9-11-13 “Lest We Forget”

Chris Smith Nominated to be Assistant Secretary for Fossil Energy

“Many of us recall September 11, 2001,” said Governor Sean Parnell (NGP Photo). “It’s a day that will live forever in our memories. We observe this day in honor of those who were injured or who died, when our homeland came under attack by terrorists.”

CBC.  TransCanada Corp.'s proposed west-east pipeline could create 10,000 jobs and generate $10 billion in additional GDP during the development and construction phase…

Today, we provide our energy column, "Decision", sent to tens of thousands of households every week.  This week’s column features the decision citizens will be making on Alaska oil tax policy in an a referendum appearing on next summer’s primary ballot.  Readers may scroll down to read the column or click here for a .pdf.

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On the same subject (i.e. Oil Tax Reform), the Alaska Support Industry Alliance will be exploring the subject at its weekly meeting tomorrow morning (Thursday) at Anchorage's Petroleum Club, 7 a.m.

This Friday Commonwealth North’s (CN) Energy Action Coalition will hear a briefing from John Lau (NGP Photo), ENSTAR’s Director of Engineering.  Lau will discuss the gas pileline infrastructure in the Cook Inlet.  The meeting will be from noon – 1pm in the first floor conference room at the CIRI building at 2525 C Street.  The goal of Commonwealth North’s Energy Action Coalition is to continue discussion on CN’s most recent energy reports Energy for a Sustainable Alaska: The Railbelt Predicament & The Rural Conundrum and highlight and identify challenges and opportunities in Alaska's energy environment in order to bring informed Alaskans to the table and come to solutions that will benefit all Alaskans and ensure these complex energy issues are understood. If you are interested in the public policy issues facing Alaska, you should be a member. Commonwealth North membership information is available on at www.commonwealthnorth.org.

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The DOE Senior Program Manager in the Office of Oil and Gas, Christopher Freitas, reports this morning that The White House nominated Chris Smith (NGP Photo) to be Assistant Secretary for Fossil Energy last night, seven months after the former Chevron official took over the position in an acting capacity. 

President Obama announced his intent to nominate Smith as part of a batch of more than two dozen other high-level nominees. “I am grateful that these talented and dedicated individuals have agreed to take on these important roles and devote their talents to serving the American people. I look forward to working with them in the coming months and years,” Obama said in a Sept. 10 statement.

Former Energy Secretary Steven Chu promoted Smith to be Principal Deputy Assistant Secretary, FE’s No. 2 position, in February after Chuck McConnell stepped down as Assistant Secretary, leaving Smith to serve in the office’s top position in an acting capacity at a time of major transition at the Department following the November election. Upon taking the helm of FE earlier this year, Smith made a point of emphasizing that he would change little in terms of program direction compared to his predecessors. Smith did, however, quickly reshuffle the Office’s organizational structure, centralizing FE’s leadership chain so that all three Deputy Assistant Secretaries, as well as the director of the National Energy Technology Laboratory, report directly to him. Smith tapped Lawrence Livermore National Lab alum Julio Friedmann and top American Gas Association official Paula Gant to be FE’s Deputy Assistant Secretaries for Clean Coal and Oil and Natural Gas, respectively, last month.

Smith had served as FE’s Deputy Assistant Secretary for Oil and Gas from 2009 to 2013. Prior to his tenure at DOE, Smith spent most of his career at Chevron, working in a variety of positions there between 2002 and 2009. He also worked at Texaco before its refining operations merged with Chevron’s. Smith graduated from the United States Military Academy at West Point and the University of Cambridge and also served as an Operations Officer and Task Force Engineer in the U.S. Army.

 

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Decision!

“Most discussions of decision making assume that only senior executives make decisions or that only senior executives’ decisions matter.  This is a dangerous mistake.”  Peter Drucker

By

Dave Harbour

Tell me: what was the greatest learning experience of your life?

Mine happened thirty years ago sitting on a lawn chair under a palm tree beside a swimming pool at Claremont Graduate School.   A half dozen of us spent an exclusive, historical, sunny week basking in the wisdom of legendary management guru, Peter Drucker.   

The quotation above crystallizes one of his ‘take away’ messages to us: good managers know that the day to day decisions of regular folks are critical to a successful operation.    

Decades after that week-long seminar with Drucker, I still apply his “management by objective” and related principles to many situations.   In public policy decisions, for example, one recognizes that citizens play a critical role—by deciding to vote, to participate in the community, to write letters to the editor or deciding to donate to worthy causes.

Drucker also placed a premium on integrity.  “Never mind your happiness; do your duty,” he once said.

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Next summer, during our primary election, citizens will have a duty to make big decisions on candidates for public office.  Voters will also decide whether or not to repeal an oil tax reform law (SB 21) passed this year by the Legislature and signed into law by the Governor. 

Do any of us want to make an unwise decision on oil taxes?  Of course not.  So we are agreed then that we need to make wise decisions on oil taxes!   That leads us to the question of, “what is the wisest decision”, and it’s not too soon to be thinking about it right now.

Having wrestled with this issue for several years now, I would offer our readers these thoughts.

1.  What do oil taxes have to do with me?   Oil companies are like newspapers, banks, commercial fishermen or grocery stores: they must make a profit to survive.  To make a profit, they must make more money than they spend on expenses.  One of their expenses is taxes.  If taxes and other expenses are too high, they must invest elsewhere.  Alaska’s oil and gas royalties, property taxes, income taxes and production taxes pay over 90% of Alaska’s state operating budget.  Meanwhile, citizens pay no state income or sales tax and get a Permanent Fund check.  If oil companies didn’t pay for state government, we would.   With some of the highest oil taxes in the world, the Legislature and Governor acted to make Alaska more competitive — to keep the Alyeska oil pipeline from closing down.  The Alyeska pipeline takes Alaskan oil to market but we are producing less and less.  If Alyeska goes down for lack of oil, the state government will implode.  We wouldn’t have money for roads, airports, public safety or a jillion other state programs – including municipal revenue sharing and support for schools and rural Alaska programs.  Economists say that without more oil investment, the pipeline’s days are numbered.  Over half of Alaska’s jobs are at risk along with our futures.
2.  Do lower oil taxes guarantee more oil?  At a legislative hearing on the subject longtime Alaskan employer Maynard Tapp said, “I guarantee you that no money you take away in taxes will be used for resource development.”  Can we agree that keeping high taxes in place will not logically lead to more oil?
3. Long term or short term?  Let’s ask ourselves, “Do we make decisions for our immediate benefit, or for the long run?”  Of course, most would agree we make decisions with the future in mind, especially if we have children.   Voting next August to repeal tax reform and keep high taxes in place will benefit us for a little while, as oil in the pipeline continues to drop below ¾ empty.  But in the long run, can we agree that even though lower taxes are no guarantee of more oil, it is a logical way to encourage more production?  More production will mean a longer life for the pipeline and more economic support for our kids in the long run.

As we seek wisdom, what have other Alaskans said publically about the oil tax issue?

Northrim Bank Chairman Mark Langland testified, “The oil industry is carrying the primary burden of supporting state government, but government’s appetite for money is unlimited.  When the oil industry can no longer feed that appetite Alaska’s citizens will have to fill the gap.”

Steel worker Peter Macksey told legislators that, “The oil industry supports the lifestyle and programs that this state has become accustomed to.   I am telling you that you are asking too much from this group and strangling all associated with it.”

Local manufacturer, Lynn Johnson, said his employee strength is down 10% and income is off 40% due to less oil industry purchasing.

The late Governor Walter J. Hickel’s Commonwealth North organization told the legislature that it had studied the issue and concluded that, “without increased production Alaska’s economy is in jeopardy,” and that, “…trading some current oil tax revenue for longer-term production…is in the best interest of all Alaskans.”

Alaskan father Tom Maloney testified, “I have an 18 year old son majoring in welding…at UAA who is very concerned about future employment activities in Alaska.”

Service High graduate Jeff Lentfer is a successful, small business owner in Anchorage.   After studying the issue himself, he testified to the Legislature that he has, “…absolutely nothing to do directly with…oil development,” but, “the state needs to encourage oil development…, not next year or the year after.”

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President Theodore Roosevelt observed, “Nine-tenths of wisdom is being wise in time.”  With oil rapidly depleting can we summon the wisdom in time to return to healthy production? 

Drucker might have advised that in a democracy, we all share the duty and responsibility for the final decision on oil taxes —but it is our children who will experience the result.