Something unusual is happening in Alaska. For the first time since the fight for statehood, there is an overwhelming consensus among Alaskan leaders that our economic future is in grave danger and decisive action is needed. This very real threat is the Trans Alaska Pipeline will shut down due to low oil production.
This bipartisan, geographically wide consensus includes Helvi Sandvik of NANA, Margie Brown of CIRI, Will Anderson of Koniag, Jim Jansen of Lynden, Northrim Bank founder Marc Langland and investor Carl Brady, former Governors Bill Sheffield and Tony Knowles, Governor Sean Parnell, Speaker Mike Chenault, a majority of the Alaska House of Representatives, board members of the Alaska State Chamber of Commerce, Resource Development Council, and Associated Builders and Contractors of Alaska, former UA president Mark Hamilton, economist Dr. Scott Goldsmith, and the list goes on.
They all know these aggressive and punitive oil tax hikes passed by the Legislature in 2007 are a policy disaster that left 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 oil production is falling even faster than before.
To make matters worse, these negative trends have occurred during 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. A small and increasingly isolated group of Alaskans simply don't get it; certain members of the Alaska State Senate.
Explanations abound for this senatorial obtuseness, ranging from economic illiteracy to personal agendas. I prefer the explanation offered by 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 very foundations of our prosperity are at risk and there is no time to lose.
Comfortably ensconced in their offices they are oblivious to how close the pipeline came to freezing up a few weeks ago due to low oil flow and low liquid temperatures.
Signs the 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 this session, Senate leaders just passed a bill authorizing a longer session. You can't make this stuff up.
Despite the evidence of Alaskan companies moving operations outside and the University issuing sobering studies of what life will look like without oil revenue, Senate leaders have decided to sit back and "study" the issue. Study? Really?
Somebody buy these people a watch!
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 and was the founding president of the Anchorage Economic Development Corporation. He lives in Anchorage.
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