Are Alaskans "Citizens" or "Sovereigns"?

 

 

Bill Walker is the sort of man I would like to have as a next door neighbor: kindly, thoughtful, a good listener, slow to anger, and, he loves Alaska.  Just because a person has attractive personal qualities, does not qualify him to dictate Alaska state policies.  If Bill were elected, be sure that he would do all within Alaska's "sovereign" power to dictate gas pipeline policy to the free market.  And, if he were my neighbor, we'd likely agree to keep the peace by not discussing politics.  -dh

Governor Candidate Bill Walker (NGP Photo) says in the Alaska Dispatch: "We, the people of Alaska, own the resources of the state. For far too long we have relied on others to develop our resources and move them to market. Over the years we have witnessed other countries move their valuable resources to market while Alaska's resources remain in the ground. That must change! Now is the time for us to take charge of our resources; now is the time to seize control of our future for the lasting benefit of all Alaskans."
Attorney Brad Keithley (NGP Photo) responds (Scroll down for give and take): "With all due respect, this approach will not further Alaska. Alaska works best when it enables and incentivizes private efforts, not displaces them (e.g., grain terminals in Valdez). Or, as a long time Alaskan puts it, when "government acts as the gentle breeze behind industry's back, rather than a gale force wind in the face." The real problem here is that Alaska tax and regulatory policy has become an impediment to the development of the State's oil and gas resources (http://bit.ly/oGFGO). Alaska cannot reverse that by "commanding" different results and dividing the world into "us" and "them." Instead, Alaska is best served by creating the "price signals" which cause the investment of private dollars in Alaska over other resource locations."
Our view:  In these tight, competitive circumstances all thinking Alaskans should consider every reasonable North Slope gas marketing angle to be on the table--including the Alaska Highway Pipeline, LNG, GTL and the Northern Gas Pipeline Route.  We should all wish buyers and sellers well and do everything possible to make Alaska economically competitive with producing areas that don't suffer Alaska's geographical and economic burdens.  Then, politicians should stand back and let the market work--if they are truly supporters of a free market.
One commenter, as you will read in the links above, dismissed Mr. Keithley's logic, calling it 'idiotic' and 'silly' and not offering support for that characterization.  But name calling has long been the main technique LNG Advocates have used for thirty years, fighting logic as they have every step of the way using faux-pro-LNG, anti-Canadian, and anti-producer name calling and slogans.   Lower 48 shale gas may indeed be a tough Lower 48 competitor to Alaskan gas, but Alaska's tax and regulatory policies have contributed to Alaska's economic challenges, not lessened them.  LNG cheerleaders seem to think that as long as Lower 48 markets are now less likely to attract Alaska gas, LNG is automatically more competitive in the world.  That is not a "given", as our friends in science would say.  It may be a political thesis or hope, but should not be a factual assumption upon which to base a multi-billion dollar, state-funded gas pipeline investment.  
Here's why. Just as Alaska's policies and geography work against gas sales in the Lower 48, so do they work against international LNG sales.  Perhaps the advent of gas shale in North America is a negative to Alaska gas sales, but the advent of new discoveries and favorable investment climates elsewhere is a negative to Alaska oil and gas sales, as well.  In addition, the fundamental negatives below can only be overcome with more attractive incentives than producers encounter elsewhere…
  • …because we are among the most expensive producing regions of the world (the Arctic), to begin with, and
  • because we are among the highest taxing governments of the world (Alaska + U.S.), and
  • because many/most of our competitors have oil and gas products available at tidewater locations, and  
  • because many/most of our competitors find and produce their oil/gas in low cost temperate zones, and
  • because many/most of our competitors have lower environmental/regulatory costs, and
  • because many/most of our competitors have lower labor costs.
Like substance dependency, political tomfoolery can only be changed when one first admits fault and then acts to correct the fault.  The great disservice that populist candidates offer is attempting to lead followers by strength of slogans like "All Alaska", as if such populism could create good economics out of thin air.  
At one point in Walker's article, he says, "It's time to act as the sovereigns we are."  He thus invokes citizens to rise up as "Sovereigns."  Whether a political group sets itself up to be 'Sovereigns' or any other 'special' class is immaterial.  What is material, is that Americans have rebelled against and rejected 'sovereigns' and other masters in favor of freedom, including the free enterprise system.  One is sad to see that Walker's campaign message supports our 'shoot ourselves in the foot' investment climate, sustains populism, denies logic, rejects the free market and tries to lead Alaskans away from a life of intellectual sobriety.
-dh

 

 

P.S.  In Pennsylvania, with severe budget challenges, leaders kept taxes low to provide high incentives to gas shale explorers.  See this Philadelphia Inquirer article, Mario F. Cattabiani and Amy Worden:

The natural-gas industry's leaders and lobbyists beat back Rendell's proposal to tax gas as it is pulled to the surface from the rich black-rock reservoir known as the Marcellus Shale.  So, as drilling rigs are sprouting in the state's northern tier and southwestern corner, the gas those rigs are extracting still isn't taxed. That makes Pennsylvania unique among the 15 states that produce the most natural gas.  What's more, the industry persuaded Harrisburg to lease more public land to gas drillers - even as the state's budget for environmental protection was being sharply cut