives, who stand to benefit from the pipeline's construction:
1. "Anything could happen, we don't know, but we remain confident that when Keystone is ultimately built, it will be the safest pipeline that has ever been constructed in this country." — Andrew Craig, TransCanada's land manager for Keystone projects and development, told NBC News.
Forbes (3/27/15) editorializes: “This Saturday marks the seventh annual observance of “Human Achievement Hour,” a celebration of technology and prosperity hosted by my organization, the Competitive Enterprise Institute. Originally created as an alternative to the World Wildlife Fund’s “Earth Hour” campaign (which urges people to turn off their lights in the name of environmental conservation), Human Achievement Hour counters widespread predictions of environmental and societal doom.”
Posted: 31 Mar 2015 11:21 AM PDT
By Mark Edwards
Today we wrap up our series on the Alaska Economic Update. Over the past three posts, we have looked at oil prices, jobs, and population. We wrap things up today with the housing marketing and the building environment. For the complete Alaska Economic Update as well as other important studies, visit our ‘Resources’ section.
Home lending activity flat - The Alaska Housing Finance Corporation (AHFC) released its third quarter report on Alaska housing indicators. It tracks new loan activity for single family homes and condominiums in Alaska. The data is based on a survey representing approximately 95% of mortgage lenders in Alaska and also includes AHFC loans. The survey covered mortgage lending activity in the first nine months of 2014.
It reported 6,889 loans were originated statewide for single family homes and condominiums for a total amount of $1.8 billion. This is nearly identical to the volume in the first 9 months of 2013. Loans were done with an average down payment of 11% for the last five years. Single family homes accounted for 87% of statewide mortgage lending activity with 52% of those loans occurring in Anchorage. The Mat-Su contributed 18% of the volume, 10% in Fairbanks, 8% in Kenai, 5% Juneau, 2% Kodiak, and 1% in Ketchikan.
10% of total mortgage activity for the quarter was for condominiums and only 3% was multi-family. 91% of condominiums were financed in Anchorage. Juneau accounted for 5%, and the Mat-Su, Kenai and Fairbanks 1%.
Refinance activity slowed rapidly in 2014, but may rise as interest rates are falling again - 30 year conventional fixed interest rate mortgage loans have been getting less expensive for three decades. In 1981 they peaked at 16.6% and have undergone a slow and steady decline ever since. In early 2009 rates dipped under 5% on average for the first time and a surge in refinance activity began.
According to AHFC statistics, there was less than $200 million in refinance loans completed per quarter in Alaska in 2006 and 2007. In 2008, the average rose to $400 million. Then in the first quarter of 2009 the activity spiked to $1.4 billion, followed by $1.2 billion in the second quarter. During this time, the average 30 year interest rate declined nearly 1.5% in six months.
The refinance pace slowed somewhat in the last half of 2009, but still finished the year with $3.7 billion in refinanced mortgage loans according to AHFC statistics. In 2010, the refinance volume declined to $2.4 billion, followed by $2.1 billion in 2011. 2012 saw an unexpected decrease in interest rates again to an all-time historic low of 3.3% by the end of the year. This led to an increase to $3.1 billion in refinance activity.
Rates increased throughout 2013 and you can see on the far right of the graph, the result has been a steep drop off in refinance activity. Rates began declining again last year and finished 2014 at 3.86% on average. AHFC data is only available through the third quarter of 2014 at this time, so we have not yet seen the year end results. Rates continued lower in February to 3.71%. This should be a positive trend for both home sales and refinance activity this year.
Housing statistics still good relative to the U.S. – The recently released survey by the Mortgage Bankers Association shows that Alaska continues to have some of the lowest levels of foreclosures and delinquencies on residential mortgage loans in the United States. Through the third quarter of 2014, Alaska ranked 5th and 7th best in the nation out of 50 states in foreclosures and delinquencies of all loan types.
The total inventory of foreclosures in process is 0.9% in Alaska, while the country has a much larger lingering foreclosure inventory at 2.4% due to higher rates during the recession and longer resolution times. These rates are an improvement from four years ago when Alaska’s rate was 1.4% and the U.S. foreclosure rate was 4.6%.
Delinquent loans are more than 30 days past due, but not yet in foreclosure. Alaska is fifth best behind North Dakota, South Dakota, Montana and Hawaii in the overall level of delinquent loans. Alaska’s delinquency rate is 3.6%, while the U.S. average is 6% for all loan types. This is an improvement for Alaska from 4.8% four years ago. The U.S. delinquency rate has also come down more dramatically from 9.4% at this time four years ago.
Subprime lending to traditionally non-qualified borrowers was a large contributing factor to the national mortgage problems. The survey covers 95,176 mortgages in Alaska. 6,110 or 6% were considered subprime, compared to 9% nationally. The rate of delinquencies and foreclosures on subprime loans is significantly higher. However, Alaska is in a far better position and again leads the nation as having the lowest level of foreclosures and is second in delinquencies for this important category. Subprime foreclosures in Alaska are at 2% while the national average is 9.8%. Alaska’s subprime delinquency rate is 9.4% compared to the national average of 19.3%.
Building permits up 430 units in 2014, but still historically low - According to the U.S. Census Bureau, the number of building permits for new, privately owned housing of 1 to 5 unit buildings remained low for the 8th straight year. It had been under 1,000 units since 2007, but in 2013 it grew 9% to 1,081. Last year saw a dramatic jump up to 1,509. However, this is still half the level seen 10 years ago.
Growth in single family homes increased from 877 to 1,114 last year. The number of duplexes permitted fell from 66 to 50. The number of structures with three or four living units decreased slightly from 49 to 45.
The other major growth area beyond single family homes was in multi-family. The number of structures with five or more units climbed from 10 in 2013 to 33 in 2014. In terms of housing units that meant a growth from 87 to 300 last year. The biggest challenge has been making new construction affordable enough to meet buyer’s income levels. There is a shortage of low cost housing in Anchorage. Vacancy factors are very low and the number of existing homes under $350,000 is in short supply. It appears builders have started to take more risk in this market segment, likely aided to some extent by government subsidy programs. Anchorage is expected to follow other growing cities by becoming denser, building vertical and redeveloping older properties.
|See this week's Petroleum News, just released.|
Compared to Russian and Canadian Arctic energy initiatives, U.S. efforts are pathetic. Russia's Arctic power could well influence competitive factors discussed below in ways detrimental to the world's democracies. Read more.... -dh
|Decision makers: look below, and ignore the competitive, new, worldwide oil & gas market at your own peril and at the risk of removing opportunities from your succeeding generation of young, hopeful, ambitious children that you and your friends enjoyed. -dh|
Today, an energy analyst friend privately opines on natural gas pricing, which should be of some interest to potential investors in a $40 - 60 billion Alaska natural gas pipeline--as well as Canadian project participants. Read below.
We hasten to add that natural gas supply and pricing is still not as "world-wide fungible" as oil.
Until now, the North American gas market has focused almost completely on North American supply/demand factors...unlike oil which has traded within a fairly narrow worldwide price range--offsetting U.S. prices somewhat because of the multi-decade crude oil export ban.
|U.S. Sen. Lisa Murkowski yesterday stressed the economic and national security benefits of ending the 1975 federal ban on exporting domestically produced crude oil at a hearing before the Senate Energy and Natural Resources Committee. See the video, also featuring ConocoPhillips Chairman & CEO Ryan Lance (NGP Photo).|
However, because of extensive, competing world-wide LNG export projects, the continuing expansion of world-wide shale technology, and the increasing attraction of natural gas for power generation it is probably only a matter of time before we approach a worldwide pricing range and supply balance for natural gas.
Investors must absorb and interpret these rapidly changing and multi-dimensional factors as they consider different lease sale bidding strategies and varied projects in different jurisdictions with wide-ranging rules and risks. This reality makes it essential that Alaska's and Canada's energy decision makers (i.e. our readership base) retreat from unpredictable, greedy and provincial tax, royalty, regulatory policies and lavish spending practices--which affect tax policies.
Everywhere, those blessed with oil and gas supply should keep one eye on the competition and one eye on reducing public spending to sustainable, essential levels. See yesterday's examples, "Lessons For Alaska From Canada". -dh
Our energy analyst friend writes, "Natural gas has seemingly had a lot going for it in the past year:
- The US came out of last winter at record low inventories
- Pipelines keep getting added and redirected to distribute natural gas to hungry markets (although slowly)
- The weather has been brutal east of the Rockies, all the way into the South
- More gas keeps displacing coal, moving to Mexico, and benefiting slightly from a modestly improving economy
- The number of gas (and especially oil) rigs has dropped off big-time
"Despite it all, natural gas is in the doldrums price-wise. The HH is $2.83, and some recent negative basis-priced gas has sold for 99 cents. The worst of it all, however, is that it is hard to see the end of the “tunnel”. There is no futures monthly price that hits $4 until 2022."
For our Alaskan and Canadian decision maker friends: here is the face of worldwide oil & gas competition from Energypedia:
GoM: Statoil adds acreage in the Gulf of Mexico Central Lease Sale
Brazil: Petrobras breaks record for well drilling depth in Sergipe-Alagoas Basin http://www.energy-pedia.com/
Ophir Energy announces full year results - updates operations http://www.energy-pedia.com/
Tower Resources announces corporate update
Trinidad: Range Resources announces Trinidad operational update
Iran upstream could be open for business this year
Colombia: Anadarko awards CGG the largest proprietary 3D marine seismic survey in Colombia
Bulgaria’s Mizia Oil and Gas awarded four exploration blocks in Bulgaria <http://www.energy-pedia.com/
UK: Britain hands lifeline to North Sea oil industry with tax cuts http://www.energy-pedia.com/
UK: Grangemouth operator INEOS begins fracking consultation http://www.energy-pedia.com/
Australia: Gardline CGG to acquire Gippsland 2D infill seismic survey for Geoscience Australia http://www.energy-pedia.com/
US shale oil firms brace for more pain as crude resumes slide http://www.energy-pedia.com/
UK Budget lays strong foundations for regeneration of the UK North Sea http://www.energy-pedia.com/
Oil & Gas UK welcomes the Chancellor’s decisive move to restructure the North Sea tax regime ....
GoM: Gulf of Mexico Lease Sale 235 yields $539 million in high bids on nearly one million acres in Central Planning Area http://www.energy-pedia.com/
Canada: Conoco to cut 7 percent of Canadian workforce
Israel's Tamar group to sell gas to Egypt via pipeline
billion of natural gas from Israel's ....
Iraq: Gulf Keystone ramping up Shaikan production
Morocco: Mubadala Petroleum signs geological study agreement with Morocco http://www.energy-pedia.com/
Indonesia: Statoil awarded new licence offshore Indonesia http://www.energy-pedia.com/
While the U.S. administration characteristically fumbles with global warming and Arctic regulatory issues, Russia -- and to a similar but smaller degree, Canada -- moves out smartly to take the initiative while establishing and enforcing jurisdiction -- and sovereignty. More below.... -dh
Barents Observer by Atle Staalesen. As Russia is unfolding a major combat alert drill in its Northern Fleet, the country’s government approves the setup of a new federal Arctic Commission. Headed by hardline Deputy Prime Minister Dmitry Rogozin, the Commission will coordinate all government authorities involved in regional developments.
Included in the Commission mandate are issues of social, economic, political, as well as military, importance, newspaper Kommersant reports.
Rogozin will have five Commission deputies to his disposal: Minister of Natural Resources Sergey Donskoy, Minister of Energy Aleksandr Novak, Minister of Economic Development Aleksey Ulyukaev, Minister of Transport Maksim Sokolov and Deputy Secretary of the national Security Council Vladimir Nazarov. A total of 60 people will be included in the new structure, among them representatives of the oil and gas industry, the ministry of Defence, the FSB, the Presidential Administration and regional governors.
See Alaskanomics Posting of Mike Bradner's Column Re: State Spending. Why do we at Northern Gas Pipelines often focus on the importance of a 'sustainable Alaska budget'? Because if the state cannot control spending and continues deficit spending, no infrastructure project in the future will be safe from sudden, unplanned, predatory taxation to stave off bankruptcy: hence, no gas pipeline. That's why. -dh
Apology To Canada And To The World
Back in the olden days, 1979 or thereabouts, I had just finished my assignment as public affairs director for the U.S. portion of the grand, 27-member Canadian / American Arctic Gas Pipeline consortium. I had an office and secretary in both our Anchorage and D.C. offices. I traveled weekly between the two locations and Canada for six years--often with company president, Bob Ward, former Alaskan Lieutenant Governor. Working with my Canadian public affairs counterpart, author Earle Gray, was another of many important cross-border relationships.
Anyway, that experience came to an end and, impressed with the entrepreneurial genius of T. Boone Pickens, I wrote him offering my corporate and grass-roots communications services.
Pickens never wrote back, but, happily, three members of the former Arctic Gas consortium did provide me with continuing U.S./Canadian energy challenges.
First, Cy Orlofsky of Columbia Gas Transmission Company asked me to consult with the Alcan Project controlled by John McMillian Northwest Energy Company, and Bob Blair of Alberta Gas Trunkline, Ltd. Northern Natural Gas of Omaha -- thanks to a recommendation of VP Dan Dienstbier -- brought me on as public affairs director to reorganize that department (i.e. before the company morphed into Internorth and then Enron). After that brief assignment, Atlantic Richfield's Robert O. Anderson hired me as government affairs director in Alaska and, later, Washington D.C.
T. Boone Pickens as the world has learned, has done just fine in the communications area without Dave Harbour's help.
Nevertheless, my own experience with Arctic Gas and ARCO enabled me to share with Pickens a knowledge of Canadian / American energy interdependence. Just as Canadian oil and gas flows through the U.S., so do American pipelines move through Canada. Our oil and gas industries benefit from the experience and technology shared by company employees rotating between U.S. and Canadian project assignments. We are each other's largest trading partner. ...not to mention our shared interests in the Arctic and North American military defense.
In 2000-2001, when we created the Northern Gas Pipeline blog, we were determined to encourage greater understanding and rapport between the two great North American neighbors.
Sometimes this was a struggle, as when the U.S. took an ill-considered tariff position regarding the import of Canadian softwood. Then there were those associated with Alaska energy concepts (i.e. El Paso Natural Gas, Yukon Pacific, Alaska Gasline Port Authority, Backbone, etc.) that often demeaned Canada as a tool for leveraging less-economic or infeasible, "All-Alaska" energy projects.
Fast forward to this era. TransCanada Pipe Lines, Ltd. has grown into a much bigger energy entity in Canada and the United states. Its pipelines crisscross North America. It is a major player in the Ak-LNG project. And, its Keystone XL project has been front page business news for over a half decade.
|Keystone: Obama's slow-motion Kabuki theatre (See This Edmonton Sun Commentary of March 3) by Kenneth P. Green|
The Obama Administration's political rejection of the Keystone XL project was a monumental decision that could shift tens of thousands of energy jobs to other countries; diminish the entire U.S. economy, injure relations with Canada, further demonstrate lack of solid American leadership to the world and seriously damage our efforts to achieve energy independence and stronger national defense capability.
In response to Obama's veto of the Keystone XL project, T. Boone Pickens produced this Op-ed piece in today's Calgary Herald.
In it, Pickens apologizes for Obama's irresponsible Keystone XL veto. Our readers can join in that apology as we interact with our fellow Canadian and U.S. families, business partners and politicians.
But the purpose of this column today -- after providing a little U.S./Canadian historical and personal background -- is to extend America's apology to not only Canada but the world in general: for the loss -- or, hopefully, just the delay -- of this great project.
Because of Obama's Keystone XL action:
- thousands will not have jobs, and
- U.S. energy prices are likely to be higher, and
- government unemployment and social expenses will be higher, and
- scores/hundreds of local, state and national governments will not have badly needed project tax revenue, and
- because of the arbitrary and capricious nature of Obama's veto, the country's "rule of law and reliance on due process" is further shaken (Ref: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, etc.), and
- uncountable personal lives will have been affected in negative ways as unemployment, involuntary transfers, divorces and marriages, home ownership, manufacturing, health, and other human conditions are affected, and
- project demand for foreign goods and services will affect the economy beyond North American borders, and
- countries wishing and planning for aggression against North America's people and economies will be given indirect aid and comfort.
Reader letter today:
Dave, I met Mr. Pickens at a cocktail party in Saratoga Springs in 2008. He was charming, impressive and extremely credible. He was advocating natural gas as a way to break America’s dependency on oil, and a substantial portion of my portfolio is dedicated to natural gas investments.
So yes, we join with T. Boone Pickens in apologizing to Canada for America's indefensible delay or killing of the Keystone XL pipeline project.
But we would go on to extend that apology to America's allies and the people of the entire world. The U.S. owes this apology to the world for failing to live up to the high standards our fellow humans have come to expect from the "shining city on the hill" that was once the United States of America.
Once America could say, "We are dedicated by our Constitution and by tradition. to upholding a citizen's right of due process and the rule of law emanating from that guarantee."
We are optimistic that the country can once again regain, embrace, protect and defend its traditional high standards.
We are not optimistic that this return to the Constitution will be easy.
A Terrible Constitutional Amendment; Constitutionalizing the Dividend
Alaska Legislative Digest- Supplemental Commentary
By: Mike Bradner
Sen. Bill Wielechowski has introduced a proposed constitutional amendment, SJR-1, that would constitutionalize the Permanent Fund dividend. This would essentially take Fund income off the table for spending on the basic purposes of government, such as schools, health and social needs, public safety, and transportation that might be needed under emergency fiscal conditions.
We’re not picking on Sen. Wielechowski, but he volunteered to be part of this discussion!
Basic Politics 101: What’s the primary purpose of government?
The primary purpose of government, Sen. Wielechowski, is to provide public services, not to pay the public a cash dividend. The latter may be feel good politics, but it lacks a place in the fundamental role of government.
None of us know how this fiscal crisis we’re mired in is going to work out. The odds are we’re not going to get through it without some significant budget reductions, harsh enough that they will also put revenue necessities on the table.
Revenue necessities - taxes!
These “revenue necessities” are polite words for “taxes,” money we will have to pay-citizen taxes they’re called. In the agenda of revenue, use of Permanent Fund income, is also a revenue, citizens surrendering a portion of their dividend for public services.
State lawmakers, as well as governors, in recent years have lived in a political environment where taxes have not been part of the discussion with the public.
Taxes is a political “choke word”
Alaskans seem to have a speech impediment. They can say Tanana, Tutatuliak, Tallahassee, Texas, Tatalanika. But ask them to say “taxidermy,” but hold everything after the “x” and they’ll choke up, and perhaps go into apoplectic shock. On the state level, taxes have simply been off the table for decades, not discussable. As a result, the “political culture” of such discussions is also a blank.
Politicians have to “facilitate” bringing taxes to public discussion
This isn’t to be taken lightly. Politicians have to work up to a dialogue about taxes, as well as use of Permanent Fund income. No one has to rush the barricades. But politicians do have to facilitate “this language,” gradually bringing the public into the discussion. Notice we used the word “facilitate.”
One of the political skills of politicians, especially when they face politically hazardous, and unavoidable, issues is to use their political skills to insure that such issues get on to the table. If they can’t personally touch the issues, then the skill is getting less vulnerable parties to push the issues on the table.
We have not had to deal with revenue issues within the institutional memory of most of our present lawmakers, so it should be no surprise they are reluctant to engage such discussion.
No one yet has put revenue discussion on the table!
• In the aftermath of the 2008 financial crash, and subsequent recession, the first action of many states across the country was to put all their revenues, fees, tax exemptions, and etc. on the table for review (not necessarily advocacy).
• Such a review of our revenues options has yet to occur.
• The recent Commonwealth North report (by people who don’t have to stand for election) managed to do a volume of work without putting revenue issues on the table. They had the opportunity, but made only a reference to such future work.
Talking taxes is politically hazardous, to be sure!
Talking taxes is a hazardous process to be sure. By nature, politicians avoid being first to grab the “third rail” of new and controversial issues. Nurturing revenue issues forward is a delicate dance between legislative leaders, majorities, minorities, and individual lawmakers. Many lawmakers come from districts where such issues may be far more hazardous than others. Then there is the governor, who has a singular constitutional responsibility to lead.
Legislators need to think about the fact that they don’t have to be elected forever.
There is life after politics. They may well have to stand up among flying political bullets. They may survive, they may not. The history of such revenue/tax combat is that the voters, of course, do react. They come down hard on a “tax legislature.” In fact, voters in reaction often don’t distinguish between those who voted for taxes and those who did not - they just whack them all.
However, even where there is a quantum shift in makeup of a Legislature, the new body rarely repeals such taxes. They may move some decimal points, and make political noise, but the revenue enactments generally remain “in place” – they were necessary. However, we are told that many lawmakers who bite the bullet often later get elected again. They apparently were respected for their courage.
Facing up to tough issues, not passing the buck!
Politicians are elected to do what? They are elected to look at complex issues, and at a greater depth than the general public, being busy with their daily personal lives can possibly do.
However, there are many of the elected willing to duck such issues, pass the buck to the public. We’re talking about putting a revenue issue out at public referendum - let the public decide. The result of such a political dodge is that there will be only one answer by the public - that will be an emphatic “no.”
Once putting a tax issue to a public vote, lawmakers are stuck with that as “precedent.”
The odds are repeated efforts will just bring repeated rejection.
Income tax, sales tax, or use PF income
The question for such lawmakers who dodge responsibility and pass the buck to the public is:
• “Why the Hell do we elect you.” We elect people to make the tough decision.
The best test of the necessity of a tax is when politicians lay their futures on the line and “do it.”
In the future, like it or not, lawmakers will likely face choices that involves enacting an income tax, a sales tax, and use of Permanent Fund income.
What we “are not” as a state!
We need to remember we are not a “usual state,” we are not Maryland, Delaware,
New Jersey, Connecticut, New Hampshire, Vermont, which you can walk across in a day. Nor are we Ohio, Indiana, Illinois, Iowa , Wisconsin that you can easily drive across in a day. These are states where a kilowatt of electricity can flow border to border, where the tax bases of local governments are relatively uniform, where local governments can support many services without state assistance.
As a state “what we are”
We are is a state that superimposed over the contiguous United States would stretch coast to coast, a fifth the size of the contiguous states. We have two-thirds of the shoreline, an extensive fishery, 82 percent of our communities are connected only by air, the state operating 247 airfields. One marine highway system stretches 1,619 miles along our coastline.
We operate school systems unconnected by roads, and where individual school sites are unconnected from each other. The densities of school populations and school costs defy efficiency in Many of these areas lack a local tax base in the traditional sense. Costs for electricity and heating oil is prohibitively high, climate restricts fuel deliveries to once a year. Community infrastructure is costly and difficult to maintain- water, sewer, waste treatment, and solid waste.
We have gained in our core regional efficiency!
Today the good news is that the costs of our railbelt region (Seward to Fairbanks) are pretty good in comparisons with elsewhere. The same is true for our Southeast Alaska cities and boroughs. The bad news is that a lot of “other Alaska” still has a high cost profile.
All this being said, our windfall of oil revenues due to the 2008 ACES tax, and the escalation of oil prices worldwide, has allowed our budgets to soar.
We can reduce budget, but also have to have a mix with new revenues. A good end result comparison might be with similar core areas in other states.
The same goes regarding what people pay for their services in these ad hoc comparisons.
So what’s going to happen now?
Somewhere here lawmakers have choices to make regarding budget reductions and balancing reductions these with a mix of different kinds of new revenue. Our budget spending is still constrained by oil prices. While we may adopt new revenues that are more predictable, our reliance on oil prices will remain, and oil price will likely remain volatile for some time to come.
There’s a lot more ahead of us!
There is a lot more ahead of us regarding a host of issues that revolve around budget situation. We will have ongoing special reports exploring the shadows of emerging policy. Right now lawmakers are pretty much just looking at budget reductions, disregarding revenue. They are assessing what is structurally possible and over what kind of time span. Cuts take time to implement, programs time to dismantle and phase out. There are also contracts. Likewise new revenue take time to put in place.
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Calgary Herald Op-ed by T. Boone Pickins. To my friends in Calgary and across Canada: I apologize on behalf of my fellow Americans for the United States government’s actions.
Why? Because after years of poring over the engineering, design, geology and the contents of the proposed Keystone XL pipeline, President Barack Obama chose to make a political statement and vetoed a bill to allow construction to begin.
I feel bad about this. I lived in Canada in the 1960s. You have a great country, and it’s a great place to operate in the oil and gas sector. We should have done better by you.
You may not follow the ins and outs of the U.S. Congress as much as we do, but you probably know Keystone was a bipartisan bill. Republicans and Democrats in the U.S. House and Senate voted for it. That was big news, as Democrats and Republicans working together on anything over the last 10 years has been rare.
There was no good explanation for Obama’s decision to veto the bill. The U.S. Department of State reported previously the environmental effects of the pipeline would be minimal. In its January 2014 report, the department stated: “emissions (from pipeline activities) would be equivalent to greenhouse gas emissions from approximately 300,000 passenger vehicles operating for one year.”
There are 250 million passenger vehicles operating in the U.S.
Keystone would have the effect of adding about 1/10th of one per cent to the fleet.
Because the pipeline crosses national boundaries, the State Department is charged with producing reports. Yet, after State made its report, the White House went “agency shopping” and asked the Environmental Protection Agency (EPA) to take another look at Keystone. To no one’s surprise, the EPA fired off a letter objecting to pipeline construction, citing concerns of increasing greenhouse gas emissions.
Where the EPA went wrong, however, was calculating the effects on greenhouse gases “from the extraction, transport, refining and use of the 830,000 barrels per day of oilsands crude that could be transported by the proposed project at full capacity.”
The problem with the EPA’s math is that Canadians don’t need permission from the U.S. to recover that oil and sell it. Canadians will extract it and ship it overland by train or via pipeline and tanker, not south to the United States, but west to Asia, or elsewhere. When oil prices come back up, Korea, Japan, China and others will benefit from the Canadian oilsands, not the U.S.
It is no surprise to Canadians that Canada is the U.S.’s largest oil-trading partner. But it is a surprise to many U.S. residents. I have long been a supporter of the idea of building on the North American Free Trade Agreement by establishing a North American energy alliance to include Canada, the U.S. and Mexico.
The reason oil prices are not bouncing up and down with every piece of news out of Iraq, Iran and Israel is the U.S. and Canada are using the latest innovative technology to recover oil and natural gas — from sands and shale. Additional production from those sources has provided an international energy price shock absorber. For U.S. consumers, lower gasoline and diesel prices have been like getting a $300-billion bonus. The effect in Canada has likely been similar.
So, why is Obama so opposed to the Keystone XL pipeline? As my dad used to say, “Son, it’s kind of like murder. It’s tough to explain.”
Politics is the most likely answer. The veto lets the president throw a bone to his political left while thwarting a win for the Republican-controlled House and Senate on their bill.
The silver lining is this: Obama’s veto didn’t kill the Keystone XL pipeline. He delayed it. Sooner or later, good planning will trump bad politics and the project will get the green light — we hope.
My Canadian friends, please have patience. The Keystone pipeline will happen.
T. Boone Pickens is the architect of the Pickens Plan, an energy plan for America. He is also chairman and CEO of BP Capital.
Landlocked: Murkowski Explains Alaskans’ Access Frustrations
The Governor and Entire Congressional Delegation Recently Vowed to Fight the Administration's Overreaching Action to Shut Down Alaska Resource Development and Her Economy. Senator Murkowski Has Acted to Create A YouTube Video to Highlight Growing Federal Restrictions in Alaska. Thank you, Senator Murkowski for Effective Work And Quick Action! We believe that some educational entity could take that map video and expand it into a one hour lesson plan framework for elementary, high school and college students. -dh
WASHINGTON, D.C. – Senator Lisa Murkowski today released a video to help broadcast the Alaska #ThisIsOurLand movement’s agenda to a wider national audience.
With Alaskans reeling from the Obama administration’s ongoing efforts to block off millions of onshore and offshore acres from energy development, Murkowski produced the two-minute film to speak plainly to Americans who may be unaware of the federal government’s costly, ever-growing overreach in Alaska.
In the video, Murkowski points out that 61 percent of Alaska’s lands are controlled by the federal government – and that almost none of those lands are truly open to energy production. Instead of allowing Alaskans to responsibly develop the State’s vast resource potential, the Obama Administration has converted an additional 12.2 million acres within ANWR into de facto wilderness; withdrawn 9.8 million additional acres in the offshore Arctic; removed roughly half of the National Petroleum Reserve (NPR-A) from leasing; planned a 685,000-acre “Area of Critical Environmental Concern” in the Fortymile Mining District; proposed sweeping critical habitat designations; and preemptively targeted potential development on State lands.
All of this and more has occurred in conjunction with a series of major federal rules – from the “Waters of the United States” expansion to EPA’s climate regulations – that will bring additional costs and consequences for energy development in Alaska.
Text of Senator Murkowski’s Remarks
“Hi this is Lisa Murkowski, Senator for Alaska. And I want to talk you about the state of my State.
“Alaska is about one-fifth of our country, by land mass. We’re twice as big as Texas, with North Carolina thrown in for good measure.
“If Alaska was overlaid on the Lower 48, we’d stretch from California to South Carolina. That’s a lot of land – but what you may not know, is who controls it.
“The National Park Service manages about 15 percent. The Bureau of Land Management controls another 20 percent. The Fish and Wildlife Service administers 19 percent. The Forest Service controls another six percent down in Southeast. Then you add one percent for the Department of Defense, and the federal government controlling about 61 percent of Alaska’s lands.
“That’s more land than Texas and Utah combined. So who controls the rest?
“The State of Alaska has 27 percent. Alaska Natives have 12 percent. And that leaves just one-quarter of one percent of Alaska as private land - barely even noticeable on a map.
“And while the State and Alaska Natives do their best to foster economic development, the federal government has taken the opposite approach.
“All of the non-yellow lands are federal lands that are now off-limits to resource production. Even the yellow federal areas are hardly “open” to development. All of the dark blue offshore areas have serious development restrictions. Most recently, the Obama Administration is trying to permanently restrict development in the red and orange areas. It’s also targeting the area in pink for new limitations.
“When you add it all up, the federal government is now blocking development on our most resource-rich lands and waters. That’s depriving Alaskans of our ability to produce energy, minerals, timber, and more for the good of our nation. And it’s depriving our nation of jobs, revenues, security, and prosperity.
“That’s the state that we’re in, in Alaska. And that’s why we’re asking for greater access to our lands and waters.”