5-20-14 - Gas Pipelines And State Revenue

Our faithful readers will remember the tributes offered them last week on behalf of retiring National Energy Board Chairman and CEO, Gaétan Caron. Today, we provide our Canadian readers with the link to apply for a significant, temporary appointment as an NEB Board Member.

Energy Questions For Voters To Ask Candidates

What do daisies and dandelions have to do with energy and voting?

Dave Harbour

Today, the House Natural Resources Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs held an oversight hearing entitled “Oil and Gas Activities within Our Nation’s National Wildlife Refuge System.”

Today, the House Natural Resources Subcommittee on Energy and Mineral Resources held an oversight hearing on “American Energy Jobs: Opportunities for American Manufacturing.” This hearing examined the growing job opportunities in the manufacturing sector made possible by America’s energy renaissance…."

Alaska's government is using its savings accounts, cash flow, borrowing capacity and bonding capability to invest in all sorts of energy projects. These include an in-state/international gas pipeline/LNG project, an intrastate gas pipeline project, a North Slope LNG trucking project for Fairbanks, a major hydroelectric project and various wind generating and other alternative energy projects.

A number of these could compete against each other, against other energy developments or against energy entrepreneurs and the private market. To be fair, some argue that big projects judged to be in the public interest would not happen without public financing.

Be assured that every project a public official desires for a constituent will require him or her to trade votes and public monies to another public official wishing to also bless his/her own constituents with beneficent gifts financed by others–including the next generation.

In the next few years, the marketplace will have its way with all of these concepts, perhaps pronouncing some to be winners along with some losers.

TODAY, U.S. Sen. Lisa Murkowski (NGP Photo) raised concerns with Lisa Murkowski, US Senator, Alaska, FERC, Norman Bay, Photo by Dave Harbour Federal Energy Regulatory Commission (FERC) nominee Norman Bay about the lack of transparency and due process at the enforcement office under his leadership.

Alaska's history of government owned projects is mixed with what many call a successful Bradley Lake hydro project, Alaska Housing Finance Corporation (AHFC) and various ports, roads and bridges — balanced by unsuccessful dairy, beer, grain silo and seafood processing experiences.

Of course, we don't remember when the state administration or legislature followed state grants and equity ownership with robust, annual forensic audits of state supported projects. These evaluations would try to assure that those projects are free from favoritism, sole source corruption, wasteful spending, an unproductive workforce, etc.

Government and Dandelions

See dandelion-daisy video here

See dandelion-daisy photos here

Dandelions, Invasive, Baxter Blvd, Baxter Road Bible Church, Anchorage, Photo by Dave Harbour It is hard for elected leaders to assure the same efficiency that private investors require.

For example, if you plant a garden in your yard, you will likely water, weed and fertilize it. If a dandelion pops up, you'll pull it out by the roots before it spreads its noxious, invasive seeds.

If you are an elected official, you'll vote to build a landscaped road or highway. And, since you have the 'best intentions', you'll require landscaping that looks pretty, at least for the ribbon cutting.

In the case of Northern Lights Blvd. in Anchorage (and other roads and highways throughout Alaska), builders planted millions of beautiful, long flowering Shasta daises by sprayed seeding on the right of way shoulders. The first few years, they were beautiful…along with the few interspersed Arctic poppies.

The ingenious landscape designer probably convinced government project engineers that this would create the efficiency of both crowding out the weeds and eliminating a lot of grass mowing while creating a beautiful, colorful right of way.

But a few years after construction, 'well intended' street maintenance managers ordered regular mowing at just the wrong times.

In early May, the yellow-headed dandelions emerge, smiling for all the world to see, preparing to evolve into cottony seed and propagate — trillions and quadrillions of them.

Then, in early June, the beautiful daises emerge from their winter sleep.

Street maintenance managers are not landscape designers, so they do what seems natural.

They wait until the dandelions are ready to go to seed, then mow the rights of way just as the beleaguered daises are laboring to bloom. This causes killing of the good flowers, homicidia boni flore, along with their premature seeds — derailing the efficient design purchased with taxpayer dollars.

Yes, all government spending is cloaked in best intentions. It is up to voters to assure that elected leaders limit spending to sustainable, prudent uses because the voters and their children will inherit the debt as well as any benefit.

While we're at it, let's ask the State highway departments and municipal street maintenance managers to please mow down the yellow heads before they go to seed and before planted daisies grow high enough to be cut off by the big landscaping mowers.

Otherwise, let's don't waste money in the future trying to beautify rights of way with specialty plants and landscaping unless there is a plan to maintain them.

Why should our kids be paying off highway and road bonds ten or twenty years from now for landscaping that no one cultivates or protects after the ribbon cutting?

And, for those who say this year it is too late to cut down the yellow heads in time, be on notice that a bumper crop of dandelions is waiting to explode forth with fall seeds later this summer! (Public facilities everywhere pay similar homage to the dandelion, which Alaska officials — ironically — refer to as an invasive plant. This is a photo taken near Northern Lights Blvd. at East High School in Anchorage.)

In the past, we've seen street maintenance cut down the daisies in mid summer then not cut the bumper dandelion crop until after they are ready to release seeds to the summer winds.

So, there's still time to change and take this lesson of the dandelions and daisies to the town hall meetings where candidates invite questions.

After all, don't we owe it to our kids if not ourselves?

-dh

Indeed, since political leaders create government supported projects is it really in the interest of those political leaders to find fault with their "investment" of public monies? Isn't it just more natural to not "rock the boat" if there are no bad headlines…and keep fingers crossed that the project will "be my legacy and not my downfall".

You can bet that, even if a few elected leaders were to take these words seriously and want to require an evaluation of the use of public money in private sector projects, the majority would not want to budget money to enforce best practices. Nor would the majority of elected leaders want to create a process that could expose "a government investment gone terribly wrong".

So where does this lead us?

Solution

We are in an interim stage between legislative sessions. It is a stage wherein the Administration is beginning to fashion its budget priorities for the next year. It is also campaign time, when dozens of citizens are preparing for a primary election in August and a general election in November.

The solution to the dilemma of how to spend public funds well is to question and talk with candidates. Ask, "do you support such and such a public investment in such and such energy project? Can the private sector do it without using state money? If state money is used, how can you be sure it will not be misused? If public funds are misused, what are the penalties? Are you putting public funds into projects that compete with each other or with private sector exploration, production or projects; if so, what is the compelling rationale? In order to build this project with public funds, what will be the true cost after you have agreed to support other state spending in return for the support of colleagues for your project? Will your decisions provide a legacy of opportunity for our children, or a burden of debt?

In questioning candidates, one could also refer to the University of Alaska's Institute of Social and Economic Research finding that a sustainable 2014 state budget is in the range of $5.5 billion. Then compare that with economist Scott Goldsmith's (NGP Photo) review of the Administration's Revenue Forecast of last fall suggesting a 2014 revenue forecast of 5.116 billion. The updated forecast produced this month projects actual revenue to be somewhat more optimistic, in the range of $5.3 billion (but creeping down to $4.5 billion in FY 2015). Revenue would not even be that good over the long term, we believe, had not the Legislature enacted production tax reform a year ago. Now, a voters referendum threatens that tax reform and the future of natural resource investments in Alaska.

In sort, good energy and economic questions for candidates come quickly to mind–with just a little thought.

In this way, we might help to assure our children inherit their full and reasonable birthright that includes:

A state enjoying federal and state policies that truly enable citizens to make a living from natural resources as defined in Alaska's constitution (Article VIII, Section 2); and
A state that has no unfunded liabilities for public employees or other decisions that would indebt our children for our excesses; and
A state that spends within its means; and
A state and citizenry that actually celebrate the natural resource industries which its constitutional dependence on natural resources logically requires;
Among other things.

For further reading on this subject, we recommend: