At the invitation of Greg Huff, the Director of the Alaska Council on Economic Education, I was the evening’s guest lecturer at yesterday’s session of this year’s “Economics Spring Forum,” an annual 3 credit course for teachers focusing on economic and financial issues. The Forum is sponsored by the Council in conjunction with UAA’s Center for Economic Education.
Previous lecturers this semester have included Dr. Kyle Hampton (UAA Economics Department), Dr. Terrance Cole (UAF History Department and Director, Office of Public History), Stephan Ribuffo (Anchorage Port Director) and Bill Popp (Anchorage Economic Development Commission).
The invitation arose out of a concern I had expressed on these pages last fall about the nature of the information being rolled out in the Anchorage School District and elsewhere on state fiscal issues (see here, here and here). While hopefully my discussion last evening is not the only counterbalance the District, Council and others involved in the previous exchange have instituted to what I believe was a one-sided approach, I appreciated the opportunity to provide a different perspective on the state’s fiscal issues to those teachers interested enough in the subject to be enrolled in this year’s Forum.
I viewed it as my shot to convey my views on a perspective I believe Alaskans — and Alaska students — should be hearing about the state’s current fiscal condition.
While last evening’s presentation largely followed the approach I have used in other, recent presentations elsewhere, the extended format enabled me also to include a module on the interplay between oil price and investment which helps explains the basis for predictions by the International Energy Agency and others that the global economy is likely to transition out of the current low oil price environment by the end of the decade.
As I have noted elsewhere, I have found that, for an oil state, many if not most Alaskans have a surprisingly low level of knowledge about how the industry actually works, which leads, frankly, to very short sited views and policy decisions. For example, when oil prices were above $100 from 2011-2014, some members of the then-Administration and Legislature set spending and program levels on the assumption that they would always be that way, an approach which sowed the seeds of many of the fiscal problems the state faces today. And now that oil prices are low, some members of the current Administration and Legislature are proposing to set spending and state fiscal policy on the assumption that, once again, they will always stay that way, a perspective that threatens to do long term damage to Alaska’s overall economy if translated into the adoption of permanent changes to the “plumbing” of the Permanent Fund and tax levels that some are advocating.
The truth, as it usually does of course in such debates, lies somewhere in the middle, a fact that I hoped I stressed fully (if repeatedly) in last evening’s session.
A copy of the slide deck from last evening’s session is above, and also at the link here.
Thoughts on Alaska Oil & Gas 