Prop 1 Boils Down To: Who Do You Trust?

This truck was parked outside the Bear Tooth when I came out of the  Alaska Dispatch News and UAA sponsored debate on Prop. 1. 

It seemed to sum up the question that voters have to answer to vote on this.  Do they trust the oil companies that worked hard to pass SB 21 (that Prop. 1  would overturn)?  Or do they trust those who are saying SB 21 is a giveaway to the oil companies?

Wielechoski and Croft

Speaking for Prop 1 (to repeal SB 21 and return to ACES) were Senator Bill Wielechowski and former Senator and University Regent (when the Board hired Mark Hamilton) Chancey Croft. 

Smith and Hamilton

Opposed were Mark Hamilton,  President Emeritus of the University of Alaska and Doug Smith, CEO of Little Red Services.

It cost $15 a head to get in, but the theater was full.










The debate was moderated by Steve Johnson, speech professor and director of the amazing UAA debate program.  And much of the proceeds were to support the UAA debate program.

Even though this was probably the debate with the most well prepared presenters I walked out still scratching my head over the facts.  Wielechowki went through a history of broken oil company promises and asked why we should trust them now.  Hamilton said it wasn't about trusting the oil companies, but about trusting facts.

But what are the facts?  Both sides cite facts that support their position and both sides say no one can predict the numbers when the facts don't support them.

• Did state oil revenue go up under ACES?  Both sides agree it did.  
• Will SB 21 raise our oil production to 1 million barrels a day as the governor predicted?  Both sides agree that isn't going to happen, but the No side says SB 21 will produce more oil than ACES.
• Would a return to ACES destroy incentives to develop more oil in Alaska?  The two sides disagree strongly here.  The No folks say the high taxes when prices are high scare away oil companies and at low oil prices SB 21 brings in much more.  The Yes folks say the high taxes in ACES are paired with high tax write-offs that spur new production.  
• Did ACES cause oil companies to leave Alaska for North Dakota and other states?  The No folks make this argument strongly.  The Yes side say it wasn't the taxes but the lower costs of extracting shale oil in locations closer to markets. [I heard that in other places, they didn't actually say that tonight.
• Will ACES or SB 21 give Alaska more revenue in the future?  That's where both sides differ greatly.  It depends on whether oil prices stay above a certain level and how much production there is.  And no one can predict that.  

Doug Smith said SB 21 should be given a chance and if, in a few years, the predicted new development doesn't happen, then he will be right in front of the line to get the legislature to change the law.  But with oil companies helping to elect legislators, is that really going to happen?  However, if Prop 1 passes, I guarantee that ACES will be amended in the next session to deal with some of the tax issues when oil is at a very high price.

Other issues that came up:

The Yes side raised the ethical issue of two legislators who are highish level Conoco-Philips employees who recused themselves, but were then told they had to vote and ended up voting in favor of SB 21. Without their votes it wouldn't have passed. The No side said these were honest and honorable men and wouldn't have voted against the state's interests and that not voting disenfranchises their constituents.
The Yes side countered with:  Can you see an oil company employee going back to his Conoco-Philips bosses and saying, "I thought it through and decided against saving you $600 million a year"?
Now, I suspect that an oil company employee probably thinks that changing to SB 21 is a good idea anyway and that their constituents knew they were oil company employees when they elected them.  On the other hand, if legislators who had this kind obvious sort of conflict-of-interest were not allowed to vote on issues they had a direct vested interest in, then voters would know that if there were a lot of oil bills, then a particular candidate would not be able to vote.

Both sides agreed that ACES earned more revenue for the state than SB 21 would have in the last few years - though they didn't agree on how much more.  And they completely disagreed on what would happen in the future.  And since that depends on the price of oil and the amount of oil, we can only guess on that.


It was pointed out that the oil companies very legitimately work to maximize their profits and that bargaining with them requires state negotiators to be doing the same thing for Alaskans.  The Yes folks didn't think having a former Conoco-Phillips attorney/lobbyist act as the state's negotiator was a good sign. 

Wielechowski said that the Norwegian Fund which began in the late 1990s now has $900 billion while our Permanent Fund, begun well before, only has about $51 billion.  Smith countered that Norway continues to tax its citizens at a high rate and uses only a tiny percentage of the fund each year.  He personally didn't want to pay that kind of tax.

But I thought about that.  Since Norway is a country.  Leaving it means changing one's nationality.  Alaska is but one state in the United States and a large percentage of oil company employees either moved to Alaska from other states or commute from their home states to work in Alaska.  Having a state tax and a large fund for the future would weed out people coming to Alaska to make a quick fortune and leave from those who plan to stay.  It would also weed out people who come to Alaska to get the Permanent Fund dividend.  Personally, I'd rather have people here who plan to stay and who are interested in investing in Alaska's future.

There was more, but you get the gist.  I agree with Mark Hamilton that we should focus on facts, to the extent that we can.  The historic facts seem to say that ACES was a better deal for the state than SB 21 would have been - even if people disagree on how much better.  Looking to the future, the facts are more slippery.  It depends on a number of things:

• the future price of oil
• the amount of oil produced
• the cost of recovering Alaska oil compared to the cost of recovering oil elsewhere
• the impacts on large and small producers
• the impacts on old and new fields

In my mind, it really does boil down to Who Do You Trust?  The 'facts' are too complex for most voters to determine, and too dependent on assumptions about the factors listed above for anyone to know with certainty. 

Should the public trust the oil companies who had behind-closed-doors meetings with Gov. Murkowski to come up with PPT which crashed when the FBI found Bill Allen paying legislators to vote for the oil bill?  Who send huge profits out of the state each year?  Who were unwilling to make any promises in exchange for the huge tax cuts they got  in SB 21?  Who are spending millions to defeat SB 21?

Or should they trust those Alaskans who are working on their own time with their own money and who stand to gain no more than any other Alaskan?

There are well known and respected people on both sides.  Some of the difference in opinion can be traced to different world views - Republicans tending to trust business more than government and Democrats leaning the other way.  But the key players on the No side are oil companies, oil industry related companies, and their employees.  Their payoff from the tax cuts are immediate.  


Doug Smith said we should give it a chance (which reflects the latest oil company ads and is far different from the governor's certainty when he was pushing this in the legislature) and come back in three years if it isn't working.  I think the odds of that happening are pretty slim.  After the last round of redistricting we're likely to have strong Republican majorities at least until the next census data in 2020 and redistricting, and they're not going to repeal SB 21.  But, if Prop 1 passes, there's no doubt in my mind that ACES will be on the table for changes in Juneau next session. 


What I think everyone should agree on, is looking at what Alaska will do when the oil runs out.  We've been kicking that barrel down the road since the oil began to flow.  Both sides pointed out that our (Republican-controlled) administration and legislature have spent wildly the last couple of years.  And since we don't have $900 billion, or even $100 billion, in our Permanent Fund, we need to start thinking seriously about the future.

"Alaskans should be partners with oil companies, not adversaries" Sounds Like "The lion shall lie down with the lamb"

The first quote is the title of a Mike Dingman editorial in the print version of the Alaska Dispatch News.  Online, the title is "Dingman: Alaskans should not repeal oil tax cuts."  

But near the end, he does write, "I would contend that a partnership much better serves our goal at developing our natural resources for the greatest benefit of all Alaskans."

The market, we are told, over and over again, works because of competition.  When business folks start talking about partnership with government, I get worried.  They rail against government, until they think they can get something from government.

The oil companies' main purpose is NOT to drill for oil, but to maximize profit for their shareholders. It's certainly not to help the people of Alaska.  There's nothing in their mission statements about that.   They're playing a zero-sum game:  the more money the state keeps the less the oil companies get.  The more the oil companies make, the less the state makes.

But now they're talking variable sum:  lower taxes will result in greater production and greater revenue for Alaskans. But like any good salesman or poker player, they're using all the terms that they think will persuade voters, but they're not offering any proof or promises to back up their words.  It's just platitudes. It's theory, not fact.   

Two Alaska Senators challenged the governor to agree to repeal SB 21 if it doesn't result in one barrel or one dollar more than ACES (the previous oil tax) would have brought in by 2018.  They were derided by the governor's friends as gimmicking.  But, if the governor really believed in SB 21's superiority (in terms of long term state revenues) to ACES, he should have readily agreed.  The truth seems to be that the governor isn't really sure.  It's all a poker bluff. 

There is a natural conflict between the state and the oil companies.  Actually there are more than one.

First, the State's job is to maximize Alaska's natural resources for the benefit of the people of Alaska.  As owners of the oil, its the governor and legislature's job to get top dollar for Alaskan oil.  The oil companies' goal is to maximize their shareholders' profits.  Zero-sum game.

Second, the state's job is to monitor the oil companies to make sure they comply with all state laws and regulations and the companies, in their attempts to maximize shareholder profit, are constantly tempted to find ways to cut costs - leading to things like oil spills because they were cutting on maintenance or moving oil rigs into bad weather to avoid taxes. 

In both the above cases, the companies denied what they later pleaded guilty to.  We really can't take them at their word, they've proved that over and over again.  Remember how Exxon dragged out their payments over the Exxon Valdez oil spill for over a quarter century?

The government is already at a disadvantage when negotiating with the oil companies - most state information is available to the public, but the oil companies aren't required to disclose their information.  (Yes, lots must be disclosed to regulators, but they have far more hidden at negotiations than the state does.)

The state and the oil companies are adversaries - a role the founding fathers saw as the way to keep checks and balances by giving different powers to the executive, legislative, and judicial branches.  

There are times when the state and private organizations can work in partnership, but Alaska's ownership over its oil puts it in an adversarial relationship with the oil companies.  We aren't partners.  We're competitors who can sometimes cooperate.  But my confidence in Alaska's ability to bargain aggressively for the people of Alaska is greatly reduced when the head of 'our team' was an attorney and lobbyist for one of the oil companies before becoming governor.  

Saying we should be partners is a noble goal, like the lion lying down with the lamb.  (Or with the wolf as this post says was the original wording.)   I'll let all those opposing Proposition 1 let their lambs sleep with lions and watch what happens, before committing my lamb, or my state, to the lions.  

I'm all for variable sum games.  Looking at the world with a zero-sum lens is short sighted.  But the other side has to really be serious about variable-sum and there's nothing about oil companies that suggests that's their mode.  They may well believe their own rhetoric, but their failure to make any concrete commitments in exchange for SB 21 says lots more than their words. 

Untangling The Oil Tax Wars - Wednesday July 23, 2013 7:30pm Loussac

One side would have you believe that the oil companies are great corporate citizens who love Alaska, generously provide lots of jobs and funding to local organizations and would reluctantly have to leave the state if the old tax regime were to continue.

The other side would have it that the oil companies are just to profit, could care less if it comes from Alaska or Nigeria, will grab the oil at the least possible cost, protect the environment only to the extent they're forced to,  and will do whatever it takes to buy politicians to pass legislation that helps their bottom line.

As I see it, the pro-oil company faction does its best to hide that discussion by focusing the debate on whether ACES or SB 21 will more likely produce oil and revenue for Alaska.

You can hear some of the most knowledgeable speakers from each side in a debate next Wednesday, July 21 at Loussac Libray.  It's an ISER (Institute for Social and Economic Research) event.  Here's from an email I got the other day.

Invite someone who disagree with you on Prop 1 for dinner first, then the debate.

Forum On the Oil-Tax Referendum: Hear Both Sides

Sponsored by Alaska Common Ground

Co-Sponsors: Institute of Social and Economic Research, UAA 

League of Women Voters of Anchorage • League of Women Voters of Alaska

Anchorage Public Library • Alaska Integrated Media

Last year the Alaska Legislature made a controversial change in the oil production tax, which is the >state’s largest source of revenue. In the primary election scheduled for August 19, Alaskans will vote  on whether to keep or repeal the new tax system—commonly known as Senate Bill (SB) 21. Alaska Common Ground and several co-sponsors (including ISER) are holding a forum on the oil-tax referendum on Wednesday, July 23, in the Wilda Marston Theatre of Anchorage’s Loussac Library, from 7 p.m. to 9 p.m. The forum is free and open to the public. Speaking in favor of repealing the new tax—a “yes” vote to repeal—will be Bill Wielechowski, a state senator from Anchorage, and Gregg Erickson, a long-time Alaska economist. On the opposing side, supporting the new system—a “no” vote to keep the new tax—will be Brad Keithley, an oil and gas policy consultant, and Roger Marks, a veteran petroleum economist. Gunnar Knapp, the director of ISER, will moderate the forum.

This event will differ from a number of others that have been held on this issue, because it will focus on getting each side to answer the other side's questions. Please join us to hear what both sides have to say.

When: Wednesday, July 23, 7 p.m. to 9 p.m.

Where: Wilda Marston Theatre, Loussac Library

3600 Denali Street, Anchorage

Alaska Common Ground is a non-profit organization that works to engage Alaskans in conversations about major public policy issues facing the state.

For more information, go to www.akcommonground.org or call (907) 952-3353.

The atmosphere was quite "McCarthyistic," - I Don't Think So

It seems we're down to "Yes" or "No"; that we're down to ACES or SB 21.

That's not at all how we should be thinking about Alaska oil taxes.  ACES wasn't perfect, and SB 21 is far from perfect.  But it's just not either/or.  There is a wide range of options for tinkering with ACES that would take care of what people say is wrong with it - that it's too taxing at the high end.  But if that were the problem really, I'm guessing it would have been tinkered with already.  The real problem, as I see it, is that the oil companies, with their former attorney/lobbyist, Governor Parnell, representing the people of Alaska at the bargaining table, had enough power to get a big tax cut. 

Roger Marks is a retired state economist, who is also a friend.  When he published his article on ACES a couple of years ago, he sent me a copy, I read it carefully, and asked him questions.  Other things were going on and it just was too complicated for me to take the time I felt I needed to write about it well.  But basically, I found that his criticism of ACES seemed to boil down to the belief that when oil prices get really high ACES reduces incentives.  I asked at the time whether we couldn't leave things as they were for a while and see what happened and then make adjustments to ACES as needed.  Meanwhile we'd be getting a higher state return than with the alternatives.  I don't want to put words in Roger's mouth, but I recall that he did allow that as a viable option.

ACES can be adjusted.  It didn't need to be replaced, and certainly not with SB 21.  A yes vote on Alaska's Proposition 1 will most definitely lead to adjustments of ACES.  A no vote will most definitely give the oil companies most of what they wanted all along - back when Gov. Murkowski had private negotiations with them and tried to force the oil companies' tax bill on the legislature - events that led to an FBI investigation and a dozen or more people pleading or being convicted.

I cover this as a little historical perspective on the comments I'd like to make now on Roger Marks' Compass piece in the ADN Tuesday, entitled "History of ACES offers perspective." (At least in the print version it had that title.  Tuesday marked the day that the Anchorage Daily News and Alaska Dispatch websites merged, and while I can find an online copy,  its title is different from the print version.)  Marks wrote:

As ACES was going through the Legislature in the fall of 2007, much was unclear about the extent of the scandal. By early November 2007, juries had returned guilty verdicts against two legislators charged with VECO-related corruption. There were many rumors that other legislators, and perhaps the oil companies, might get charged. For example, a published report (a blog post from a KTUU reporter) suggested that 26 total people would be indicted. The public was enraged.
That kind of talk created anxiety for a number of legislators. The atmosphere was quite “McCarthyistic,” the implication being that if you did not support a large tax increase, you were corrupt. Paranoia spread as the bill went from committee to committee, and the tax rates kept escalating. The tax structure that became the final ACES bill passed the legislature on November 15.

Let's get this straight.  What happened in Juneau in 2007 wasn't anything even close to the McCarthy period.  'McCarthyistic' is NOT a synonym for "legislators were concerned about their reelection"  and "paranoia" is a mental health condition you can read about here.  It's not an accurate description of what was spreading in Juneau.

It's true that people often exaggerate and use such terms to make their points.  But Marks is writing as an expert.  His bio on the piece describes his professional background as a petroleum economist.  He's not writing just as a private citizen.    But when he strays into political science and psychology he uses these terms - McCarthyistic and paranoia - like a talk show host.

Let's look at what PBS says about McCarthyism:

Capitalizing on those concerns, a young Senator named Joseph McCarthy made a public accusation that more than two hundred “card-carrying” communists had infiltrated the United States government. Though eventually his accusations were proven to be untrue, and he was censured by the Senate for unbecoming conduct, his zealous campaigning ushered in one of the most repressive times in 20th-century American politics. . .

Known as McCarthyism, the paranoid hunt for infiltrators was notoriously difficult on writers and entertainers, many of whom were labeled communist sympathizers and were unable to continue working. Some had their passports taken away, while others were jailed for refusing to give the names of other communists. The trials, which were well publicized, could often destroy a career with a single unsubstantiated accusation. Among those well-known artists accused of communist sympathies or called before the committee were Dashiell Hammett, Waldo Salt, Lillian Hellman, Lena Horne, Paul Robeson, Elia Kazan, Arthur Miller, Aaron Copland, Leonard Bernstein, Charlie Chaplin and Group Theatre members Clifford Odets, Elia Kazan, and Stella Adler. In all, three hundred and twenty artists were blacklisted, and for many of them this meant the end of exceptional and promising careers.

In Juneau at that time, the FBI had recorded conversations in the hotel room of oil company support industry executive Bill Allen during the legislative session as he told legislators how to vote.  Juries convicted two Alaska state legislators based on tapes which showed that money was given to them for votes.  Others involved cooperated with the FBI and pled guilty without a trial.

No one held innocent people in terror, wrongfully deprived them of their livelihoods based on totally made up accusations.  If legislators were afraid that the voting public might think them corrupt, it might have had something to do with the amount of money they got from the oil industry and their votes on oil taxes, not on some totally false accusations.  Or maybe it was because they were hat carrying members of the Corrupt Bastards Club.

Comparing Juneau in 2007 with McCarthyism suggests ignorance of the facts of McCarthyism (or Juneau), a serious problem with analogies, a careless use of terms, or a combination of several or all.

When people make comparisons to Nazi Germany, there tends to be a strong pushback, even if the comparison is accurate and limited to a specific aspect of Nazi Germany, such as their propaganda machine.   I don't think my reaction here is that kind of pushback.  I just think that McCarthy was a far more significant threat to many, many more people, plus the details of the McCarthy hearings have no counterparts in what happened in Juneau.  I don't see any part of McCarthyism that fits here:

• the level of fear wasn't the same
• the people affected weren't innocent members of the public
• any danger to the Alaska legislators came from the electorate
• no tribunal was set up to persecute innocent people 
• people didn't lose jobs simply because their name was on a blacklist
• there were no false accusations that were totally made up
• those who were accused could have a fair hearing in a federal courtroom

I'm just saying that, unlike the McCarthy period, if legislators were worried about their reelection, they probably had good reason to be based on their own behavior, and the legislators were totally unlike the private citizens who lost their jobs because of McCarthy's baseless accusations.

Legislators are threatened all the time by private interests if they vote 'wrong' on an issue.  The targeting of candidates by people and groups like the Koch brothers, Karl Rove, or the NRA cause a lot more election angst than any of the Alaska legislators could even remotely have felt, yet no one compares that to McCarthyism.  And they shouldn't.  In fact, when Sen. Harry Reid called the Koch brothers 'un-American,' Mother Jones editor, Daniel Schulman, responded:

You know, I think it’s a very dicey strategy by Reid. He has actually come out and called the Koch Brothers un-American. Now, that’s kind of an absurd thing to say. And it’s almost McCarthyite rhetoric.

But he very specifically linked Reid's use of the word 'un-American' here - the key word that McCarthy used and the name of his Senate committee.

Marks also writes:

ACES passed by the same three-to-one margin that PPT did a year earlier, with the legislature 80 percent the same people. The difference between PPT and ACES can be characterized as displaced VECO frenzy and vengeance.

I'm not saying here that legislators who were afraid of crossing oil company executives when they voted for PPT, a year later were not afraid of crossing voters.  I am saying that any fear of voters' wrath that caused them to vote for ACES was no more McCarthylike than was their fear of the loss of oil company support the year before.  But people take the power of the oil companies as the normal state of affairs here.

FBI surveillance was exhaustive. At the end of the day four legislators were found guilty of felonies related to the VECO scandal: 56 out of 60 were not. Most likely those four did not affect the outcome in 2006; they were not the most influential lawmakers. There was no evidence of taxpayer (oil company) culpability.

The FBI surveillance may have been exhausting but it wasn't exhaustive.  It was surveillance of one hotel room in Juneau during one legislative session and a few folks wearing wires for a short time.  No one was recording in oil company boardrooms or even oil company phones that we know of.  And, in fact, there was some evidence of "taxpayer (oil company) culpability."    There was a mention of Bill Allen making a report of how he was doing with legislative votes to an oil executive, but that didn't get followed up.

Finally, I'd note that Marks also writes:

SB 21 will bring in more revenues than PPT or the original ACES.

We keep hearing from the governor and all the others who are campaigning against Proposition 1 (the repeal of SB 21, which would have us revert to ACES), that SB 21 will generate more oil production and more revenue for the state.

On June 10  Senators Wielechowski and French challenged the governor.  They cited the state's own forecasts of lower production.  They wanted the governor to put up or shut up essentially.  Their challenge was new legislation that would require:

"If by 2018, SB 21 does not increase oil production by 1 barrel or increase revenue by $1, then ACES would be applied to oil companies retroactively."

They agreed to withdraw support for Proposition 1 if such legislation were passed.  If the governor and those supporting him were as certain that the state (and not just the oil companies) would do better under SB 21 than under ACES, they would have no trouble taking up this challenge.  And they could stop spending the millions they have dedicated to defeating Prop. 1. 


I've really focused on semantics here (the use of 'McCarthyistic') rather than substance.  That's mainly because getting into the nitty gritty of the two tax measures is very complicated.

But I'd note that both Scott Goldsmith (who recently published a report saying SB 21 was a better deal for the state than ACES) and Marks are economists whose analysis is totally focused on numbers, many provided by the oil companies, and based on assumptions about oil production and prices they can't be certain of.

In my conclusions, I'm also factoring in the history of the oil industry around the world, the redistricting that broke the bi-partisan coalition, the oil corruption trials of 2007 and 2008, and the knowledge that we (the people of Alaska, the state of Alaska, and the economists) simply do not know the actual numbers necessary to make the predictions.  And we don't know to what extent the oil companies held off investments before SB 21 passed and to what extent they're doing things on the oil fields now to improve numbers to help defeat Prop. 1.  What we do know is that they are investing a lot of money to convince the voters of Alaska to vote no.  And they've made no guarantees whatsoever about production levels or the tax revenues the state might expect to receive.  No reasonable person would risk their own money based on the lopsided availability of information and guarantees that Gov. Parnell and the legislature accepted from the oil companies.  And the people of Alaska have to wonder how well the governor, who used to come to Juneau as an oil company attorney and lobbyist, understood and represented the people of Alaska in negotiations with his former employers.  So, yes, I'm adding politics, sociology, psychology, history, and the study of power to the mix in addition to economics when I conclude that Prop. 1 should pass. 

Some Not So Random Shots At Pride Fest

We didn't get there until after 3pm.  It was a gray day with some light drizzle, but that had ended by the time we got there.




We found ourselves standing next to the No on Prop 1 booth which was right next to the BP Booth.  That got me thinking about who else had booths.  Here are a few.







The Yes on 1 folks had a booth too, but by the time I got around to getting their picture it was almost 5pm and a lot of booths were already being dismantled.






US House candidate Forrest Dunbar was talking with the operations manager for the Alaska Workers Association, Barbara Sarantitis at the AWA booth.

AWA works with low-paid workers and their newsletter says

"AWA members cooperate year-round in organizing a self-help free-of charge Benefit Program that includes emergency food, cloting, preventive medical care, legal advice, non-emergency dental care . . ."

The Evangelical Lutheran Church of America was there letting people know that LGBT folks were welcome at their church.  I didn't see Jim Minnery and his Love Your Gay Neighbor campaign.

Darrel Hess was staffing the Anchorage Equal Rights Commission and Ombudsman table.

The Anchorage International Film Festival had a booth to promoting the GayLa part of the festival.  Three AIFF heavy weights were at the booth when I got there:  Laura Moscatello, the general manager,  and board members Rich Curtner, and Dean Franklin,  who is also their web manager. 

The National Park Service was there as well. 

Wielechowski/French Challenge Governor; Plastic Gyre and Kobuk at Museum - Preview Post

I rode through the light drizzle this morning to check on the press conference being held by Rep. Bill Wielechowski and Sen. Hollis French challenging the governor to stand by his claims.  It was scheduled at the Legislative Information Office which doesn't have any walls at the moment.  I thought that would make an interesting backdrop and I needed to get on my bike and get some exercise.

In this post I'll just give a preview of future posts.

Here are the two legislators at their red oil barrel.  Basically, they said the governor has been pushing SB 21 as legislation that would increase oil production and state revenues compared to the previous tax structure ACES.

Sen. French and Rep. Wielechowski showed in the charts the governor's own agencies' predictions that production and revenue will go down.

They challenged the governor to call a legislative session to pass legislation that says, "If by 2018, SB 21 does not increase oil production by 1 barrel or increase revenue by $1, then ACES would be applied to oil companies retroactively."

I'll put up more details and some video later.

Since the rain had gotten a little more serious by the time I got out of the meeting, I decided to stop at the museum and give it a chance to lighten up a bit.  I'd been wanting to see the GYRE exhibit - about the plastic continents floating in the Pacific - anyway.

WOW!  Everyone should go.  I'll put up more, but here's sneak peek.

 Scientific information of the GYRE is there, but the key is that artists have been invited to do pieces to help bring this issue home.


This "Present From The Pacific"is part of a much bigger piece by Steve McPherson.  I chose the lego pieces to highlight because it  should resonate with most people.  These are items found in the sea or washed up on beaches, packaged into gifts.



This exhibit will be here for the summer - then it travels the world.  We're the first city to see it.  Take the kids.  Don't put it off until September, you might want to go back.

And, of course, this does relate to the press conference I'd just been at, because . . .


. . .well of course, the vast majority of today's plastic comes from petroleum.

I'll have to go back and see if the museum made that connection.  I didn't see it there.

Another exhibit I almost missed because it's all by itself on the top floor is a series of photos of the Kobuk sand dunes and some explanation of how scientists today are studying the dunes to get clues about the sand dunes of Mars.

Kobuk Sand Dunes from photo at Anchorage Museum

And then I got back on my bike in something a little more than a drizzle and made my way to the bike trail which is so incredibly beautiful now, even in the rain.  Flowing down the green trail on my bike seems to cleanse me of the detritus of civilization (like the plastic gyre).

"Yes, but we're not Congress, aren't we?" Giessel Said

Wednesday I reported that Sen. Hollis French had sent a letter to Sen. Cathy Giessel requesting that the witnesses - oil company representatives - be asked to testify under oath.

For those who want just the summary, scroll down to:  It All Seems to Boil Down To


That afternoon, the committee met and the Anchorage Daily News reports that Giessel opened the meeting by saying they would not administer oaths and when French attempted to respond to her, she had his mic shut off and the televised portion when silent.

Obviously, the issue, as far as Giessel was concerned, was not open for debate.  I've tried to glean from the Daily News article by Rich Mauer   Giessel's main objections.  This snippet seems to get most of them which I've highlighted:

“It’s unfortunate we have to have this kind of duel on the floor,” she said. Acknowledging that the use of sworn testimony wasn’t quite without precedent, she said it was last used by the Legislature in 1997.     
“We are to conduct ourselves with some decorum, and to spring that on people who are coming to testify would simply be unprofessional of us,” Giessel said. “I’m not an attorney, as the previous speaker is, but it is my understanding that the preparation for testimony under oath is a different type of preparation than simply coming and providing information.”    
As the Senate broke, French said as he was leaving the chamber that his request was hardly extreme. “You can’t contest a traffic ticket without taking an oath,” he said.    
At her desk in the chamber, Giessel talked to Senate President Charlie Huggins, R-Wasilla.     
Doesn’t Congress swear in witnesses? a reporter asked.     
“Yes, but we’re not Congress, aren’t we?” Giessel said.     
“This is redneck Alaska,” Huggins said.    
“There was no criminal activity that was being investigated,” she said as Huggins called her away.

Additionally, Giesel is quoted as saying the request was:

• “unprecedented and inappropriate.”
• “Springing an under-oath requirement on invited citizens at the last minute is not only unfair but unprofessional,” Giessel said. The request by French, a former prosecutor, would bring a “criminal justice approach to this committee meeting,” she said. 

My reaction Wednesday, and the reaction of some others I talked to, was, "Gee, I thought it was expected that you told the truth."  But it turns out that unless you are sworn in, you can't be prosecuted for perjury.  So, if you lie, there are no legal consequences.

Let's look at the arguments one by one.  

• "to spring that on people who are coming to testify would simply be unprofessional of us,”
  There are two parts here.  1.  The timing and 2.  asking them to testify under oath. 
• Sen. French's letter is dated one day before the committee hearing.  I'm not sure when the witnesses were announced.
• Unprofessional is a word that many people use when they disagree with a practice.  Essentially it's a fancy word for 'bad.' For 'unprofessional' to have real meaning, one would have to cite a professional association (in this case relevant to legislative hearings) that has among its rules, regulations, or standards something about asking witnesses to testify under oath and/or related to a time limit.  
• "preparation for testimony under oath is a different type of preparation than simply coming and providing information."
• My sense of this, confirmed by an attorney friend, is that this isn't wrong, but it depends on the context and the experience of the people testifying.
• If under oath, it isn't hard to say, "I'm not sure of these numbers" or other qualifying comments.  In fact, the ConocoPhillips presentation even had a 200 word disclaimer (see below) on their forecasts. 
• These oil company representatives were not there to casually provide information.  These are well-paid professional spokespersons,  trained in presenting their corporations' views.  They had Power Point presentations (see below) that someone had clearly spent a lot of time preparing. 
  
• "we’re not Congress"
  I'm not quite sure how to interpret what she meant by this.  Obviously, the Alaska legislature is not the US Congress, but it is to the state of Alaska what Congress is to the United States.   Some possibilities:
• She may have meant that unlike Congress with all its intense security and many other restrictions, the Alaska legislature is much more casual.  And that is certainly true.  Anyone can walk into the capitol building and up to any legislator's office without going through security.  And being more casual, we don't have to administer oaths. 
• Or perhaps she meant we aren't gridlocked like Congress.  In Alaska the minority has no power to stop whatever the majority wants to do.
  
  However she meant it, it's more than clear that few other issues than SB 21 and its impact on oil companies will have greater impact on Alaska's future.  The oil companies are spending millions of dollars to defeat a proposition to overturn SB 21.  No one in Alaska has a greater financial vested interest in any legislation than the oil companies have in SB 21.  They have every incentive to make it appear that SB 21 has stimulated them to invest more in Alaska and to create more jobs in Alaska.  And that could include misleading testimony.
  
• There was no criminal activity that was being investigated  Note:  She didn't say there was no criminal activity, only that (if there were), it wasn't being investigated.  But we do know that battles over oil tax funding have, in the not too distant past, involved criminal activity that netted a dozen or so pleas and/or convictions.
   
• “unprecedented and inappropriate.”
• Sen. Giessel herself already corrected the unprecedented claim
• Inappropriate is like 'unprofessional' but even more vague.  It's a way of saying no in polite language but without giving a reason.
  
• "unfair but unprofessional" Unprofessional has already been addressed.  But we don't know what she meant by 'unfair.'  It's unfair to ask people to swear that what they are testifying is the truth?  

I checked with Sen. French's office to see if any reports were submitted to the committee.  Each oil company representative had a Power Point presentation (see below), but nothing too heavy with words.  My thinking was that if they had prepared reports that they knew were not quite truthful, it would be hard to withdraw them before the hearing.  But if you look at the presentations linked below, there's simply not that much content that could be faulted for perjury. It's mainly about plans, which can always be changed. There are claims about how much new money has been budgeted to be spent in Alaska this year and in the future.  Discussions about new projects and new work.  There is even language that talks about new investment in relation to SB 21:

Plans for over $2 billion gross in production adding investments announced since passage of SB21

Note that this only talks about timing, not about cause and effect.  Since the oil companies are in control of when they announce things, there's no reason to believe that this wouldn't have happened if SB 21 hadn't been passed.  Certainly these things take a long time to plan and cost out.  If the passage of SB 21 was the reason for this new investment, then surely they would have said so. But I didn't see that claim in their written documents, only that it happened after SB 21 was passed.

It All Seems To Boil Down To:

Essentially, from what I can tell, this was a show hearing.  SB 21 gave the oil companies a $2 billion a year tax break, which the governor said would increase oil production and state revenue and jobs.  Prop 1 on the Alaska ballot in August would repeal SB 21.  The oil companies were being given a platform to prove how the passage of SB 21 was making Alaska a better place.  French wanted to require them to be subject to perjury prosecution if they lied. Giessel didn't. 


The Reports 

The reports that are linked online through Basis - the legislative website - are essentially Power Points with some text.  I've highlighted the main text below.  The links should take you to the reports themselves.

• Respol - basically pictures
• ConocoPhillips - pictures and text
• $1.7 billion net 2014 Alaska capital budget - 1750 new jobs
• 2014 exploration update
• Plans for over $2 billion gross in production adding investments announced since passage of SB21
• ExxonMobile- mostly pictures with a bit of text, here's what appears to be the key text:
• More than 729 positions on the slope, many of which are rotational
• 1,200 positions statewide
• 85% Alaskans
• Out of 92 companies, 73 are Alaskan
• BP   - Pictures and fair amount of bulleted text, below is their Investments in Alaska Summary:
• Actively investing in the North Slope oil fields
• Acquiring new seismic data in Northern Prudhoe Bay – 190 sq. miles summer and 220 sq. miles winter season, 150 jobs, ~$78 million, 55 million barrels resource potential
• Adding 2 new rigs with 200 jobs, $1 billion over 5 years – currently 7 rigs • Testing new drilling completions technology for challenging oil fields.
  i.e.: Sag River potential resource 200 million barrels
•  Restarted development Milne Point drilling in 2014
• Appraise/Select stage engineering for West End Prudhoe Bay with potential startup in 2018, $3 billion, peak 2022 est. 40,000 bopd
• Major facility investments committed to safe & sustainable operations, for example $76 million in 2014 Turnarounds with over 700 people involved, including GC2 Module built at NANA’s Big Lake facility – 79 jobs, $13.5 million, potential 2,000 bopd.

Here's the ConocoPhillips disclaimer:

The following presentation includes forward-looking statements. These statements relate to future events, such as anticipated revenues, earnings, business strategies, competitive position or other aspects of our operations or operating results. Actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict such as oil and gas prices; operational hazards and drilling risks; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas development projects; unsuccessful exploratory activities; unexpected cost increases or technical difficulties in constructing, maintaining or modifying company facilities; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations or from pending or future litigation; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; general domestic and international economic and political conditions, as well as changes in tax, environmental and other laws applicable to ConocoPhillips’ business and other economic, business, competitive and/or regulatory factors affecting ConocoPhillips’ business generally as set forth in Item 1A of ConocoPhillips’ 2012 Form 10-K and in our other filings with the Securities and Exchange Commission (SEC).

Other notes:

I also called Sen. Giessel's office to ask her about these statements and to see if I had missed anything.  I talked to an aide, who, after my first question - about what professional standards the Senator was referring to when she said it was 'unprofessional' said he'd have the Senator call me back and answer the questions.

That was Wednesday.  My cell phone did ring.  I got a call from "an inmate of Grayson County" that I could accept for $9.99. I assumed it was not Sen. Giessel so I hung up.
It's Saturday now and there have been no messages from her on my phone.

Title Note:  I didn't comment on Sen. Giessel's grammar because:
a.  it's not really relevant
b.  it's a quote and not necessarily accurate
c.  much of our spoken English wouldn't pass grammar tests when written down

Apparently Lying To The Alaska Legislature Is OK

[UPDATE April 12, 2014:  Follow up post here.]

I got a copy of a letter* that Sen. French sent to Sen. Giessel about this afternoon's Resource Committee hearing.  He asked her to swear in the witnesses from Repsol, BP, and ConocoPhillips and ExxonMobil, who, he expects:

". . . will be generally trying to establish that SB 21 is 'working' and that negative consequences would result if SB 21 were repealed by the voters in August. "

He goes on:

"There is no issue of greater importance to the economic future of the state than this one. Alaska has struggled since statehood to set a fair oil tax. Our obligation as elected representatives should be to elicit the most reliable and trustworthy information that exists on the topic and to make it available to our constituents. 

AS 24.25.060 gives you, as chair of the Resources Committee, the authority to administer an oath to witnesses appearing before your committee. While this power  is not normally invoked in the Legislature,  it is of course a matter of everyday routine  in the court system.  By this letter I am requesting that you use your authority under our laws to swear  in  the witnesses who appear before the committee at tomorrow’s hearing.

I believe that as citizens and as legislators we have an obligation to seek the truth and to promote it."

I didn't realize that witnesses before legislative committees weren't expected to tell the truth.  I called Sen. French's office and spoke with an aide, Alex, who said that if a witness does not testify under oath, they cannot be prosecuted for perjury.  And thus, if they aren't truthful, it has no legal consequences to the witness.

It seems Sen. Giessel's options are to say:

• "Sure, why not?  They have nothing to hide."
• "We don't swear in most people and swearing them in would be an insult to their integrity."

In Sen. French's press release, he notes:

"The investigation surrounding the grounding of Royal Dutch/Shell’s Arctic drilling rig, the Kulluk, had a role in French’s decision to make the request.    Through a series of problems the Kulluk went aground.  Questions arose about whether Shell took the risky move of a mid-winter tow to avoid paying millions in state property taxes.  A Shell executive told the press that tax considerations had nothing to do with the move.  The same executive later admitted under oath that Alaska tax laws influenced the move."

I covered the Kulluk press releases last year and remember them denying that the tax issue played a role.

In a fair world, Sen. Giessel would  have no choice but to agree to swear them in.  Is there a choice between risking insulting a witness by asking him to take responsibility for telling the truth or making sure the people of Alaska are guaranteed that if the witness lies, he could be prosecuted for perjury? 

In my mind, not swearing them in would be an insult to the people of Alaska. 



You can watch the meeting which starts now (1pm Alaska Time) here.
[UPDATE:  This is the House Resource committee.
The Senate committee starts at 3:30pm. You should be able to get it here.] *No special scoop, it was in a press release emailed to me and zillions of others.

Roll Call Reports On Mary Beth Kepner Discipline

Rollcall reported yesterday:

"FBI Director James Comey told a Senate subcommittee Thursday that an agent faced discipline for conduct related to the investigation of late Sen. Ted Stevens.

Comey was ready for a line of questioning from Republican Sen. Lisa Murkowski about the FBI’s conduct in the probe of her former Alaska colleague. Murkowski asked for an update from 2012 on allegations made by FBI whistleblower Special Agent Chad Joy about inappropriate conduct by a fellow agent.

“I did learn about this in the last week and get briefed in detail. The Office of Professional Responsibility (OPR) inside FBI did investigate in response and identified an agent who had engaged in improper conduct there, and the agent was severely disciplined,” Comey said. “The discipline has been imposed.”
Comey was sworn-in as FBI director last September, succeeding longtime director Robert S. Mueller. Mueller previously faced questioning at the Appropriations Subcommittee on Commerce-Justice-Science about the Stevens case from both Murkowski and then-Sen. Kay Bailey Hutchison, R-Texas."

I attended and blogged the three trials in Anchorage.  When Chad Joy's so called "Whistle-blowing" document was released, I reviewed it in great detail.  As I saw it, the charges could be broken down into two categories:

1.  How Agent Kepner ran the investigation
2.  Misconduct involving the handling of information at the trial

I found the complaints about the investigation to be about subjective issues of administrative discretion (things like how close do you get to a source and what information do you tell a source) and not about breaking any clear laws or regulations. [In fact, he never cites any laws or regulations or policies that were violated.]

I would also note that there was nothing in Joy's memo that showed concern that the behavior might result in injustice for any of the defendants.  The 'victim' of her alleged misbehavior was Chad Joy himself.  He complained she told witnesses personal information about him and there was a sense that he was worried things would go bad and he didn't want to be blamed. 

I had no way to judge the allegation regarding what happened with information at the trial, but I was struck that he provided few specifics about what he thought had been done wrong.   The only specific details he gave were about a meeting that Kepner had with their key witness in a hotel room which he used to suggest they were having an affair.  I discussed that allegation in depth in this post. 

And here's a post I wrote in November 2010 trying to understand the general context of the investigation itself.

I mention all this because the media coverage has tended to jump all over Kepner and I see this as far more nuanced.  After all, she's the agent who set up the surveillance of Bill Allen's hotel room that revealed how he was managing key legislators' votes regarding changing oil taxes.  The reporting doesn't ring true with my impressions of the agent I had a few opportunities to talk to in some depth.

I don't know what happened.  I recognize that that the FBI and prosecutors in general often have extraordinary power over most defendants and they do a lot of stuff we don't know about to intimidate suspects into cooperating.  I also know that getting information about white collar crime is extremely difficult and without insider informants almost impossible.  And whenever you use informants, lots of tricky issues arise.  And there was some mishandling of evidence.

But the Ted Stevens team had the money and brainpower to take on the FBI and the DOJ and while they lost in the trial, they did 'win' in after trial maneuvering.

Andrew Longstreth quotes Jeffrey Toobin in an The American Law article about two young Jersey attorneys beating the law firm that defended Ted Stevens.  He writes about Brendan Sullivan:

In court, however, Sullivan is often silent during pretrial proceedings. According to a story repeated in legal circles, a judge once asked Sullivan about his lack of involvement during a hearing. Sullivan pointed at the jury box and said: "I work when they work." Arguing pretrial motions is often the job of his partner, Barry Simon.

Longstreth continues:

"There are no school yard fights," says Toobin, who was the junior member on the North prosecution team, about Simon. "Every battle is nuclear warfare. Everything is prosecutorial misconduct." (Sullivan declined a request to speak for this article. Simon did not return calls.) 

Everything is prosecutorial misconduct.  That's part of the Sullivan strategy. The team is good at defending high profile defendants, for very large amounts of money, and forcing the prosecution to make errors.  That's no excuse, but it does shade the story differently than most coverage. 

It's possible that the main offense Kepner committed was to catch Republican legislators, particularly Stevens.  And to interrupt the oil companies' influence in Juneau.  The infractions Stevens committed are dismissed as minor given all the pork he brought to so many Alaskans, but Kepner's infractions are used to define her and all her accomplishments are dismissed.

Cliff Groh, who attended the Stevens trial in DC and believed that Stevens would have been convicted without the evidence that was tainted, in one post cites interviews with jurors who found Stevens not credible.  It wasn't just the recording of Stevens telling Bill Allen

"that the worst they could expect was 'a little time in jail.'” 

I think there's a much bigger story behind all this.  With the prosecutions behind us and Kepner and others in the prosecution team disciplined, the oil companies are once again as cozy with Alaska's governor and legislators as they were before this diversion that Agent Kepner started.. 

Exxon-Valdez Almost 25 Years Ago - Plus Some South African Courage

In anticipation of the 25th anniversary (March 24) of the Exxon-Valdez oil spill, retired UAF professor Richard Steiner has a Huffington Post reflection piece Exxon Valdez 25th Anniversary: Lessons Learned, Lessons Lost.

Here are the titles and you can go to the piece to get the details.

1. Oil spill "cleanup" is a myth:
2. Oil spills can cause long-term environmental damage:
3. Oil spill restoration is impossible:
4. Officials habitually understate spill risk, size, and impact:
5. Prevention is key:
6. Citizens' oversight is critical:
7. Liability motivates safety:
8. Oil money corrupts democracy:
9. It's time to end our oil addiction:
10. Need for a sustainable society:

Steiner essentially lost his job for standing up against the oil companies.



Another man who stood up at great personal risk is Horst Gerhard Hermann Kleinschmidt.  From South African History Online, here are some excerpts of a life of a man who stood up to unjust power.

Kleinschmidt comes from a family of missionaries, the earliest of whom arrived at the Cape in 1811. In 1814, Missionary Hinrich Schmelen married one of his catechists, a woman of Khoi-khoi origin he met in Pella on the Gariep, later the Orange River. They lived in Komaggas, Northern Cape where one of their three daughters married Missionary Heinrich Kleinschmidt in 1842.

n particular, three events clouded his career prospects: he had organised for a black speaker to address the students on campus – something the authorities disallowed; he wrote articles about black education, had these published in the local student magazine and provided hundreds of extra copies for students at black campuses where publications containing dissent were not allowed. In 1969 he and other leaders led a student march to the infamous John Vorster Square police station where Winnie Mandela and 20 other people were being held without charge or trial. The protest was against detention without charge or trial. For leading the march he and others were arrested, charged and found guilty under the Riotous Assemblies Act (General Laws Amendment Act). The Rector of the Education College warned Kleinschmidt that he had placed his education career in jeopardy.

In 1971, Kleinschmidt was charged under the Suppression of Communism Act for possession of banned (forbidden) literature after a raid on his flat in Cape Town. The raid resulted from the arrest and murder by the police of Ahmed Timol. Timol appeared to have an address list on which Kleinschmidt’s name appeared. Kleinschmidt was acquitted in court with a warning. . .
In 1972, he started work for the South African Christian Institute led by Dominee Beyers Naude, the dissident White Afrikaner leader. Appointed at the same time was Steve Biko, founder of the Black Consciousness movement in South Africa. The two had collaborated since student days. In that year, the authorities permanently withdrew Kleinschmidt’s passport, preventing him from traveling abroad. When Winnie Mandela was imprisoned for six months in 1974, for breaking her banning order, Nelson Mandela (from prison on Robben Island and through his attorney) and Winnie Mandela, appointed Kleinschmidt as the legal guardian of the two Mandela daughters, Zindzi and Zenani. 1974, the all-white Parliament of South Africa appointed a Commission to secretly probe the activities of the Christian Institute and other organisations. Together with the other leadership of the Christian Institute, Kleinschmidt refused to testify unless the proceedings were held in the open. For this they were charged under the Commissions Act. In Kleinschmidt’s case a ‘mistrial’ was recorded due to technical errors committed by the prosecution. His wife at the time, Ilona Aronson was sentenced to six months imprisonment. But when she presented herself at the prison, she found that an anonymous person had paid her fine. It later transpired that a white politician had arranged payment to prevent her from becoming a martyr to the anti-apartheid cause. In 1975, Kleinschmidt was detained under Section 6 of the Terrorism Act that gave the police powers to detain and interrogate persons without charge or a court hearing. He spent 73 days in solitary confinement. The police suspected him of having been recruited by an underground organisation led by the Afrikaans poet, Breyten Breytenbach who was arrested on the grounds of forming an illegal organisation. When no links between the two could be established, Kleinschmidt was released.

Read the whole bio here.


Makes me feel like I should get to work. 

Alaska's Permanent Fund Dividend For Oil Companies - $2 a Barrel or $28?

Oil companies are making a huge fortune in Alaska.  They already were doing great before Governor Sean Parnell, with the help of the Alaska Redistricting Board, which broke the Bi-partisan coalition in the State Senate, got SB 21 passed this last session. It's like they have their own Permanent Fund Dividend from the state - a $2 billion dollar a year check.  And it's not even their oil.  It belongs to the current and future residents of Alaska.  Bet they don't spend much of their dividend in Alaska. 

Bill Weilochowski, Les Gara, and a few others have been trying to tell Alaskans this story for years.  Another person who's been on trying to get the story out a long time is Ray Metcalfe.  In an Alaska Dispatch article Feb. 14 Metcalfe spells it all out.


Metcalfe has two major points:

1.  BP is making only $2 a barrel in Iraq, but about $28 a barrel in Alaska
2.  Alaska media aren't covering this story because they fear losing oil company advertising.  

On April 28, 2009, Bloomberg Business & Financial News reported that BP makes less than $2 net profit for producing a barrel of oil in Iraq. On March 14, 2010, Petroleum News reported what BP's net profit was under ACES without bothering to mention that it calculated to a net profit of $28 per barrel on their total production. ConocoPhillips' annual report also demonstrates a $28 to $30 per barrel net profit from Alaska oil under ACES. But no news reporter or TV news show in Alaska has ever bothered to tell you how little Iraq pays to the same companies for the same service. 

Metcalfe also speculates about why BP doesn't increase production in Alaska:

In 1995, BP persuaded Congress to let it export North Slope crude, but before it got around to doing so, BP jumped on an unforeseen opportunity to buy Atlantic Richfield Co.'s West Coast refineries and retail gas stations. Arco's refineries were built specifically to refine North Slope crude. BP's purchase of Arco West Coast assets appears to have incentivized BP to abandon ideas of exporting and pursue the much more profitable business of refining its North Slope crude into products to retail in what were Arco's gas stations.
Controlling Alaska crude from the wellhead to the gas pump is very likely the most profitable cash cow BP has. When BP's North Slope production exceeded BP's ability to refine and retail on the West Coast, when BP's West Coast storage tanks nearly ran over, BP further demonstrated the high value BP places on its North Slope crude. Rather than sell its excess crude before returning its tankers to Valdez, BP retained possession, sending several tankers back to Alaska with half their load still in their hulls. Producing more North Slope oil than BP's refined products market share can absorb would likely require export and most certainly shorten the life of BP's Alaska cash cow. It is very likely that the size of BP's West Coast refined-product market share has a lot to do with the rate of North Slope production.

And he shows what BP was willing to do just to make $2 a barrel in Iraq:

In 2009, BP, through a competitive bid process, won the right to produce Iraq's largest oil field, the Rumaila field. The field was producing a little more than 900,000 barrels per day when BP took it over. Iraq only pays BP for actual costs for managing the original production. The contract requires BP to raise daily production to make a profit. As production increases, BP is paid for actual costs plus $2 for every barrel produced in excess of the original 900,000 barrels. Now that the cat's out of the bag, the new talking point for the other side is that it is unfair to compare BP's contracts with Iraq to Alaska because BP had no original capital outlay in Iraq. Unfortunately for the other side, history doesn't support their argument. BP discovered and developed Iraq's Rumaila oil field in 1953. Iraq gave BP the boot for taking too much of the profit in 1961. Fifty years later BP went back to Iraq, hat in hand, and offered to resume pumping Iraq's Rumaila field for $4 per barrel, and Iraq said no. Then BP offered to do it for $2 and Iraq said OK, but only on the increased production. BP's contract requires BP to bring the Rumaila field's production to 2.9 million barrels per day within six years. If they make it they will be making $4 million per day by year six. That's $1.460 Billion net profit per year.

And then, again, compares this to BP's Alaska situation.

At $28 per barrel profit under ACES in Alaska, it would only require the production of 143,000 barrels per day to make the same amount of money. This year the three big North Slope producers will produce about 500,000 BPD and under ACES would have taken home a combined net profit of about $5.1 billion. If SB 21 is not repealed, their combined net take-home will be closer to $7.3 billion.

He also puts BP's jobs promises into perspective:

On October 3, 2013, BP told the Fairbanks News-Miner that thanks to SB 21's tax cut BP will now create 200 new Slope jobs. A positive statement unless one calculates how many jobs the state of Alaska could have created with a billion or two. One billion dollars is enough to create 10,000 jobs that pay $100,000 per year; 2 billion could create 20,000 such jobs. Not many readers would think that a fair trade, but no reporter in Alaska has offered to make the connection for you. 

I guess when Metcalfe says 'no reporter in Alaska has offered to make the connections for you"  he wasn't talking about bloggers.  Because I made exactly that connection almost on November 3, 2013 - How Many Jobs Could You Create For $2 Billion?

For instance I did a post (can't find it though) on this theme showing that for $2 billion a year you could hire every unemployed Alaskan and give them each $30,000 a year for their labor.  Not a great salary, but it gives you a sense that there are probably great alternatives to what the oil companies DON'T promise to do. 

[I still can't find the original post - I even looked in the old drafts to see if it never got posted.  In it I showed you could hire all the unemployed in Alaska for $30,000 a year each, which I figured was a better deal that the oil companies would ever do with the money.]


Metcalfe doesn't offer much data on why the Alaskan media don't report on the gap between oil company profits and in Alaska and in Iraq.  He does point out that readers in other cities get reports comparing Alaska and Iraq oil profits.

The Associated Press Media Ethics, Standards of Principles, under Integrity, includes this line:

The newspaper should report the news without regard for its own interests, mindful of the need to disclose potential conflicts. It should not give favored news treatment to advertisers or special-interest groups.

I'm not sure how you'd prove this.  The Anchorage Daily News could argue it's staff cuts, not fears of losing advertising.  They could also point to articles that do report unfavorably on the oil industry.  But I agree with the premise in the article's headline -

There would be no arguments over oil taxes if Alaska's media were doing its job

Metcalfe, a former Republican legislator, does his homework and has been pretty much on the mark in past criticism of politicians and their ties to the oil companies in the past.

Not too many rational folks would allow a former  oil company lobbyist to negotiate on their behalf with the oil companies.  But Alaskans have allowed, former Conoco-Phillips lobbyist and now Governor Sean Parnell to do just that.

Enough Alaskans have signed a petition to repeal the SB 21 oil tax cut to get it onto the August ballot.   Can a group of citizens defeat big oil in the voting booth?  Stay tuned.