Encourage corruption and more will come
We now face a great civic task: deciding the referendum on whether to strike down Senate Bill 21, which slashes state revenues from the oil industry by about a billion dollars a year. Which side do you believe?
I go with the leaders I have long observed to have state residents’ best interests at heart and who have spent many years working on state oil policy: founding father Vic Fischer, Sen. Gary Stevens, scholarly Jack Roderick, and the honor roll of the dead — Jay Hammond, Wally Hickel, Don Gilman and Hugh Malone, among them.
Gov. Sean Parnell and Sen. Peter Micciche place their faith in the oil culture from which they come. I don’t doubt their sincerity, just their misplaced faith in the industry which the Alaska Supreme Court ruled guilty of “deliberate falsification in computing the price paid to Alaska for its royalty oil,” referring to billions of dollars giant oil corporations had cheated out of Alaskans from 1977 to 1982 (Amerada-Hess case).
Gov. Hickel warned us, “Meanwhile the oil industry and companies that depend on them are flocking to support candidates for Governor and the Legislature who will do their bidding.”
And they succeeded. Sen. Micciche and Gov. Parnell are two prime examples. SB 21 cuts oil severance taxes and royalties, money that will come out of Alaska‘s schools, highway maintenance and other general fund expenditures. The oil senator amended the oil governor’s 33 percent clause to 35 percent in a deal which looked a lot like being prearranged to make him look less like he was taking orders from his career-long employer. That would be Alaska’s biggest resource exporter, Conoco-Phillips, the giant oil corporation for which the senator manages Cook Inlet natural gas.
Gov. Parnell, as a corporate lawyer, found the oil industry the best of clients. Right or wrong, he vigorously represented them. That’s the job for a corporate mouthpiece. That’s not the job for our governor.
Some governors enjoyed the perks of industry friendship more than others: Gov. Parnell is in the company of former Governors Knowles and Sheffield in that regard. Governors Gruening, Egan, Hammond and Hickel all embraced the interests of ordinary Alaskans, and believed in treating industry respectfully but at arms length.
Big oil has not treated us the same way. They removed the obstacles to slashing what they pay for Alaska’s North Slope crude by paying for the election of their own senators, who removed Gary Stevens, Burt Stedman and Lyman Hoffman from the leadership. Wired directly to lobbyists, the new guys in charge — charged.
Sen. Stevens spoke to Alaskans from the Senate floor: “Those who don’t know history are doomed to repeat it. I don’t want to dwell on those abuses but I ask you to remember just three events in our historic relationship with the industry, so we won’t repeat them. Remember Amerada Hess. Remember the Exxon Valdez. And remember Bill Allen. Those three events are not the only abuses we have experienced. I was elected to the legislature in 2000 and was surprised to see Bill Allen and VECO employees so often in the halls and offices of the Capitol. As we now know, some of our elected officials were bribed yet still voted on oil tax bills and even went to prison for their actions.
“Those three events are not the only abuses — the wise person learns from history and remembers our past. We don’t want to be accused again of inexcusable trustfulness when dealing with the oil industry.”
The investment climate remains very friendly for oil development. There has long been 60 percent in tax credits for exploration and development and a web of loopholes, netbacks, incentives, rebates and deductions. Congress has eliminated much federal tax, no matter what our local state taxes may be at the moment.
As Gov. Hammond said: “It is the obligation of oil company CEOs to maximize benefits for their shareholders. It is the obligation of the state’s CEO to do the same for his.”
Longtime Homer resident Larry Smith writes that he is “interested in good goverrnment, honest politics and fair dinkum for the permanent fund.”
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