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How ’bout them ACES?

What oil money has done is create bureaucratic entitlement mentality in government agencies

Posted: May 14, 2014 - 3:15pm

It’s just overwhelming — the media coverage of how we should vote this fall on the ballot measure to repeal the “new” oil tax. One could simply choose not to listen — admittedly a wise choice — because the strident pros and cons in this debate have tuned out the old-time Alaska mindset that brought us ACES (Alaska’s Clear and Equitable Share) in the first place.  

If just for one moment we could all set aside the media circus clown act that Sarah Palin became after she championed ACES, and recall the petroleum markets of the 1990s and early 2000s, you can get a glimpse of how many lifelong Alaskans view the production and sale of our oil. 

To begin with, as my father likes to remind me, our lives were just fine here in Alaska before oil. And in spite of well over $200 billion cash spent directly from the state treasury since Prudhoe Bay, we seem to have the same social, educational, transportation and infrastructure woes we had before that money ever came our way. 

What that money arguably did is create a huge bureaucratic entitlement mentality in our municipal, educational and state agencies that people are terrified of losing.  

Loss of big dollars — if the oil companies were scaling back their production efforts under ACES — definitely implies the loss of jobs and decrease in value of real estate and businesses. It implies the contraction of our economy instead of growth. It means our maintenance of government facilities will suffer and big cuts for social welfare programs. We really are afraid of going there — and of course one side of this debate is taking full advantage of that.

On the other hand, many of us watched oil hit $14 a barrel in the early 1990s and in spite of the hand wringing there was plenty of oil in the pipeline and we remained flush. At that time the petroleum industry rightly and politely pushed for some incentives to explore and drill. We gave that to them as the discussions began in earnest of how to incentivize them at the low prices and give us a bigger share than normal at the high prices.

The concept was widely embraced. That simple philosophy behind ACES started more than 20 years ago —  back when Sarah Palin was still in a job more suited to her talents as a local TV sports announcer. 

The increase in oil prices in the early 2000s was phenomenal and Palin did something governors Hickel, Knowles and Murkowski could or would not do: Get Alaska a bigger share of oil revenues that was a quid pro quo with the oil companies when petroleum prices got much higher. It was inherently fair and unconscionably late. 

But here’s where it gets interesting, especially for those of us who enjoyed life here before oil. We can’t help it that North Slope production is declining, or that North Dakota is booming, or that companies have limited budgets for drilling and exploration. But many of us who remember oil production at $14 a barrel think ACES tax rates at $100 a barrel were a pretty fair agreement.  

If the oil companies need us to subsidize them when prices are this high, then something is wrong with our dependence upon that industry.

And this is precisely why many very conservative, old-time Alaskans part company with the Republicans in Juneau who overturned ACES. 

As a lifelong Alaskan I’ll just say it: I’m not afraid of losing a large chunk of our bloated state government bureaucracy just so we don’t have to play chicken with the oil companies. 

Mike Heimbuch is a lifelong Alaskan who lives in Homer.

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