Having worked in and around the oil and gas industry my entire career I have never found the PFD to be all that remarkable. It is, in essence, simply Alaska's version of the royalty payments made by producers to royalty owners throughout the L48.
In the Lower 48 producing states, private landowners own the minerals under their lands and thus, receive royalties when they lease those lands to producers and the producers, in turn, start production. Under the statehood act, individual Alaskans largely are prohibited from owning what lawyers refer to as the "mineral estate" -- the minerals underlying the state's surface. Instead, those interests -- at least those under the lands owned by the state -- are held by the state government.
In the Lower 48 producing states, private landowners own the minerals under their lands and thus, receive royalties when they lease those lands to producers and the producers, in turn, start production. Under the statehood act, individual Alaskans largely are prohibited from owning what lawyers refer to as the "mineral estate" -- the minerals underlying the state's surface. Instead, those interests -- at least those under the lands owned by the state -- are held by the state government.
Absent any further action, that essentially would have made the Alaska economy more like Angola than Texas. The state would have received the royalties and those (few) who run the government would have decided where it was spent.
But the PFD changed that. It essentially took a portion of the royalties and distributed them equally to individual Alaskans. It treats individual Alaskans as, what lawyers would call, "tenants in common" of a portion of the mineral interests and distributes the payments to them in exactly the same fashion as occurs when multiple landowners own equal interests in a producing property in the L48 states.
The result has been to make the Alaska economy operate much more like Texas than Angola. It puts a portion of the royalties in the hands of individuals, who then decide individually where to spend the money. It makes the Alaska economy operate much more as a free-market, than a state-controlled economy. It has helped create and support a private Alaskan economy free from state domination.
The Governor's veto action this year, and longer-term SB 128, the Senate-passed version of the permanent PFD cut, does much to reverse that effect and begins again to make the Alaska economy look much more like the state-controlled economy of Angola than that of free-market Texas. The irony is that SB 128 was supported by a number of Republican legislators who otherwise talk a good game about being free-market oriented, but failed to walk the talk when the rubber met the road.
All this came back to mind yesterday during a Facebook conversation. For those interested, the relevant part follows:
But the PFD changed that. It essentially took a portion of the royalties and distributed them equally to individual Alaskans. It treats individual Alaskans as, what lawyers would call, "tenants in common" of a portion of the mineral interests and distributes the payments to them in exactly the same fashion as occurs when multiple landowners own equal interests in a producing property in the L48 states.
The result has been to make the Alaska economy operate much more like Texas than Angola. It puts a portion of the royalties in the hands of individuals, who then decide individually where to spend the money. It makes the Alaska economy operate much more as a free-market, than a state-controlled economy. It has helped create and support a private Alaskan economy free from state domination.
The Governor's veto action this year, and longer-term SB 128, the Senate-passed version of the permanent PFD cut, does much to reverse that effect and begins again to make the Alaska economy look much more like the state-controlled economy of Angola than that of free-market Texas. The irony is that SB 128 was supported by a number of Republican legislators who otherwise talk a good game about being free-market oriented, but failed to walk the talk when the rubber met the road.
All this came back to mind yesterday during a Facebook conversation. For those interested, the relevant part follows:
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