Alaska editorials

Here is a sampling of editorial opinions from Alaska newspapers:

Feb. 1, 2017

Alaska Journal of Commerce: Overtaxing is as bad as overfishing

Dating back to before statehood, Alaskans know that overfishing is a bad thing.

Stopping overfishing of salmon and regaining control of the resource was in fact one of the driving forces in the effort to become a state.

What we know about sustainability of our vast fisheries resources is worth applying to yet another debate over another immense asset - our oil - and the means by which that resource is taxed.

Get ready for more proclamations from Democrats, soft Republicans and the friends of Gov. Bill Walker about receiving “our fair share” of the resource through taxation and the debunked claims that the 2013 oil tax reform was a “giveaway” to industry.

The “Alaska model,” as it has come to be known, holds an overarching policy to prevent overfishing and though the enshrinement of sustained yield in the state constitution it has largely been a success.

The reason is simple: while there may be short-term economic benefits to harvesting nearly every fish in the sea, the long-term effect will be to destroy the resource. Some of the fish must be allowed to reproduce to sustain populations in perpetuity.

It isn’t a difficult concept to understand, but when it comes to the oil industry there is a large segment of the population and their politicians who don’t get it.

True, oil, unlike fish, is not a renewable resource. But capital is.

Certainly it is tempting to want to collect every dollar possible from the oil business through taxation, but doing so robs the companies of the investment capital they require to expand existing fields and to discover new ones. In the long run, overtaxing will wreck the economic engine of Alaska in the same way that overfishing decimated the salmon resource.

The cashable tax credits whose origin in policy date back to the 2006 Petroleum Profits Tax have received the bulk of the attention for the deficit-stricken state budget as the tab is running to nearly $1 billion by the end of next fiscal year.

Dealing with the credits is a cash flow problem, however, and the more troubling effort is what is likely to come from either the governor or the new House majority to increase the tax on production.

The leaders of the new House majority and the governor opposed the 2013 production tax reforms and campaigned for the repeal and return to the previous system known as ACES in 2014.

Those critics of the current policy keep pointing to the low production tax revenue at current prices as proof that the regime is a “disaster,” as Senate gadfly Bill Wielechowski endlessly repeats.

Yet according to Walker’s Revenue Department, under ACES the state would have received zero - yes, zero - production tax revenue in fiscal years 2016 through 2018 and the current policy took in more than ACES would have in fiscal year 2015.

In fact, under ACES the state would receive no production tax revenue until the price climbs north of $63 per barrel.

ACES does collect more revenue at higher prices, but returning to the parallel of overfishing, at what cost?

There is no disputing that production declined by an average of 6 percent per year under ACES while the state share averaged 41 percent.

There is no disputing that ConocoPhillips, the most active explorer on the North Slope since 2000, did not look for oil from 2010-12 despite sky-high prices.

There is no dispute that under oil tax reform, we’ve seen no decline in fiscal year 2014, a slight dip in 2015 amid a record amount of drilling and workovers, followed by the first increase in 14 years in 2016.

What’s amazing about the results of the 2013 reform is that oil companies haven’t even seen the upside of it yet.

They have seen prices collapse to the point where losses have amounted to billions in the upstream segment - ConocoPhillips lost more than $4 billion in 2015 and another $1 billion in the first quarter of 2016 - and they are paying more in taxes at these prices than they would have under ACES.

What the 2013 oil tax reform proved is that allowing companies just the prospect of keeping more of their capital to reinvest is enough of an incentive to spur development and discovery even during a brutal price environment.

Not many would have thought when 2016 began with prices bottoming out at $26 per barrel that the year would end with a production increase and hugely successful North Slope lease sale.

The supporters of oil tax reform were proven right, but the fight isn’t yet over against those who would crush the North Slope through overtaxing the way the canneries nearly did to salmon by overfishing.

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Feb. 3, 2017

Fairbanks Daily News-Miner: High time for King Cove road

Common sense. You’d think it always would prevail. It doesn’t, of course, and government routinely offers plenty of examples to prove it.

The continual battle to obtain a much, much needed - and potentially life-saving - road out near the tip of the Alaska Peninsula is one such example of how some government officials on the far side of the nation can’t understand Alaska and don’t recognize a common sense solution to a problem.

The issue of the King Cove road might not seem to be one of concern here in Interior Alaska. The small town in the Aleutians East Borough is 850 miles southwest of Fairbanks, after all.

But it is an issue that Interior Alaska residents, and all Alaskans really, should identify with - bureaucrats and department leaders not understanding life in Alaska.

Actually, the King Cove road wouldn’t be much of a road at all. It would be a narrow, 11-mile noncommercial gravel road linking King Cove to the all-weather airstrip at Cold Bay. That all-weather aspect of that airstrip is what it’s all about. That’s because the airstrip at King Cove is unreachable because of bad weather for about 100 days annually, and that means chartered private medical flights can’t get it in.

The result? Numerous instances over the years in which the U.S. Coast Guard is summoned to evacuate a person in need of urgent medical care that is not available in King Cove or Cold Bay. The lack of ground access to the airstrip at Cold Bay unnecessarily puts the Coast Guard crews in danger.

How dangerous is the air access to King Cove? Several aircraft have crashed en route to King Cove during the past several decades, sometimes killing the occupants, on the trip along a narrow valley known for high winds. People have died waiting for flights to Anchorage for medical care.

The solution was simple and fair: a land trade to gain a 206-acre right of way through the Izembek National Wildlife Refuge to connect King Cove to Cold Bay. The state of Alaska and the local Alaska Native corporation would give 56,000 acres in exchange for the right of way acreage. Also, the new road would not be paid for by federal taxpayers, the same taxpayers who pay the estimated $200,000 cost of each trip to King Cove by the Coast Guard from its station in Kodiak.

Congress authorized the trade, but former Interior Secretary Sally Jewell, who had authority over the matter, vetoed the trade two days before Christmas 2013. She determined the land exchange was not in the public interest.

The Aleutians East Borough, the city of King Cove, the state of Alaska and local tribal and Native corporations sued - and lost.

Prospects are brighter now. Secretary Jewell is out of office. Her likely replacement, U.S. Rep. Ryan Zinke of Montana, almost certainly will be receptive to approving a land exchange. A Senate committee easily approved his nomination earlier this week, setting up a final confirmation vote in the full Senate.

Alaska Sens. Lisa Murkowski and Dan Sullivan last month introduced legislation to authorize the land exchange again, which would involve the swap of the 206 acres of refuge land for 43,093 acres of nearby state land and some Native corporation land.

Despite what you hear from the elected officials, Congress has some culpability in this issue.

Lawmakers approved a lands bill in 2009 that authorized the land exchange and stated that the road “shall be used primarily for health and safety purposes.” But the interior secretary also was required to make sure the land exchange complied with the 1969 National Environmental Policy Act. The act doesn’t allow for consideration of health and safety.

The judge wrote that the NEPA requirement “probably doomed the project.”

“Perhaps Congress will now think better of its decision to encumber the King Cove Road project with a NEPA requirement,” he wrote.

Every day that goes by without this road raises the possibility that someone will die unnecessarily or that Coast Guard personnel will be put at risk.

A resolution of support moving through the Legislature spells out that risk in stark fashion. Since Secretary Jewell’s denial of the land trade, according to the resolution, “55 additional emergency medical evacuations, 17 of which had to be performed by the United States Coast Guard, have occurred between King Cove and Cold Bay.”

It’s past time to get this done. It’s been past time for the 30 years that King Cove residents have been asking for this road.