Something unusual is happening in Alaska. For the first time since the fight for statehood more than 50 years ago, there is an overwhelming consensus among Alaskan leaders that decisive, coordinated action is needed. Leaders from all walks of life have come to realize that our economic future is in grave danger.
What is this danger? The very real threat that the Trans Alaska Pipeline System (TAPS) will shut down as a result of low oil production.
The consensus is far reaching. It includes Alaska Native CEOs: Helvi Sandvik of NANA Development Corp., Margie Brown of CIRI, and Will Anderson of Koniag, to name a few. It features homegrown Alaska business icons: Lynden CEO Jim Jansen, Northrim Bank founder Marc Langland and investor Carl Brady. It includes a bipartisan cross-section of elected officials and elder statesmen – Democrats like former Governors Bill Sheffield and Tony Knowles, Republicans like Governor Sean Parnell, House Speaker Mike Chenault, and a majority of the Alaska House of Representatives.
The consensus is geographically wide, too, and includes the business leaders on the statewide boards of Alaska State Chamber of Commerce, the Resource Development Council, and the Associated Builders and Contractors of Alaska. It includes prominent academics such as former University of Alaska president Mark Hamilton and Alaska's leading economist, Dr. Scott Goldsmith. The list goes on.
All of these leaders sense danger.
They all know one undeniable fact: the aggressive and punitive oil tax hikes passed by the Alaska Legislature in 2007 have been a policy disaster. Those irresponsible increases gave Alaska the highest marginal tax rates in North America. Although state revenues have increased temporarily, spending to explore for new oil fields has plummeted to almost nothing and North Slope oil production is falling even faster than before.
To make matters worse, these negative trends have occurred in the face of the highest oil prices ever recorded over a similar period of time. Alaska's industry trends should not have worsened in the past four years. But they did.
With so many smart people recognizing the problem and calling for action, it should be easy to fix, right? Wrong. There is a small and increasingly isolated group of Alaskans who simply don't get it. They are certain members of the Alaska State Senate.
I have heard several explanations for this senatorial obtuseness, ranging from economic illiteracy to personal agendas. I prefer the explanation offered by influential Wall Street Journal columnist Peggy Noonan. She says of leaders who fiddle in the face of urgent threats that they "simply don't know what time it is." They don't know that the very foundations of our prosperity are at risk and there is no time to lose.
They don't realize, for example, how close the Alaska pipeline came to freezing up a few weeks ago due to low oil flow and low liquid temperatures. They are comfortably ensconced in their offices and oblivious to all of this.
The signs that our Senate majority is out of touch are everywhere. While production declines, they are spending like power-drunk sailors, as though high oil prices will last forever. And even though the Legislature has passed only a couple of bills so far this session – one of which deals with proper handling of the Alaska flag – our Senate leaders just passed a bill authorizing a longer session. You can't make this stuff up.
Here's another troubling signal: despite overwhelming evidence, many hours of testimony, the spectacle of Alaska-owned companies moving their operations to N. Dakota and the University of Alaska issuing sobering studies of what Alaska life will look like without oil revenue, Senate leaders have decided to sit on their hands and "study" the issue. Study? Really? Somebody buy these people a watch!
Where were the calls for "study" in 2007 when some of these same senators quietly slipped the heaviest tax increases (the steep progressivity) into the legislation, literally in the middle of the night?
Alaskans who have any inkling of what a pipeline shutdown would mean to all of us should contact their state senator. Tell them to listen to the incredible array of true Alaskan leaders who get it – and who know what time it is.
Scott Hawkins, a former regional economist, is president of Advanced Supply Chain International, an oilfield support company. He is also chairman of ProsperityAlaska.org, a nonprofit promoting responsible resource development and fiscal policy in Alaska.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch. Alaska Dispatch welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.