Monday, April 1, 2013

Alaska Oil Policy| Irony ...

My first column on Alaska oil policy appeared as a Compass piece in the Anchorage Daily News in October 2009.  The title of the piece was "Alaska poorer for outdated oil attitude."

The focus of the piece was on Alaska's failure to keep pace with what the New York Times in a then-recent piece characterized as an industry "hot streak."  As the Times reported, "[t]he oil industry has been on a hot streak this year [2009], thanks to a series of major discoveries that have rekindled a sense of excitement across the petroleum sector, despite falling prices and a tough economy."

My piece pointed out that Alaska was not participating in the boom and suggested some reasons:
To put it bluntly, for the past several years, Alaska's exploration signals to the industry have said "go elsewhere." 
Recent legislative enactments, such as the Alaska Gasline Inducement Act and the ACES oil tax, come to mind as examples. The root cause runs deeper, however. 
Alaska has become smug and arrogant about the industry legislatively, administratively and even on the editorial pages of some newspapers. A good example is the attitude expressed earlier this year by one of the governor's "energy" advisers, Joe Balash. 
In a recent international survey conducted by a Canadian institute, Alaska ranked 78th out of 143 states and governments in an assessment of policies designed to encourage oil and gas production. When asked to comment on the results, Balash said, “Alaska is right where it ought to be. ‘We … have tough terms; we set the bar high. … We have world-class resources. Arkansas and Mississippi don’t.’
(The quote from Balash is reported in "Report critical of Alaska's relationship with oil industry," Fairbanks News-Miner (Jun. 28, 2009).  A copy of the piece is available by paging down through the collection of articles here.) 

My column went on to criticize the 2009 Parnell Administration and Balash suggesting "Alaska's 'tough terms' have shot Alaskans in the foot."

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That piece came to mind again when I was reading a story about Alaska's current situation in yesterday's Los Angeles Times.   The story, entitled "Oil revenue fuels intense fighting among Alaska lawmakers," reports on the current debate in the Alaska legislature over oil taxes.

The story echoed what I wrote in 2009.  According to the story, "[s]omewhere along the way, the North Slope golden goose stopped laying. Production on the slope's aging fields has dwindled to barely a quarter of what it was in the 1980s; once the nation's largest oil producer, Alaska now ranks behind Texas, North Dakota and California."

The irony?  One of the persons quoted in the story yesterday as supporting the need for reform is the same Joe Balash who, in 2009, said "Alaska is right where it ought to be ... [with] tough terms."  In the 2013 version of the story, however, Joe -- as has the Parnell Administration -- has changed horses.  This time Joe is quoted as follows:
"I was talking with a gentleman from BP, back in 2008 when oil prices spiked. He didn't have authority to sign the checks to pay the tax each month. He had to get authorization from London — the checks were that big. And he was the chief financial officer," said Joe Balash ....
Hindsight is always 20/20, of course, but what a difference it might have made in Alaska's history if, rather than spending its time boasting of its "tough terms," the Parnell Administration instead had stopped to read the New York Times back in 2009, or Joe had stopped to understand what the "gentleman from BP" was telling him in 2008.

Another irony?  I have never met the Governor of Alaska, much less talked to him about oil policy.  Joe Balash?  He's now the Deputy Commissioner of the Department of Natural Resources, responsible for oil policy.  That, frankly, explains a lot.

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