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Erika Bolstad

Erika Bolstad covers Alaska issues, including the congressional delegation, from Washington, D.C., for McClatchy Newspapers. Before joining the bureau in 2007, she spent seven years as a reporter at the Miami Herald, where she covered politics, government and the state legislature. E-mail Erika at ebolstad@adn.com.

Sean Cockerham

Sean Cockerham writes about Alaska state politics. He spent three years based in Juneau for the ADN before joining the Tacoma News-Tribune to write about Washington state politics. He went to Iraq twice for the News Tribune, and previously wrote about Alaska government and politics for the Fairbanks Daily News-Miner. E-mail Sean at scockerham@adn.com

Kyle Hopkins

Kyle Hopkins covers politics and other stories for the ADN. He covered the 2006 campaign for governor, has blogged extensively about Alaska politics, covered Anchorage city government and was a reporter based in the Mat-Su. He grew up in Southeast Alaska and previously was a reporter at the Fairbanks Daily News-Miner and Anchorage Press. E-mail Kyle at khopkins@adn.com

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Fuel costs & Fairbanks

Posted by Alaska_Politics

Posted: May 15, 2008 - 6:06 pm

From Kyle Hopkins in Anchorage --

The way people talk about high fuel and gas prices in Fairbanks is very different than the way they talk about it in Anchorage. Think full-on crisis versus painful inconvenience.

"The new reality is that the energy crisis that has confronted rural Alaska for years is now confronting the second- and third-largest communities in the state -- that is Fairbanks and Juneau," Fairbanks North Star Borough Mayor Jim Whitaker said today.

The borough recently reported that the average Fairbanks household spent about $2,800 on energy bills. In 2007, the same household spent twice as much -- about $5,700.

"Many people are considering whether or not they can continue to live here," Whitaker said.

He said rising energy costs could be as big or a bigger drain on the Fairbanks economy than losing Eielson Air Force Base would have been a few years ago.

Fairbanks Assemblyman Tim Beck said he paid $146 to fill up his 2004 Ford diesel truck yesterday. Nealry one-third of his monthly electric bill pays for a fuel surcharge, he said.

Beck said he'd just read how Flint Hills might sell its North Pole refinery.

He said: "A concept that just went fleeting through my mind ... Why doesn't the state of Alaska and Golden Valley get together, purchase the refinery and then utilize the - our oil that we're getting instead of taking it in cash. Take the oil, develop it, produce it ourselves, at our own refinery and sell it at you know, basically zero profit as an initial step to help offset the energy costs."

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5 May 17, 2008 - 7:10pm | TheSdog

Economy

Energy costs are clearly a barrier to development. If we could come up with a long term plan to have cheap renewable energy we would have a clear advantage to develop the economy.

These cards are nothing but an entitlement band-aid. Even worse, the program could very easily slip into something that is expected and a long term liability.

I have been looking for a way to slip this link into a blog and stay on topic.

Texas is a microcosm of what can happen if you control the contingency wolves. All of a sudden you have doctors, a booming economy and happy people.

4 May 15, 2008 - 11:38pm | lunatech

Fairbanks electric bill fuel surcharge, will only get worse.....

I do not know what the fuel surcharge in Fairbanks is, but I do know that a lot of electricityy is shipped to Fairbanks from generators in Anchorage. In Anchorage, the electricity is generated mostly on 20-40 year old machines with over 200,000 operating hours on them. These machines burn 30% more fuel than a modern machine, and my guess is that Golden Valley has even worse machines. Alaskan electricity is made from machines, for the most part, that should have been retired to back-up and peaker duty long ago. What is worse is that if any one of these machines has a catastrophic failure, the entire railbelt electrical grid is in deep trouble. Juneau will look like paradise in comparison. I do not know much about the natural gas situation except that it is declining very fast in Cook Inlet. A new turbine compressor has been installed at the Beluga gas fields to help keep things flowing, but this is a band-aid on a big problem. There are no easy fast answers for the mess Alaska's energy industry is in, but I do think the clock is ticking towards severe meltdown soon if something is not done. Wind and solar cannot fix this problem, we are way beyond that at present.

3 May 15, 2008 - 8:01pm | fnord

The next generation of personal transportation

Naturmobil

2 May 15, 2008 - 6:29pm | rfn

Don't lose sight

of the possibility that Exxon or one of their associates might buy it just to shut it down and twist the Valdez knife a little.....

1 May 15, 2008 - 6:28pm | TheSdog

If your city

cannot survive in the present economy then it must be allowed to retract and even possibly go away.

Socialism is not the answer, Mr. Beck.

May 15, 2008 - 10:09pm | Black3

Sdog, this has become tiresome; you simply don't

understand the Alaska economy. Whether you like it or not, Alaska is a socialist state. It was meant to be that way, its Constitution sets it out that way, its government is structured that way. That gives you three choices: you can make that government work in the way you prefer through democratic processes, you can try to get the necessary groundswell of support to have a constitutional convention and change the way the State is structured, or you can leave for some place more to your liking. There is no Door D.

The bulk of wealth generated in Alaska is not generated by private capital or by market actors; it is generated by the sale of collectively, see that word, collective, owned natural resources, principally oil. The revenue from that sale is then distributed in the economy by political rather than market forces; that is socialism, pure and simple and it is the way the State works.

We had something of an argument about this in the late '60s, early '70s where some posited that the best thing to do with ANS revenue was simply distribute it per capita, the so-called Cremo plan was one scheme. That notion was rejected and we have what we have.

Since both the oil and the revenue are the collective wealth of Alaska's people, the current situation of extraordinary revenue to the State and extraordinarily high energy prices to the People makes those prices simply a tax on Alaska's People if that revenue cannot be distributed in some equitable and productive manner. Right now the only people profiting from Alaska's budget surpluses are the Treasury Division, its employees, and a bunch of Wall Street Bankers.

I haven't had time to look at Palin's plan in any detail, but some scheme by which some serious money is placed directly in the economy to offset energy prices is unquestionably necessary. I lean personally towards using some portion of our 12.5% royalty oil for Alaskan domestic needs at a lower than market price, but the devil is in the details and much of Alaska doesn't use oil products refined here because of shipping limitations, so that complicates the case.

So, accept life in the socialist workers' paradise or accept that Alaska Airlines is ready when you are.

May 27, 2008 - 1:17am | Sheridan_Sheraton

Whether you like it or not,

Whether you like it or not, Alaska is a socialist state

???????????

Sorry there are lots of people that earn their money in Alaska and they earn lots more than their PFD checks.

But then again, as far to the wing-nut right as you appear to be, John Birch would be 'socialist,' too.

May 15, 2008 - 10:23pm | TheSdog

You do not have to be a socialist. You do not have to use the AK Constitution to rationalize and justify socialism.

Here are a couple of no-brainers:

1. Repeal the gasoline tax immediately
2. Repeal any state government regulatory fees related to energy that are out there.

Then you spend considerably more than Palin set up for research and development of alternative energy in AK. We need to harness wind, geothermal, hydro and anything else we can. This also should mainly be done in the private sector and done through a credit or grant process. Dare I say maybe a guarantee of a stable tax environment for the projects for a couple of decades.

The last thing you should do is keep handing out free money that will be hard to take back at some point to the general population. You definitely should not be doing it in the places you are always saying exist only to justify a zip code.

What you fail to realize is the "socialist paradise" is attracting the wrong element. There are thousands of people up here, many in Anchorage, here for the better benefits and free money. They are turning the state blue and the entitlement lifestyle will only grow without any meaningful development of the economy if appropriate policy is not put in place.

Sooner or later the resources and money will not be there especially if you just take care of everybody as if they are children in the playpen.

May 15, 2008 - 10:54pm | Black3

No, I am stating the fact of the Alaska Constitution.

We can have an argument about the wisdom of what was done fifty years ago but not the fact of it.

I don't really disagree with much of what you say about the effects of a socialist system; it both attracts and rewards the wrong people, but it is what we have and we will either make the best of it or not.

My personal belief is that socialism is a failed utopian fantasy, but since the house is burning, keep warm.

May 15, 2008 - 10:56pm | TheSdog

The AK constitution does not require giveaways to keep the population entranced in entitlement.

You can move forward without this nonsense.

May 15, 2008 - 11:18pm | Black3

The only real entitlements

under Alaska law are the schools and the PFD; the rest are federal entitlements. We've had "give-away" after give-away since oil came on line. They've come and they've gone.

Hey, it ain't how I'd design a government, but it is what it is; the product of a bunch of New Deal Democrats with all the hubris of the generation that had just won WWII.

May 15, 2008 - 11:21pm | TheSdog

It is a strategy

destined for failure.

The New Deal was the beginning of the end for this country but that is also a conversation we have already had.

May 15, 2008 - 8:57pm | davidg

Anchorage on the dole

Sorry to say but Anchorage has been on the dole as far as gas from Cook Inlet, is concerned, for a generation, or if you didnt have that royalty relief, then your town would be gone. If the rest of the state got the same deal this conversation would be mute.

May 15, 2008 - 10:04pm | TheSdog

Trying to say

that there is no reason other than Cook Inlet gas that Anchorage is here?

You should be writing books of fiction instead of blogging.

May 17, 2008 - 1:52am | Cartman3_15

No, Dog

What he's saying is you are happily the beneficiary of the kind of "handout" you want to deny others.

But you know that already. You just can't own it.

May 15, 2008 - 9:38pm | seewhy

moot, even

;

May 15, 2008 - 8:13pm | seewhy

we're on the verge

of seeing everyplace rendered uninhabitable within the confines of current consumption patterns. where you gonna run?

May 15, 2008 - 10:04pm | TheSdog

Could be

There is no doubt we should be looking at alternatives.

May 15, 2008 - 8:28pm | akgen

space, baby, run to space... be a spaceman!

I wanted to be a spaceman
That's what I wanted to be.
But now that I am a spaceman,
Nobody cares about me.
Hey mother earth,
Won't 'cha bring me back down
Safely to the sea ...
!

May 15, 2008 - 9:42pm | seewhy

'we shouldn't even be

talking about colonizing other planets, when we've done such a lousy job with this one.' --carl sagan

May 15, 2008 - 7:30pm | KatRock_AK

Spoken like someone who has not felt the pain

The fact of the matter is that the resource is owned by the people of Alaska.

Do I need to remind you of the Statehood Compact, the State Constitution, or the body of law that make up the statutes? I will if you really want.

Like it or not the resources that underlie all of Alaska are reserved for the development in the maximum interest of all of us, whether we live in Anchorage or not.

If you think that the terms of our Constitution are "socialism", then so be it...

Change it if you can.

Until then, I hope you find a way to understand that not all Alaskans enjoy the benefits of living in Anchorage that you do, nor should they be required to.

May 15, 2008 - 10:07pm | TheSdog

If a place

cannot survive without government subsidies it should be allowed to fail naturally.

May 15, 2008 - 11:20pm | Emperor

So..

...you'll stand by and watch your neighbors freeze out of principle?

This isn't some academic study. These are real people, families and neighbors struggling to get by when gas was half of what it is now.

Energy costs add to the delivered cost of virtually all products and services. What about the people on fixed income? What about energy costs sucking up budgets leaving less available of other goods and services? Skyrocketing costs and rampant unemployment because you don't want to help your neighbors.

May 15, 2008 - 11:31pm | TheSdog

Emp

Passing out freebies is not the answer.

Repeal the gas tax. Get rid of all other state regulatory fees that are passed on to consumers.

You then invest in long term energy solutions but you still aim to keep it in the private sector.

The state could also promote conservation.

You need to aim money at long term capital improvements. Some things that could be considered short term without the long term potential for liabilities that this presents:

1. State credits for cars with better fuel efficiency.
2. State credits for energy saving electronic devices for individuals and local governments.
3. State credits for any measures that help a structure save energy. One big thing here would be money to improve the energy efficiency of local government buildings across the state to save money over the long run.

If Palin wants to do something else useful in addition then she should get together with some other governors and tell Bush to quit putting oil in the strategic reserve for a while.

Passing out money does nothing to solve the underlying problem. This is a classic case of where the govt should not directly interfere but try to help set the tone instead.

May 16, 2008 - 10:20am | Black3

Much of that stuff has been done Sdog.

The State had a massive retrofit and code modernization in the '80s which brought most residential structures up to what was then economically efficient standards. Everything built since the mid-eighties has been built to an economically reasonable standard. I chose those terms carefully. A little in the way of conservation measures saves a lot, a lot saves a little more but at a very high cost. The heat loss calcs would be very different now using today's fuel costs for some measures that weren't really economical in the '80s, e.g., retrofitting to R-19 or greater walls, R-30 up to R-38 or more ceilings, air-to-air heat exchangers for ventilation needs in very tightly weatherstripped houses and to replace exhaust fans, furnace replacement with more modern, efficient plant. etc. As an example, I was willing to live with my '64 vintage oil boiler until last year. A new one, not even the highest most expensive technology, has saved me close to half of my former oil usage, so I'm paying little more at today's prices than I was a couple of years ago for heat and DHW.

Those programs are still in place, mostly in AHFC, though the outreach and eligibility is not what it once was and the emphasis is on on lower income people, many of whom are in subsidzed housing or already have subsidized fuel which lessens the incentive to participate effectively.

Much of what was State built or built from State funds from the '80s onward was at least designed to a then reasonable level of energy efficiency. As with the residential, at today's prices some techniques might be economical now that weren't then. Maintenance is the real issue with much public infrastructure. Fundamentally, the State doesn't much maintain anything; it has to be done with General Funds mostly and until recently there was absolutely no willingness in either the Executive or Legislative Branches to spend GF; still isn't much. Palin still sticks to the "save it" meme reflexively while Treasury and Wall Street get richer and richer and Alaska's People get poorer and poorer. Maintenance in the villages is non-existent, so only God knows what kind of shape a lot of very expensive State funded structures are in out there.

Anyway, I don't like the every man, woman, and child aspect of this plan and I share your concerns about fraud, waste, and abuse. Also, there is no direct relationship between the number of members of a family and their energy use. Certainly there should be some check on where the money can be used, by whom, and for what purposes. If the State isn't willing to put in these kinds of safeguards, just handing out cash, though a bad thing in lots of ways, is easier and cheaper to do. Of course some would just blow it and be crying for help because their babies were freezing and we'd have to "help the most vulnerable among us" again. I'd really like to see what a well thought out plan to use State royalty oil in kind might look like. I don't know enough about North Pole's capacity v. Statewide usage, but it would seem that with that refinery we could basically sell State oil at a price pegged to, say, the 2003 average price, let the refinery set its reasonable profit, and sell oil and downstream products at a very attractive price within Alaska. As I understand it, about half of NP's production is for jet fuel used principally at TSAIA. A decision would have to be made on use of State oil at pegged prices for that. On the one hand, the people shouldn't have to do without State oil to feed the jets, but on the other have at least some jet fuel at a very attractive price would lower transportation costs within the State and to and from the Lower 48 as well as attract more landings at AIA. Those decisions are what Legislators get paid the big money for.

Coastal Alaska is largely left out of such a scheme though. Because of the shipping issues, most oil and oil products for SE and Coastal Alaska are refined in the Lower 48 and barged, at enormous cost, back to Alaska. One thing that comes to mind is the old 8" military pipeline from ANC, I think, maybe Whittier, to Haines. Don't know what kind of shape it is in but there is a right of way and some infrastructure that could bring refined product to Haines to serve SE. I don't see a solution for the rest of the Coast and other areas that use oil barged from the Lower 48 other than some sort of direct subsidy.

May 16, 2008 - 10:25am | TheSdog

Things could certainly be expanded. There are a lot of ways to save energy.

A final plan is a long way away here. This, as put out there, is a horrible idea. My guess is much of the criticism circulating along with some of the other ideas will eventually be incorporated into something.

This is a pandering move, not one based on sound thought which is what you are trying to do.

May 16, 2008 - 10:35am | rfn

Just this morning

fella I know who sells real estate showed me some material about a state program for energy saving. Involved having an audit done and then getting upgrades followed by another audit to show that the improvements had been made. Rebates were up to $10,000 if the property owner was able to make several steps of upgrade. Less rebate for less improvement.

Looks really nice in concept.

Problem is the word "rebate".

The plan requires that the property owner pay, up front, the cost of the two audits and the improvements. Then, maybe (OK, probably) get a rebate. No mention of where the up-front money is supposed to come from. Maybe a second mortgage?

This pretty much guarantees that a very worthwhile program really is available only to those who have enough loose cash to pay for the improvements and don't really need the rebates.

I could get on board with a program that offered free audits and energy saving upgrades without having to lay out money you don't have.

May 17, 2008 - 9:07am | spotsboy

contact info

do you have any contact info for the state program?

May 17, 2008 - 4:30pm | Emperor

AHFC Program

Home Energy Rebate and Weatherization Programs (Updated 05/13/2008)

Anchorage Weatherization Program

May 17, 2008 - 11:05am | rfn

Contact info

I don't have the information immediately at hand.

I do recall that the documents I was given to read came from AHFC, Alaska Housing Finance Commission (or a very similar name).

I believe you can find it on the state website. Meanwhile, if I see the real estate guy again Monday I'll ask him and post it here.

May 16, 2008 - 11:19am | Black3

That program dates back to the early '80s,

and I used to be a major player in it. Back then, there was a small grant, $300 as I recall, for small, immediate improvements, and low interest, back when that really meant something as residential loan interest was nearly 20%, loans to finance the improvements. Though the program was rife with fraud and abuse, it did some good things. Most of the fraud and abuse was because the State, as usual, really couldn't administer it effectively. If you were a provider with the right friends, you could do no wrong. The politics of the time moved it mostly to the non-profits and quasi-govermentals where there is no waste, fraud, or abuse, because they're all such "good people," but there are some Hellishly high salaries for doing next to nothing.

But, in concept, it is a good program. However, if you have a modern house, say mid-'80s on, saving much on your fuel bill for heat is going to cost one Helluva bunch of money. The immutable law of conservation measures is that a little saves a lot, a lot saves only a little more, and often at enormous cost. Most housing in Alaska was retrofitted to what were then economically appropriate standards in the '80s and codes were revised to those standards. Any houses built since then, if well maintained, are pretty energy efficient. At today's prices there are some technologies that were too expensive then but which might be appropriate now, e.g. air to air heat exchangers for ventilation rather than simple exhaust fans, more modern gas furnaces; gas was so cheap back then that almost nothing paid off in a gas heated house in ANC.

May 15, 2008 - 11:53pm | Emperor

Survival

You really don't get the whole impact of this on people.

Yeah, we have to do something about the underlying problem. How many victims to that underlying problem is acceptable to you while we try and do something about it?

May 16, 2008 - 8:53am | TheSdog

Survival?

When people sell the cards to buy drugs?

When people use them to fill their snow machines?

There are plenty of people who do not even use energy at all individually or who live out of state during the high use months who will get these cards. You can argue many of them should not be getting PFDs but that is hard to enforce.

This is about the worst way to handle this "problem."

May 16, 2008 - 11:05am | Emperor

Now a straw man?

'dog you are losing it.

You don't set public policy based on what some people "may" do to abuse the system.

EVERYONE is affected by high energy costs. If you eat, wear clothes, live inside, use electricity, basically if you exist, you are affected by higher fuel costs.

May 17, 2008 - 1:26am | Cartman3_15

Without the straw man

Dog might actually have to do some homework to get some real facts to support his position.

May 16, 2008 - 12:50pm | TheSdog

The road to

Hades is paved with good intentions.

Look what happened with the debit cards given out for Katrina?

Good public policy takes into account the long term effects of the policy.

Energy costs are a problem but this is not the solution. Take a hard look at some of the suggestions being made by me and others.

May 16, 2008 - 1:10pm | Emperor

None of your...

...suggestions adequately address the immediate problems being faced by people, and businesses all across the state.

I'm all for long term solutions including many of those that you and others have suggested. However, people need help NOW.

May 16, 2008 - 3:31pm | TheSdog

Emp

Blanketing money across the population is a ridiculous solution. This is also a solution that despite the rhetoric will have no end. Now is not the issue if you are forced to keep it going when people keep flashing their "E" for entitlement.

May 16, 2008 - 5:16pm | Emperor

Ridiculous?

The state has the money and the people need help. Giving it to everyone is the most cost effective way to distribute the money. No new bureaucracy needs to be created to determine eligibility or process payments.

You can "think" what ever you want about what "may" be the case a year from now. Perhaps over the next year there will be a better and long term solution.

This silly notion of yours that the government shouldn't do anything because it may be abused or be ongoing is just that - silly.

May 16, 2008 - 5:47pm | TheSdog

Emp

You do not think that these cards will create administrative costs? Get real. There may not be any new investigations needed based on using PFD data but that is not where the issues will end. Look around the blogs and you will see a few questions have already been raised.

The long term problems when you create an entitlement can be immense. Your failure to acknowledge that can only be attributed to true believe in socialism or a need to be naive.

This is not the government's responsibility. Your silly notion that the government should save everybody is more than just silly, it is dangerous. That attitude has been going on in this country for decades and is the main reason we are losing our ability to compete. It is draining the incentive to succeed from the people.

May 16, 2008 - 7:12pm | Emperor

Do you just make this stuff up 'dog?

I said it was the most cost effective way to run this program. Of course there will be some administrative overhead, but insignificant compared to other government programs I would think

I understand about the long term problems whether we help immediately or not.

I know a number of working poor families that don't live extravagantly, have acted responsibly, and are worried about making their food and rent budget this month.

I don't have the coin to help them, but the state does. I hope the state, as in - all of us - act with compassion and give every Alaskan a portion of the wind fall proceeds from record high oil prices.

May 16, 2008 - 7:42pm | TheSdog

Insignificant overhead?

How do you know?

Setting up the cards? Finding a bank or some other institution to run the cards? Making the cards? Ensuring they can only be used for energy? Ensuring the vendors of energy are involved?

The private sector has ways to help the families of which you speak. This should not be the government's responsibility.

May 16, 2008 - 7:56pm | Emperor

They already...

...have the system to distribute and manage the accounts and cards, it's the same used for food stamps which includes what they can purchase with it.

What is private industry doing to help people who need it?

May 16, 2008 - 8:10pm | TheSdog

Emp

That infrastructure still costs money when you add to it.

Look around you to see the private sector at work. There are food banks. There is Anchorage Project Access. There are bills being written off all the time by businesses. People can get help with all kinds of costs. Many of the uilities have programs to spread out costs and charity as well.

If you do not think there are good hearts in industry and business you are misguided.

May 16, 2008 - 8:32pm | Emperor

The cost...

...would be paltry compared to the benefits delivered. We already have the data and vendor, it could probably be added at little cost to existing contracts.

I know there are plenty of "good hearts" in business and industry. I also know a lot of those "good hearts" in small businesses are suffering as well. When people have less disposable income the first to suffer are small businesses.

May 16, 2008 - 1:31pm | rfn

Must have missed the proposed solution:

It involved frog-marching everyone from the villages into Seattle-North where there might be jobs and housing for them someday. Now expanded to include a mass march down The Parks Highway from Fairbanks and across the water from Juneau.

Both places that must be abandoned as energy costs rise and the economy shrinks to "proper" size.

Seems to forget that not everybody can walk on water!

May 15, 2008 - 10:09pm | AK_Lady

Exactly.

May 15, 2008 - 9:15pm | rfn

It's easier

when you understand that there is a mindset that believes Alaska consists solely of the land within the boundaries of The Muni.

Fortunately those who live in Alaska understand the inversion of that thought process.

May 15, 2008 - 7:04pm | Emperor

Turning our...

...backs to neighbors in need isn't the answer either. The state is rolling in greenbacks while it's citizens are struggling to even survive. Sounds like Iraq before the war to me.

You might have told me before, but how long have you lived in Alaska? How much experience do you have in Alaska outside of Anchorage?

May 15, 2008 - 10:08pm | TheSdog

Emporer

Once you let subsidies like this out trying to take them away is like trying to get a genie back in a bottle.

This is just one more thing that proves that Alaskans are nothing but leeches who cannot support themselves.

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