In game of give-and-take, Alaska wins
Alaskans want to give. With oil at $60 a barrel, why wouldn’t they?
According to recent news reports, Gov. Frank Murkowski is frustrated with his state’s increasingly negative image. Environmentalists continually pillory Juneau officials for their enthusiastic support of drilling in the Alaska National Wildlife Refuge, and logging in coastal rain forests. The state checks every Alaskan receives each year — $845.76 in 2005 — are an ongoing irritant to the residents of the 49 other states not home to a Prudhoe Bay oil field. And thanks to a small but powerful congressional delegation, Alaska gets $1.89 back in federal spending for every $1 sent to Washington, D.C. The $430 million appropriated last year for two “bridges to nowhere” drew unwelcome national attention, and hostility, to the riches flowing Alaska’s way. Sen. Ted Stevens made things worse by threatening to resign if the Senate took the money away.
The sense of entitlement hangs over Alaska like a cloud of its famous mosquitoes.
Murkowski is wising up to the state’s poor reputation. He wants to hire a public relations firm to reverse the damage. But his comments about “giving,” and a natural gas pipeline deal announced last week, will take more spin than the Donald Trump-Martha Stewart feud.
The gift Alaska primarily wants to keep on giving is its oil, including the still untapped reserves — whatever they may be — beneath ANWR.
“Alaska does not just take,” Murkowski said in a news account. “We give, and we have the capacity to give much, much more — if permitted to do so.”
The U.S. Senate and most Americans, according to polls, would just as soon that gift remain wrapped.
The other gift in Alaska’s bag is natural gas, the trillions of cubic feet oil companies have pumped back into the ground for years, and trillions more besides. That gas is badly needed in the Lower 48, but there is no way to move that fuel south. Last week, Murkowski announced a deal with Exxon Mobil, BP and ConocoPhillips that could start the long process of getting a 3,600-mile pipeline built from Alaska’s North Slope all the way to Chicago. Cost estimates start at about $20 million, but with design work barely begun and completion a good decade away, the likely total could far exceed that. Nobody, for example, makes the 52-inch-diameter steel pipe the project calls for.
Murkowski negotiated for years with the oil companies to get the proposed deal. But after a preliminary announcement the state would impose a 25 percent tax on net oil company profits, with offsetting credits for reinvestment, the governor found himself back at the table, and emerged with a 20 percent tax. Many legislators in Juneau think Murkowski was a little too anxious to come to terms. Said one foe: “One-hundred thirty-nine years ago Russia sold Alaska for peanuts, and we just sold Alaska’s oil for peanuts.”
Boo-hoo. But that’s a fight Alaskans can have for themselves.
The question for the rest of us is how much giving from Alaska can we stand? Oil and gas will be more expensive in the future no matter what the source. Alaska is better than most. Even with gas from the North Slope, the U.S. will rely more on imported gas to meet domestic demand, creating the same dependency that increases the risk supplies can be disrupted, with devastating economic consequences. But Alaskans continue to be the indirect beneficiaries of the heaping incentives — loan guarantees in the case of the pipeline — that impose on all taxpayers risk that should be borne by the oil companies.
Every state, every locality, tries to exploit as best it can whatever resource — be it scenery, timber, harbor, hydropower, what-have-you — it has. Not many, however, have the nerve to call it a gift at the cash register.
That’s some kind of public relations challenge.