By: Scott Goldsmith, NGP Photo
Point of personal privilege: Our great friend, Chuck Becker, passed away this morning (Photos). Today, family and countless friends are mourning his passing. We will attempt to provide more official information as the family makes it available.
Chuck and I met in the mid-1970s in Washington D.C. Another dear friend, the late Anchorage Mayor George Sullivan was his client and I was representing the first North Slope gas project, the Arctic Gas Consortium, with Washington and Anchorage offices.
After Chuck had moved to Anchorage and completed his economic development assignment with the Sullivan administration, and I had joined Atlantic Richfield Company, he and I worked on some communication projects. He soon became a respected communications consultant to some of the most important businesses in the 49th state.
Chuck was deeply involved in support of reasonable development of Alaska's resources through leadership positions with the Alaska Support Industry Alliance and after years of service was named "Director Emeritus".
A veteran of the United States Department of Commerce, he served as the long-time director of the Alaska Export Assistance Center, revered for his accomplishments by the Alaska World Affairs Council which he also served as a director and past president.
Indeed, I have always considered Chuck to be deserving of the title, "Alaska's Diplomat"; for his every mission at home or abroad uniquely reflected great credit upon the United States, Alaska, his personal integrity and his own considerable abilities.
I believe the world, the country and the State of Alaska are better for having hosted the life of this dedicated man.
I believe that Chuck's friends and family will remember him as much for his patient, gentle and principled nature as for his professional accomplishments.
One of our commentaries last week was edited and reprinted by the national, Master Resource Blog, and concluded with a number of interesting reader comments. (It was followed by a more heavily researched piece dealing with the environmental strategy to defeat capitalism.)
From Master Resource, it was adopted into an Austrian Economics Addict editorial: "In this article by Dave Harbour titled, Seattle Hearing On Shell’s Arctic Rig Docking: A Clash Of Visions, he talks about the differences between the two sides in this battle. Here are some excerpts from the article.
“If our civilization is to continue, our well-grounded public and private leaders need to wake up and undertake communication programs designed to better articulate...."
* * *
Would we like to see your reaction? Yes we would, and we will reprint or link selected submissions.
Readers wishing for a more in-depth look at the role of environmental armies in securing their avowed goal of 'the destruction of capitalism' may be interested in our less politically correct editorial last week, "Useful Idiots".
Calgary Herald Editorial: Everyone seems to agree that more pipelines are needed to carry Alberta bitumen to new markets, so let’s hope premier-designate Rachel Notley puts a lid on any further talk that could endanger approval of Enbridge’s Northern Gateway project.
Today's Energy Links by Larry Persily:
B.C. agrees to fiscal terms with Petronas for LNG project
(Wall Street Journal; May 20) - The province of British Columbia and Malaysia’s state-owned energy company Petronas on May 20 said they had agreed on fiscal terms to promote construction of a liquefied natural gas export terminal near Prince Rupert.
First Nation opposition presents legal question for LNG project
(Business in Vancouver; May 19) – The decision by the Lax Kw’alaams First Nation in British Columbia not to accept an offer from Pacific NorthWest LNG raises a number of questions, such as whether Petronas, which has yet to make an investment decision, might cut its losses if First Nations mount an all-out battle.
Companies deny Wood Mackenzie report of delays for Australia LNG
(Bloomberg; May 19) - Chevron and Japan’s Inpex Corp. face potential delays in starting liquefied natural gas projects in Australia, according to consulting firm Wood Mackenzie. Chevron’s Wheatstone and Inpex’s Ichthys ventures could start output in mid-2017, later than the companies forecast, Angus Rodger, Asia-Pacific analyst at Wood Mackenzie, said in an interview....
U.S. exports could help push LNG market toward more spot sales
(Bloomberg; May 19) - The U.S. is about to change the global LNG market. When the first tanker carrying liquefied natural gas leaves Cheniere Energy’s Sabine Pass terminal in Louisiana in December, it will turn traditional consumers into new traders with more bargaining power.
Cheniere says it is talking with LNG buyers in China
(Reuters; May 19) - Chinese buyers are eyeing long-term supplies of liquefied natural gas from Cheniere Energy’s U.S. export operations....
Tokyo Gas looks to invest in more U.S. production as price hedge
(Reuters; May 18) - Tokyo Gas, Japan's biggest gas utility, is looking to invest in more U.S. shale gas production ....
GAIL signs preliminary deal to sell some of its U.S. LNG to Shell
(Reuters; May 20) – GAIL, India's largest state-owned natural gas distributor, has signed a preliminary deal to sell some of its contracted volumes of liquefied natural gas to Shell....
Proposed Nova Scotia LNG project gains provincial permit
(The Chronicle Herald; Halifax, Nova Scotia; May 19) - After an environmental assessment, Nova Scotia’s provincial environment minister has granted Bear Head LNG approval to build an 8-million-tons-per-year liquefied natural gas plant.
Australia’s LNG industry has its share of worries, survey says
(Sydney Morning Herald; May 18) - A lack of competitiveness, unwieldy regulations and inflexible industrial relations threaten to derail a bonanza from the liquefied natural gas sector in Australia as it transitions from a $250 billion investment phase into production.
BHP says Australia LNG project ‘falls lower’ on its list of priorities
(Bloomberg; May 17) - BHP Billiton is lowering the priority of its proposed $10 billion Scarborough liquefied natural gas project with partner ExxonMobil in Australia amid a fall in prices and ....
Natural gas industry faces increasing opposition to pipelines
(USA Today; May 17) - The U.S. is producing record amounts of natural gas.... But building the infrastructure necessary to bring that fuel to market is increasingly difficult.
North Dakota farmers, ranchers frustrated over salty wastewater spills
(Wall Street Journal; May 16) - For most of the years since wildcatters began tapping the North Dakota prairies for oil, energy companies have existed peacefully with the farmers and ranchers ....
State legislatures act to protect drilling from local restrictions
(Wall Street Journal; May 19) – A Texas city last year banned fracking; state lawmakers want to make sure that never happens ....
Yukon Territory gold mine would consider using LNG for power
(CBC News; May 16) - Kaminak Gold Corp. is aiming to finish a feasibility study for its Coffee Gold project near Dawson City....
Yukon First Nation will invest in LNG-fueled power plant
(Yukon News; Whitehorse, Yukon Territory; May 15) - The decision to invest in Yukon Energy’s liquefied natural gas-fueled power plant in Whitehorse, the Canadian territory’s capital city, is supported by the Kwanlin Dun First Nation community, according to ... Chief Doris Bill....
Oil exports to Canada help ease pressure on U.S. storage capacity
(Wall Street Journal; May 19) – Crude oil exports to Canada provided a crucial relief valve for U.S. producers this year, according to a new report from ...
|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.
3-16-15 The Future of Oil Prices According to An Astute Reader - Senators Sullivan's Reputation Spreads
Our friend, Rob Bradley (File Photo-R) of the Master Resource Blog, saw U.S. Senator Dan Sullivan's (NGP Photo) Maiden Senate Speech on this website and has further promoted it to his large international audience (here). (Our original coverage and speech text) -dh
Halloran Opines On Proposed Ohio Severance Tax and Future of Oil Prices
Republican Governor Proposes Ohio Severance Tax? Our friend, Independent Energy Analyst James R. Halloran (File Photo) just returned from the Ohio Oil and Gas Association Winter Meeting where he reported that, "the big issue is Governor Kasich’s proposal for a (completely mis-named) “severance tax”. We will have a lot more on that topic after (maybe) cooling off slightly. Momma did not train this writer to suffer fools gladly, and that is what Ohio is faced with on the topic of taxation of the oil & gas business."
(Point of personal privilege: our friend and longtime APRN senior reporter Steve Heimel (NGP Photo) is retiring after decades covering countless Alaska issues. -dh)
On oil prices, Halloran says, "The overwhelming question (outside of Ohio) is, When will oil prices go back up (how high is a second implicit question)? That question was posed to us numerous times at the Winter Meeting. Our standard answer is that oil pricing is a process, not an event. Assume for the moment that Brent oil (we try to stay with the international price for analysis purposes) were to return to $70 by midyear (this is NOT a prediction; it is for discussion purposes): Can we tell them what will happen to the price in the next six months after that?
"The relevant questions that need answering first", he says, "are:
- "Have there been fundamental changes in the market that will cause crude oil to trade at a different price range than $94-114 for an extended period of time? If so, what are they, and how will they affect the industry longer term?
- "If the the major inputs to the current market are more likely of a transient nature, what will have to change for prices to recover? Will a price recovery cause some of these transient inputs to recur?"
He elaborates that, "there are some effects that are of a transient nature (maybe) that are significant contributors to the oil price drop, of which we have commented heavily in the last several months:"
- "The strong dollar, which is following a trend to get even stronger, and which will likely provide a major head wind for any near-term recovery
- "Massive amounts of capital and incredibly low interest rates, putting many PE, Major, and vulture players ready to jump into the Energy pit. This is related to the strong dollar, and will provide no relief from the fact that there are too many players.
- "Too much production, which is having a hard time to find a home (see the chart of inventories below, courtesy of Mike Bodell), which graphically illustrates the situation.
- "Much of the capital cutbacks are coming out of the hide of service companies, so that lower costs will not really bring lower production volumes soon."
"No one is cutting back to the point of ceding “market share” to others. This capitalism at its purest. Unfortunately, it is being done in an environment in which central banks are imposing zero effort to observe capital discipline: Nothing. Nada. Rien. Zip.
"The only “good news” (but less helpful than one might think) is that the rig count continues to drop. It is too much to try to get trends from the rig count on a weekly basis, so we will be looking at it monthly. This should make it easier to spot trends. Our observations are as follows:
- "The downturn in rigs is much more directed toward oil (no surprise). Oil rigs are down 45% from our base date last December, compared to 25% down for gas rigs. The Marcellus, Utica, and Eagle Ford, which have large dry gas plays, are not down in rigs as much as the other basins.
- "Vertical rigs are down much more than horizontals. Also, Small Basins are harder hit than the major basins. This consistent with the WSJ article, which indicates that major players are still drilling big wells (just not completing them).
"BOTTOM LINE: The beatings will continue until capital discipline improves and/or the number of players is reduced. There may be rallies, but they will likely be shallow." (Note: While Halloran has sources to back his statistics, we removed them in the interest of space. -dh)
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.
What's next for Keystone XL?
|We urge our gentle readers to review yesterday's posting; we cannot remember -- in well over a decade -- posting a more useful, relevant and actionable commentary for our Alaskan, Canadian and Lower 48 readers. -dh|
Alaskanomics by Mark Edwards.
Over the next couple of days, I will post a three part series about the current oil price environment in Alaska.
It is well known that Alaska’s economy is highly sensitive to the price of oil. Billions of dollars in investment capital flow into the state each year as energy companies both explore for new oil and maintain their existing fields. This activity has an enormous positive multiplier effect on the rest of the economy as major service industries including trucking, construction, finance, legal, engineering, retail and countless others see a direct benefit from the contracts and employment required to support this massive effort. Read more....
TransCanada's Keystone XL:
Our Northern Gas Pipeline (NGP) friends will want to tune in today to Alaska legislative video conferences dealing with
1) AIDEA financing of an Interior Energy Project (10:15 ADT), and
2) Hilcorp discussing Cook Inlet gas/North Slope projects and operations (12 Noon, ADT)
Letter from a reader: Dave: Thank you very much for having provided the opportunity to present to the public the example of injustice that the Orange Hill Taking exposes. Your description of the “War On Alaska’s Future” is excellent. More here (2-24-15)....
Yesterday, we opined that, We continue to wish Alaska's new governor well, but hope there's not a screw loose somewhere....
Today we decided to further refine the story and that will take us another day.
In preparing to critique it, we urge our gentle readers to review yesterday's references and to those we add two more today:
1. Please review our earlier commentary, "It's Our Oil And We Are Sovereign, By Golly!"
2. One of our most astute readers is a natural resource investor from Down Under--not associated with the large Alaskan producing companies.
Being a private, individual investor interested in Alaska and being a firm believer in "due diligence" he has rigorously analyzed Alaska as an "investment climate" for several years.
Last night, our friend penned his own commentary (right hand column) which we appreciate his having shared with us.
His unsolicited, personal views may reflect a number of sophisticated investor views everywhere.
We hope that by honestly and publicly discussing these matters Alaska's new governor may yet become successful and and that the state can avoid any critical, politically caused, train wrecks. -d
A commentary written by our Australian investor friend to his friends and colleagues in Alaska (Please read in conjunction with our 3-1-12 commentary):
I was minded to put fingers-to-keyboard by your Governor’s recent comments on the Alaska LNG and Alaska Gasline Development Corporation projects (AKLNG and AGDC, Aka., ASAP).
They sounded very much like one hears all the time in developing nations: “We are the owners, blah, blah, blah."
Of course, he misses the point here: the State is the freehold owner but it has leased its rights to extract to others on a long term basis, sufficient for those others to book reserves and contingent resources in connection with those extraction rights.
In developing nations it is often easy to understand the motivations of the political leaders who say such things.
Their statements are usually a combination of not being well educated in international commercial and legal matters (and who can blame them) and because they see an opportunity to personally profit from a State’s resources.
I would strongly presume neither motivation applies to Walker, who no doubt is merely (i.e. in his own mind) undertaking a minor political tactical play in connection with appointees to AGDC, etc.
However, does he not realize that LNG projects compete on a global basis and although AKLNG has leapt up the league tables over the last 18 months, its chances of achieving FID are reduced by playing petty politics? (See our commentary on LNG global competition: 1, 2, 3 -dh).
It is of course a complete joke to think that the State of Alaska could by itself somehow “procure” (expropriate?) gas from the Producers and then sole fund, build and market its own LNG project. That's the sort of thing the Government of Mozambique might say.
Anyway, I expect the Producers to just sigh and get on with things - with however another minor reservation in the back of their minds.
(Signed by our Australian friend....)