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
by
Dave Harbour
Robert O. Anderson, Atlantic Richfield Co. Board Chairman, Board Member: Arctic Gas Consortium, Photo Circa 1975. Spring, 1976 we first met at 7 a.m. in the NYC Park Lane Hotel. Yes, he was wearing this hat that morning. Our extended elevator conversation: he was biggest landowner in N.M. and I went to Jr. High in Albuquerque, taught school in Los Alamos, was his Arctic Gas spokesman. We agreed to meet in a month for breakfast back in Anchorage, in Gov. Wally Hickel’s Captain Cook Hotel. That meeting led to later employment with ARCO when Canada’s NEB disapproved their portion of the Arctic Gas Project after the FPC had approved the US portion. -dh
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.
 Lawrence Hamilton, Attorney, 5-20-15 in El Cajas National Park trout fishing expedition, President, Cuenca-Ec Fly Fishers Club. NGP Photo by Dave Harbour 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. Lawrence Hamilton |
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.
_________________________________________
Courtesy of: Alaskanomics.
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.
For information on subscribing to the Alaska Legislative Digest, email akdigest@gmail.com
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.
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