Out There

Alaska’s oily political scene

Posted in Uncategorized by Pete on August 21, 2014

Two days ago saw the latest primary election in Alaska. Ballot measure one was brought by a statewide initiative to the ballot. It would have overturned senate bill 21, and returned state oil tax policy to the ACES tax structure put in place under Gov Palin. SB21 was passed in 2013 at the behest of the oil majors and their allies in the Alaska legislature, Gov Parnell not least among them. Measure one appears to failed by a 51-49% margin. The oil industry and their allies put forth a bazillion commercials all calling for “no on one,” and they outspent the “yes on one” side by approximately 120-1 per the Anchorage Daily News.

The defeat of the ballot measure isn’t a shock to me, but its still a little depressing to see how little things seem to change here politically as the years roll by. The ACES tax structure only got in place in the immediate wake of the VECO political scandal, where several legislators were caught on video by the FBI, taking cash for doing the bidding of the industry and generally behaving badly. The fact that it could be overturned just a few years later underscores the depth of amnesia we Alaskans apparently suffer from.

This editorial from noted Alaska historian Steve Haycox sums up the repeated history of the industry using the same false arguments and scare tactics that they used this time. One thing I found interesting is that the “no on one” side liked to claim that oil tax revenue from SB21 won’t be any lower than it would have been under ACES. At the same time, the central claim was that lower taxes were needed to spur further investment. Hmmm. Does anyone else see an obvious contradiction here? If the tax bite from SB21 is no larger than it is under ACES, then why will SB21 cause increased investment? Ha ha.

Here is another question.  Isn’t the oil only going to eventually increase in value?  This is a non-renewable resource, after all.  We know that the industry threats (operation shutdown?) are hogwash that has been trotted out so many times before, but maybe the truth is that even in the very unlikely event they weren’t lying through their teeth, it would still work out ok.  Let them go all over the world for the cheaper oil.  Eventually our children or grandchildren would be the richer for it.  Am I crazy?  

Regarding the amount of increased investment likely to occur pursuant to sticking with SB21, economist Gregg Erickson put out this estimate (using the state’s own DOR figures) that the state will lose $20 of tax revenue (relative to what the take would have been under ACES) for every $1 of increased revenue from the hypothetical additional industry investment. Loony tunes. Alaska politics would be funny if it were made up, instead its just embarrassing.

Extractive industrialists have been calling the shots in Alaska since Europeans first arrived in the 1700s.  

  • From Russian fur traders who enslaved and slaughtered Aleuts in their pursuit of sea otter pelts (worth a year’s wages at their peak)
  • to the turn of the century gold mining days
  • to the Seattle-based salmon packing lobby whose lobbyists used to pass notes with voting instructions to territorial legislators, and who did crazy stuff like covering the entire mouth of rivers with nets to catch ALL the returning salmon, and who used the *hated* fish traps
  • to the timber industry
  • to the oil industry, which transformed the state from a “D” state to an “R” state seemingly overnight and has dominated the state economy and political scene for the last 50 years.