Today's LNG Hearings and Shell's Canadian Setback (Note as you read all these items how closely related energy projects are to the economic health of our economies! Perhaps as enviro activists and hostile local and federal governments attack energy projects in the future these case histories will cause the adults in the room to better and more loudly articulate a wiser way forward. -dh)
ADN by Pat Forgey. Gov. Bill Walker (NGP Photo) is wondering if pension borrowing may be useful in Alaska.
Under consideration are what are known as "pension obligation bonds," borrowing money on Wall Street using the state's strong credit rating, and then investing the proceeds along with the state's retirement trust funds.
| Globe & Mail by Justin Giovannetti. …{Alberta} will run a deficit of $6.1-billion this year, just short of Finance Minister Joe Ceci’s worst-case scenario and the largest in two decades. (More….) Comment. This link came to us from a Lower 48, former Alaskan resident who observed: "Not that population is a single metric to be evaluated; but if you compare a $3 billion+ deficit for Alaska to Alberta's which has a population that is 6x Alaska's with much more infrastructure, it shows how out of whack spending in the Great Land is." -dh |
If the state can borrow money at 5 percent interest, and earn an expected 8 percent on the invested money, the difference could bolster state retirement savings. More.
(Note: we are not opposed to the concept of fully funding the employee pension program via borrowing and would only note that its efficacy is based on an assumption of robust pension fund earnings. However, that is not necessarily negative since it there is always market exposure with any sort of invested trust funds. But there are other practical and political implications which we note without further comment: 1) It removes the argument that Alaska is investing in a risky LNG project using money that could be used to pay down an employee pension unfunded liability; and 2) It eliminates the "optics" of legislators and the governor — who may be beneficiaries of the pension fund — from having someday to fulfill the 'full faith and credit' state responsibility to retirees by advocating a citizens' vote to bolster the unfunded liability from the "citizen owned'' Alaska Permanent fund. This could also be the result of a contentious, class action lawsuit eventually settled by the courts. (3) It provides the benefit of resupplying pension funds at borrowing rates that may be the lowest in history, never available again. (4) It increases by maybe up to $10 billion the overall indebtedness of the state of Alaska which would have an unknown effect on the credit worthiness and thus the credit rating and future borrowing costs of the state. -dh)
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TODAY'S Alaska LNG Legislative Hearings: See the live streaming schedule (House Finance, 1:30 ADT; Senate Finance, 3 P.M. ADT). After watching Senate and House Finance Committees for the last several days, we are impressed with the focus, dedication and fact-finding of these elected officials. On the other hand, we remain concerned about the ultimate effect this Administration will have on the culture of 'Independent Alaska' with its obvious determination to own and/or control energy businesses in Alaska. In today's hearing, some of the perils of government ownership surfaced via excellent questioning of Senate Finance Committee members. We believe the legislators are representing their Alaskan constituents well during the course of their rigorous questioning of all Alaska LNG project representatives and state officials. -dh |
Canada Struggles With Low Energy Prices and Lack of Pipelines….
Within a month after having abandoned its Alaskan Arctic OCS drilling program due to partly to low oil prices, environmental activist delays and federal government roadblocks, the company puts a hold on an oil sands prospect for some of the same reasons. -dh
Globe & Mail by Jeff Lewis. Royal Dutch Shell PLC is scrapping a massive steam-driven oil sands project, blaming the collapse in oil prices and a lack of pipelines to move crude from Alberta to global markets. More… (One wonders how Shell could be so involved with liberal European governments and environmental NGOs in the upcoming Paris Climate Change summit when anti-oil environmental activism is partly responsible for the lack of new pipeline systems in Canada/U.S. and a wasted, six year, $7 billion exploration effort recently abandoned in Alaska. -dh)
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