Category Archives: Immediate Reactions

This page started out primarily as a one stop source for oil & gas news of interest to Alaska.  That continues to be a focus, with the curated news feeds down the lower right side of this page doing the bulk of that work.   Over the past year, however, the commentaries on the left hand side of the page, and the shorter “Observations & Updates” headlined on the upper right, and printed in full here, increasingly have focused also on fiscal issues.

The reason is that, in Alaska, oil and fiscal policy are inextricably intertwined, given Alaska’s reliance on oil revenues to run the state.  A recent video from the website Understanding Alaska’s Budget does an excellent job of explaining.  As the video explains at the beginning, “Alaska is at a crossroads.”  We write hopefully to help shed some light on the factors that go into deciding which path to follow from here.

Which state Senator said yesterday about this year’s state budget, “we have actually done a very good job managing Alaska’s spending. … We got it right.”  Senator French?  Senator Wielechowski?  Nope, guess again.

The answer is Senator Lesil McGuire during yesterday’s Alaska Live with Bernadette.  Why is that conclusion wrong?  Read almost any commentary on this page in the last three months.  For starters, read the commentary that follows this.

[The entire interview with Senator McGuire is available here.  The portion dealing with the budget begins at minute 48:05.  A transcript of the relevant portions follows.  In reading the following, it is important to understand that the Capital Budget is managed by the Senate Finance Committee, of which Senator McGuire is a member; the Operating Budget is managed by the House.  Bernadette is asking about the Capital Budget.]

Bernadette:  Let me ask you, with the budget.  Would you agree, I mean there were comments that came out, obviously from Representative Bill Stoltze Continue reading →

Toward the end of the Special Session earlier this year, the director of the state’s Office of Management & Budget (“OMB”), Karen Rehfeld, was asked to testify before the House Resources and Energy Committees about the impact on the budget of the Governor’s proposed oil tax bill introduced at the beginning of the Special Session.

One of the slides from her presentation is the most important in this year’s election.  The slide shows four lines.

The first – in red – is OMB’s forecast of revenues under the status quo, before the potential implementation of “HB 3001,” the Governor’s proposed oil tax bill.

The second, in blue, is the level of state spending from the General Fund as projected in OMB’s FY 2013 10-year plan.

The third, in green, is OMB’s forecast of revenues in the event the Legislature passed HB 3001.

The fourth, at the bottom in black, shows the projected deficits each year in the event the Legislature had passed HB 3001. Continue reading →

From the beginning, this blog has been intended primarily to provide a “one stop shop” for those interested in keeping up to date on developments and trends affecting Alaska oil & gas.  Part of that is through the commentaries appearing on the left hand side of the page, part is through the shorter commentaries linked on the top right of the page, but an important part also is through the headlines appearing under the header “Daily News and Articles” appearing farther down the right side of the page.  That column contains the current headlines from the news sources which I believe, combined, provide the best insight into current developments and trends affecting oil in Alaska and the industry at large. Continue reading →

As some readers may have noticed, I publish shorter, less formal “thoughts” occasionally on another page, which I then link to this page in a box located in the upper right corner of this page entitled “Observations & Updates.”  The reason for using the separate page for those shorter pieces is because I don’t want them to displace the longer thought pieces that appear in this section of the blog.   A recent piece appearing on the other page, however, which started out short but turned into a longer piece, has attracted substantial attention and, as I have thought about it, should be included also on this, main page.  It follows below:

The Alaska “House Special Committee on Fiscal Policy” yesterday released a new website focused on “Understanding Alaska’s Budget.”  The website may explain much more than the authors intend about how Alaska has worked itself into its coming fiscal crisis — and why recent legislatures have made the problem worse.

The press release announcing the website provides the first clue.  The release quotes the Chair of the House Special Committee as follows:

“We’re in the cat-bird seat, financially, now, but with throughput this week under 400,000 barrels, and with a volatile oil price, we need to prepare people for the likelihood of lower revenue. That means also preparing to handle the challenges before we reach a crisis – that’s what this is meant for.”

Alaska is not in “the cat-bird seat, financially, now.”  Alaska has a temporary cash surplus, the same way that you or I would if we treated as current disposable income the money that we otherwise need to put away for our children’s college tuition or our retirement.  Spending it now means that our children — and us — will be worse off in the future as our income winds down but our spending needs continue. Continue reading →

A year ago at this time we published a brief piece announcing that Chambers & Partners, a firm that specializes globally in assessing the reputation of law firms, had ranked Perkins Coie’s Alaska office among the best in the state for its Environment, Natural Resources & Regulated Industries practice, and the Firm’s overall practice throughout all of its offices among the leaders in the same field nationally.  The guide is read by industry-leading companies and organizations worldwide, and is widely used by firms in all states for referral purposes.

Its time to renew that piece by noting that the Firm has done it again.  Here is Chambers’ assessment of the Firm’s Alaska practice this year, ranking it with only two others in the top tier in the state: Continue reading →

I appeared on the Glen Biegel Show on June 5 to discuss my recent piece on Alaska fiscal policy and the status of oil development in general.  The discussion took some interesting turns along the way, including a discussion of peak oil theory, and does a good job of focusing on the lack of “sustainability” of current state government spending levels.  The interview is at the following link; it starts with an intro at 21:02 and goes to the end of the first hour,  Glen Biegel Show 6_5_12 part 1.

Please pardon a brief digression from the usual subject of these pages.    One of the reasons I spend time focused on Alaska oil & gas and fiscal policy issues is because of the importance of those issues to the future of the state.

Also important to the future of the state is the availability and role being played by the state’s four centers of higher education — the University of Alaska Fairbanks, the University of Alaska Anchorage, the University of Alaska Southeast and Alaska Pacific University.   UAA — the University of Alaska Anchorage — recently published a story about my support for that institution.  If you do not already, I would urge you to support one or more of these institutions as well; they are as crucial to the future of Alaska as is oil and gas.

The story is part of the University’s “I Am/Love UAA” series and is available here.

An excellent discussion between Steve Coll and Steve Heimel of APRN’s “Talk of Alaska,” focused on Exxon’s role and position in the state.

One of Coll’s observations:  “ExxonMobil has this attitude they want low political risk and high political stability.  That suits their very rigid, long term business model. And, they regard Alaska as a place that they just can’t seem to figure out politically.  They often talk about Alaska the same way they talk about other political environments they can’t seem to manage.”

To the same point from the book, talking about the early years of the second Bush Administration:

Compared with other oil majors, however, ExxonMobil was no longer a dominant player inside the United States. Chevron had inherited some of the longest-lived of Standard Oil’s American oil properties, in California, and Chevron and British Petroleum had moved more boldly than Exxon into the Gulf of Mexico when leasing opened during the Clinton administration. Exxon had opportunities to exploit oil and natural gas in Alaska, but held back from some expensive deals because Raymond had learned after the Valdez that the political risks posed by Alaska’s frontier-minded political culture and populist governors were comparable to those in West Africa.

Interested in Alaska oil policy?  This interview offers an excellent insight into an important piece of the puzzle.