Q. Why are we sending our Canadian and Lower 48 readers an alert primarily focused on Alaska oil tax reform? (See today's report)
A. Because, if Alaska's investment climate is not improved sufficiently to attract massive new oil exploration, production will continue declining. North Slope oil supports 90% of the state budget and nearly half of Alaska's economy. Alaska has savings accounts, true, but also an employee pension unfunded liability the size of Detroit's. The outcome of current oil tax reform debates will affect all Alaskans, Canadians and Lower 48 citizens as well.
Alaska used to be the largest domestic oil producer in the United States. At its zenith, the Trans Alaska Pipeline System (TAPS) shot over 2 million barrels of crude per day, 800 miles south from Prudhoe Bay, to tankers waiting in Valdez to move the liquid energy to the West Coast.
Now TAPS is almost 3/4 empty, production is declining at 7%/year and Alaska is falling to 4th largest producer status behind North Dakota, Texas and California. The cause of this decline is federal government and environmental activist success in blocking or delaying energy production on federal lands and unattractive state government tax policy. Another reason for Alaska's relative decline, is that other U.S. state and Canadian provincial investment climates are more attractive.
Were federal and state policies inviting, Alaska's huge energy potential could inject growth into the entire North American economy -- as it once did.
With Alaska's energy potential unleashed, North America's security, economies (i.e. Canada and America are each other's largest trading partner), and labor markets would set records!
With Alaska's energy potential leashed, Alaska's economy is on a path to self destruction. Will the hundreds of thousands of jobs that could have been created throughout North America to support responsible Alaskan development, remain unconceived?
At this writing, Alaska's energy potential is leashed and bound by a web of unattractive, bureaucratic and predatory federal & state policies--as we have documented here for over a decade. Current policy makers can get away with saying, "Things are fine," because their constituents will never really know what might have been.
We may not know exactly how it might have been with rational state and federal energy policies. But, we do know that the known resources of Northern North America are sufficient to provide for the common defense, support robust economies and sustain the lives of our people for generations to come.
The fundamental question is: do our leaders have the insight, courage and will to sustain and protect our civilization?
We'll find out in coming months and continue to keep you posted.
Dave Harbour, Publisher, Northern Gas Pipelines