4-28-16 Alaska And Its Democratic Socialist Look-Alike, Venezuela

THE HILL: Energy will play a major role in at least five races that could determine control of the Senate next year. President Obama’s controversial climate policy is looming large in Ohio and Illinois, where the coal industry still employs thousands, while battle lines are being drawn in Colorado, pitting environmentalists against oil and gas companies over drilling.

Read the full story here

“Venezuela doesn’t have enough money to pay for its money“, by Bloomberg’s Andrew Rosati. (Full story here: http://tinyurl.com/jmn46sn)

Please review the above story. Here is a commentary by one of our readers, our mid Atlantic energy analyst who prefers to remain anonymous:

We have been making the point that low oil prices are going to lead to significant economic distress in a number of major countries. The more an economy is oil & gas dependent, the greater the likelihood the economic conditions will spill over into the political arena. Some may find the leadership to make transitions that ease the friction; Saudi Arabia is at least presenting a rational-sounding plan. It at least provides some hope for a transition to less dependence on single commodity in the future.

There is no such luck for Venezuela, at the far other end of the spectrum. They cannot afford the oil services that help keep crude oil flowing. They cannot afford to keep the lights on. They cannot afford toilet paper. They cannot afford to pay the bureaucrats. And now they cannot afford to pay for more money to feed the highest inflation in the world. When they reach the point that they can no longer pay the military, the game will be over.

The point of bringing this up is not suggest a new venue for Bernie Sanders to take his BS. It is to note that there are a large number of countries in which there is likely to be political backlash from reduced petrodollars. Cumulatively, this strangulation will serve as part of the recovery in oil prices. But they are also likely to contribute to continued volatility in the period we call the Era of Affordable Energy (see chart below).

Commentary

“We can love Alaska or Venezuela, but reject their lack of leadership”

Venezuela and Alaska are both blessed with abundant natural resources. We note that both are currently suffering from political leaders intent on buying political support (i.e. power and re election) with subsidies they can no longer afford.

Venezuela is 95% dependent on oil as its economy crashes. Alaska’s economy is 90% dependent on oil as its economy crashes. Venezuela’s leader refuses to give up control of the means of production, good socialist that he is. Alaska’s governor seeks control of the means/transportation/distribution of production (i.e. LNG project equity, In-state gas pipeline & government subsidized Fairbanks gas utility). Both Venezuela and Alaska spend more than they take in. The late President Chavez gained popularity by increasing entitlement spending. Alaska’s governor has institutionalized expansion of Medicaid and maintained subsidies for virtually all other entitlement programs. Venezuela’s past and present leaders demonized oil companies. Alaska’s governor and his supporters have demonized oil companies. Venezuela is a “democratic socialist” nation. Alaska’s democrats have formally supported a “democratic socialist” candidate for President of the United States. No one wants to invest in Venezuela. Who, in his or her right mind, will want to invest in Alaska until its leaders finally come to their senses?

One’s eternally springing hopefulness can only find solace in one conclusion: that the people will become sufficiently united in common sense to reject socialism and begin to give free enterprise the respect and support it deserves.

For a free market — minimally oppressed by taxation and regulation — is the key to prosperity and sustainable, long-term economies in both Anglo and Latin America!

And make no mistake: as Venezuela and Alaska have discovered, the mere act of ‘democratically electing’ socialists who want to control you and everything you depend on to thrive does not sustain freedom.

Democratically elected socialists (i.e. Chavez and Hitler) were just as ruthless, economically ignorant and hard to eject as socialists (i.e. Lenin, Castro and Pol Pot) who maintained power by force.

-dh

Footnote: Apologists for Alaska’s leadership decisions over the years could criticize us for comparing Alaska to Venezuela. Admittedly, the countries have at least as much as differences as they do in common. However, we believe in learning from history.

History teaches that socialist takeovers of societies are often disguised as populist movements to give more, “power to the people”, when, in reality, those takeovers enhance government control over the citizens and their free enterprises.

So…we will freely admit that Alaska is in far better shape than Venezuela. However, we also hope our critics will admit that some of the traits the two governments share could be prudently regarded as warnings to Alaska that a bloated, populist government — not restrained in time — could very well displace the optimistic investment of free enterprises.

About the Author: wpnorthern

Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska, a Commissioner Emeritus of NARUC, NARUC's Official Representative to IOGCC and Vice Chairman of NARUC's Gas Committee. He served as Gas Committee Chairman of the Western Conference of Public Service Commissioners. He also served as commissioner of the Anchorage Bicentennial Commission and the Anchorage Heritage Land Bank Commission. He earned a Bachelor of Arts Degree: English, at Colorado State University, a Master of Science Degree: Communications-Journalism at Murray State University and graduated from Utility Regulatory School for Commissioners at Michigan State University. He served as a Vice President for Communications and Public Affairs at Alaska Pacific University, taught bank marketing classes at the University of Alaska and was an English teacher at Los Alamos High School. Harbour served in ranks of Private - Captain during a 4-year assignment with the Army in Korea, Idaho, Georgia and Fort Meade and received the Meritorious Service Medal among other commendations. Harbour is also a past Chairman of the Alaska Council on Economic Education, the Alaska Oil & Gas Association Government Affairs Committee, the Anchorage Chamber of Commerce, the Export Council of Alaska and the Department of Commerce's District Export Council. He is a past President of the Alaska Press Club, American Bald Eagle Foundation, Consumer Energy Alliance-Alaska and Common Sense for Alaska. Harbour was instrumental in founding the American Bald Eagle Research Institute (UAS), the Alaska Support Industry Alliance, the Downtown Anchorage Business Partnership, and Arctic Power. He also served as CEO of several small Alaska organizations, including the Anchorage Parking Authority and Action Security, Inc. Harbour is also Chairman Emeritus of the Alaska Oil & Gas Congress. Harbour's wife, Nancy, is a professional, performing arts administrator and his three boys, Todd, Benjamin and William work in the fields of environmental management, energy marketing and medicine.