Another new year is upon us. And we all know what that means: political fun and games in Juneau. Grab your popcorn and tune in to Gavel-to-Gavel on January 17th as the second session of the 27th Alaska Legislature gets started. Wait. Scratch that. You can probably wait until about ⅔ of the session is over before things really start to heat up.
It may not be all that entertaining though, compared to the political theatre we all witnessed in the last few days of the session last April. You remember it don’t you? In case you missed it...
The state Senate’s bi-partisan working group (Senate) and the House majority (House) were fighting like cats and dogs over the governor’s bill to “reform” oil taxes. The governor and some of his cabinet members (Guv’s guys) were calling the Senate a bunch of do-nothings because they didn’t want to bend over and sell the state down the river to the oil industry (Big Ol) without doing a bit of due diligence. The House had barely passed the bill with one vote to spare. Another group showed up in the middle of it all, calling itself the Make Alaska Competitive Committee (Big MACC), led by former University president Mark Hamilton (The General).
The Senate dared to ask pesky questions of the Guv’s guys and Big Ol. And it went a little something like this:
House: “Questions? Why more questions?”
Senate: “Uh, because we owe it to the residents of the state of Alaska to make sure this isn’t just a big giveaway.”
House: “Give-a-way shmive-a-way. Just do what we did. We passed that thing in nuthin’ flat because of what the Guv’s guys said.”
Guv’s guys: “Well...sure...I mean...probably...uh, we can’t be sure, but the industry said they’d commit to...uh...wait, no...they didn’t actually commit to exploring any more...or producing anymore... but...uhhhh…”
House: “Well that’s good enough for us...Lets vote!”
Senate: “Wait just a minute, fellas. We have this little thing called the Alaska Constitution, and in Article 8, Section 2 there’s a bunch of pesky words that say something like - The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the state, including land and waters, for the maximum benefit of its people.”
House: “Well, corporations are people too, right? Geesh, its only two billion dollars a year. What’s the big deal?”
About then, Big MACC showed up and spent a million bucks marching out the General who we all love and trust:
The General: “Look, I know I’ve been coming down here for the past ten years asking for critical dollars for our state’s university system, but that was in the past. And yeah, maybe if this doesn’t work like the Guv’s guys say, the University system will ultimately be mothballed or be downgraded to a little community college. But thats beside the point. Now I’m an oil expert, and I’m telling you if you don’t give Big Ol what they want, the biggest oil field in North America is going to dry up, the pipeline is going to shut down, and the industry will leave, and then all we’ll be left with is a handful of tree huggers.”
Someone forgot to tell the General that Big MACC is nothing but a bunch of Big Ol service providers, who will say and do whatever they think will make Big Ol happy. Duh. Big MACC will reap the benefits of any advantage Big Ol gets in tax relief and will be first in line to get work on the Slope. Its a no-brainer for them. And you can’t blame them for trying.
I mean Big Ol promised if HB110 passes they would do tons of exploration and seriously ramp up production and hire tons of Alaskans to do all the work while sending Texans with Okies under each arm back to where they come from... What? They haven’t promised any such thing? Oh.
Now I don’t know about y’all, but where I come from negotiations is a two-way street, not a one-way directive.
Nonetheless, the session ended and everyone went back to their corners to regroup and kill salmon. But in between killing salmon season and killing moose season (my favorite time of year), some of the Big MACC folks decided to do this report card thingy, and basically graded everyone who thoughtfully questioned the oil taxation situation an “F” and anyone who quickly voted to give Big Ol whatever they wanted an “A.”
Then just a little bit after killing moose season ended, Commonwealth North invited Senate President Gary Stevens (Mr. Prez) to speak to them. He began:
Mr. Prez: “Thank you for inviting me to speak. Frankly, you’ve got a lot of nerve.”
Now that was verbatim. Ooooh, this is gonna be good. More popcorn please.
But this is probably a good time to stop with the paraphrasing, because what Senator Stevens said next is deadly serious and cuts to the heart of the matter.
In a nutshell, Senator Stevens chastised the crowd for giving him an “F” for daring to question the governor’s proposal and reminded the crowd what has happened in our not so distant past, when we’ve let our guard down with the oil industry in Alaska.
Senator Stevens said: “I would ask you to remember just three events in our historic relations with the industry, so we won’t repeat them. Surprisingly enough, so many Alaskans don’t know or remember these events:
1. Remember Amarada Hess, when the industry was found guilty of falsification and depriving the state of nearly $1 billion.
2. Remember the Exxon Valdez, when the industry despoiled our environment from which it has not fully recovered even today.
3. Remember Bill Allen, when some of our elected politicians were bribed and sent to prison.
The judge in the Amarada Hess case, said the state was guilty of “inexcusable trustfulness” in its dealings with the oil companies. Stevens also said a number of other things I wholeheartedly agree with, particularly this passage from the transcript of his speech, right after the part about our Constitutional obligation which Stevens’ former constituent Jay Hammond was so fond of quoting:
“That’s people, not businesses or corporations but the people of Alaska -- You.
It’s a very unusual constitution in this regard. Now, you should know, I love the oil industry. I want to see more oil flowing through the pipeline. Oil provides jobs to Alaskans as well as lots of jobs to outsiders. But it is our oil, and Prudhoe Bay belongs to us. It is true oil pays the bills here in Alaska. Some 90 percent of our annual revenue comes from oil taxes. So, we like you, we respect you, and we need you. We want you to be profitable.
So let’s not forget the Constitution or Jay Hammond. But, to be fair, let’s not forget the abuses we have suffered at the hands of the oil industry.
Remember Edmund Burke’s famous quotation, "Those who don’t know history are destined to repeat it."
As I said, this speaks to the heart of the matter. I absolutely understand what the oil industry is seeking. If I were them, I’d do the same thing. I’d be a fool not to. But just giving them what they want without question would make the legislature completely guilty of “inexcusable trustfulness.” We (Alaskans) have an obligation to our state and to ourselves. Hard bargaining should rule the day, not rolling over. If a small tweak to progressivity is an appropriate adjustment that brings a commitment of new exploration and development and commitments of Alaskan hire then we should strongly consider it. And then, maybe we’d end up with a fair deal.
But HB110 as it is, is a bad deal for Alaska. So bad, it borders on unconstitutional. It jeopardizes Alaska’s future to a greater extent than diminishing throughput. With all the successful lease sales for exploration and the most exploration activity in decades before us under the current tax regime, sticking with Alaska’s Clear and Equitable Share (ACES) is a much safer bet for our future than the uncertainty of the governor’s poorly constructed bill.
So grab another bucket of popcorn and stay tuned.
