In a Compass piece appearing in today’s Anchorage Daily News, Sen. Hollis French argues that Alaskans should not be concerned about the level of oil taxes because a recent judicial opinion finds that TAPS may continue operating for longer than Sen. French suggests some have recently argued. See H. French, “Judge’s ruling underscores longevity of oil pipeline,” Anchorage Daily News (Jun. 16, 2011).
Once again, Sen. French misses the point. As Scott Goldsmith/ISER have pointed out, even assuming the pipeline operates forever (which it won’t — Sen. French also overlooks the point about whether it will be economic to make the investments necessary to heat the pipeline as production continues to decline), the revenues from oil will fall in the near future to levels below those needed to sustain Alaska state government as we have come to know it. See S. Goldsmith, “Revising the State Fiscal Plan to Account for Petroleum Wealth,” Web Note 9, Institute for Social and Economic Research, University of Alaska Anchorage (May 2011). Even with the most optimistic assumptions about oil decline, the State will start eating into savings in 2018 and all savings will be gone by at least 2028, and possibly as early 2023.