6-27-13 – Pay Attention to RDC

Pay Attention to RDC

Our Reaction To Yesterday’s Annual Meeting of the Resource Development Council for Alaska (RDC).

by

Dave Harbour

Lest readers think, "Oh, the RDC is just another business organization", we would say: "Pay attention: this group represents the core of Alaska’s economy!"  The group’s membership includes oil & gas, mining, airline, trucking, education, communications, food, forestry, beverage, fishing, retail, hospitality, tourism, Alaska Native enterprises and a variety of other industries.  Together, these are the heart beat of Alaska’s present and future economies.

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We’ll return to the RDC later in this commentary but turn our attention now to the AEDC story (right).  In it, we see that Anchorage’s economy is doing wonderfully and seems ‘healthy’.  This is due partly to earlier state legislation which provided oil & gas exploration and production incentives in the populous, Cook Inlet Region of Alaska.

However, all humans know that the slip from ‘healthy’ to ‘sick’ can occur without warning, very quickly.  And this can happen to cities and states just as it can happen to people.

Alaska’s overall economy may seem healthy today.  But this is not a diversified, sustainable powerhouse at the moment–as those with good jobs and low debt might be tempted to think.

Alaska’s economy is actually fragile  

This is because it leans precariously on the health of one industry: petroleum.  And the political leaders of Alaska over the years have assured that the state is almost totally dependent on the health of the petroleum industry while illogically attacking the health of that industry.  The attacks, most recently initiated during Governor Sarah Palin’s (NGP Photo) administration, emerged through enactment of predatory, high taxes.  In other words, politicians have discouraged the industry investments that support the lifestyles, lives and futures of all Alaskans. 

Politicians have also created one of the biggest entitlement / welfare economies in the nation (i.e. big government).

Alaska’s government is about 90% dependent on the remaining oil moving down the TransAlaska Pipeline System (TAPS) and the overall economy is more than 50% dependent on this oil production.   Today, the TAPS dipstick is approaching the 3/4 empty mark.  (Note: "Dipstick" term: credit to Tom Barratt.)

Federal politicians have further restricted Alaska’s economic potential by creating gauntlents of regulatory obsticles blocking natural resource development, as we have documented ad nauseum in Northern Gas Pipelines over the years.  The federal assault on Alaska also includes impeding activity on state, Native and other private lands–as well as federal land. 

So we have a situation wherein the state government costs are steadily growing as the oil production to support government costs is steadily shrinking.  Don’t forget that local governments and the private economy are similarly dependent on the diminishing economic nourishment the TAPS umbilical cord is able to provide.

A few months ago, the Alaska legislature began to view this unsustainable situation so seriously that they adopted a tax reform designed to encourage more oil and gas investments.  The conservative side of the aisle said, "Lower taxes will increase investment and production."  The liberal side of the aisle said, "Lower tax revenue is not fair to Alaskans."  

After the tax reform act passed, Governor Sean Parnell (NGP Photo) signed it.  

Soon after, liberal coalitions began promoting a voters’ referendum to repeal the tax reform act.  We note that the effort is headed by Pat Lavin, "…who works on climate change and energy issues in the Anchorage, Alaska office of the National Wildlife Federation".   Taxing the oil industry out of Alaska (if not the Nation) would obviously be quite an attractive vision for the several dozen enviro-extremist groups that have established offices throughout Alaska.  A number of free-market related organizations are opposing repeal of tax reform.

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Yesterday, we witnessed two presentations relevant to the issue of Alaska’s economic future–at the RDC annual meeting in Anchorage.   RDC presented the CEOs of a large ANS oil and gas producer and of a large, national consumer energy organization to a room filled with a thousand interested citizens, the Governor, Speaker of the Alaska House of Representatives and a huge assortment of other Alaska business and governmental decision makers.  

BP Exploration (Alaska), Inc. President Janet Weiss (NGP Photo), reported that tax reform had created a more attractive investment climate.  She said that reforming oil taxes improved the chances for an Alaska LNG (i.e. liquefied natural gas) export project since oil production is critical to gas production.  She then enumerated projects planned and occurring as a result of tax reform efforts.   (View Weiss’ entire presentation here.)

David Holt (NGP Photo), Consumer Energy Alliance’s president (NGP Photo), discussed his theme that the path to American energy independence (i.e. possible by 2030) flows through Alaska.  He demonstrated why the dramatic increase of domestic shale production does not diminish Alaska’s potential.  He also noted the importance of a federal government that viewed the natural resource industry more as a partner than an adversary.  (View Holt’s slides here and the video here.)

RDC President Phil Cochrane (NGP Photo) thanked Governor Sean Parnell, and a number of state legislators attending, for their support of tax reform legislation.  He urged members to remain vigilant and involved in energy issues at both the state and federal levels.

Prior to the noon presentation, both keynote speakers met with Cochrane and the RDC board to answer their questions and, earlier, Holt provided a briefing on state and national consumer energy issues to the Regulatory Commission of Alaska at a scheduled public meeting.

A crowd like that, listening to leaders like that, attended by decision makers like that, gathered in support of issues like that … all attests to the value of all citizens paying close attention to RDC.  After all, what is said in such meetings and done as a result is designed to further our way of life by those with the resources to do it.

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(ENDNOTE: For citizens who do, "pay attention to the RDC", we at Northern Gas Pipelines will join you in supporting continuing tax/regulatory reform and improvement of Alaska’s investment climate.  

We will support your efforts to thwart federal government overreach that seeks, along with its environmentally extreme allies, to kill Alaska’s economy.  

We want nothing extreme ourselves: we just advocate for a free market, reasonable policies, honesty, freedom itself.  

We advocate that Alaska become a place where "A deal is a deal"; where "need" takes priority over "greed"; where the rule of law is unchallenged by political agendas.  

We also stand behind citizens from whom great courage will be required to rise and tell an imperial, intimidating, aggressive and intolerant federal government, "You must return to your proper constitutional role."  

We believe the greatest courage will come from Federal regulatory and law enforcement employees who see the waste, abuse and oppression occuring around them, and who then step forward to right the wrong.  For those who so sacrifice, we shall reserve special respect, support and admiration.)