"The good news is the price of oil is fairly high," he said at the town meeting, while noting that's also bad news for consumers.

Stevens wasn't optimistic that construction of a gas pipeline from the North Slope through Canada would come soon enough to keep funding state government.

"The future for Alaska is sort of iffy," Stevens told the chamber at its noon lunch on Tuesday. "What will we do if in fact we don't have the money to run government from oil?"

While many Alaskans pin their hopes on a natural gas pipeline, Stevens said he has to be realistic about the current gas situation.

Clouding the pipeline's prospects is "the extremely low price of gas. It's readily available. There's a lot of it," he said. "We don't clearly know how much gas there is on the North Slope."

Reducing the carbon footprint and addressing global climate change could make natural gas a less carbon producing fuel than coal or oil more attractive.

"That bodes well for Alaska," Stevens said.

Reducing the amount of carbon dioxide in the atmosphere is needed, he said but not through cap and trade. Cap and trade is a carbon-reducing strategy where caps on carbon production are set for various industries. Industries that don't exceed their caps can trade them as credits to other industries.

"Cap and trade scares the heck out of me," Stevens told the chamber.

He elaborated on that theme at the town hall meeting.

"Cap and trade is like the carrot and the stick," Stevens said. "Cap and trade is the stick."

Stevens said he favored a "carrot" approach, where government rewards and encourages industry for reducing carbon use.

"Instead of punishing people for producing carbon, let's move them ahead," he said.

Stevens enthusiastically supports is alternative energy. At the chamber and town meetings he spoke of Kodiak's good record on renewable energy production. Between a hydroelectric plant and a new wind turbine project, Kodiak gets 89 percent of its energy from renewables. Alaska has strong potential for hydropower, wind energy and tidal power.

"Oh yes, absolutely," Stevens said when asked if he supported renewable energy. "We need to get away from as much carbon generation as we can."

One proposal being considered in the legislature is combining all seven Railbelt electric utilities into one large consortium. Proponents say that could lead to better efficiencies and make it easier to get funding for large power projects that benefit the entire Railbelt grid.

Getting utilities to work together could be a problem, Stevens said.

"It's really hard to get everyone in the same room," he said. "Some are producers. Some are consumers. Some are both. We're a long way from getting that settled."

Stevens criticized a proposal by Gov. Sean Parnell to suspend Alaska's 8 cents a gallon tax on gasoline. Former Gov. Sarah Palin got the Legislature to suspend that tax from August 2008 to September 2009 as part of an energy relief package. Parnell wants to Legislature to suspend the tax again.

That tax helps fund construction and maintenance of Alaska roads, Stevens said.

"If we have no gas tax, Alaskans pay nothing for our roads," Stevens said. "We depend on the federal government to save our fanny save our roads."

"I think that is absolutely wrongheaded," Stevens told the town meeting of the gas tax suspension. "I think we need to pay for the services we use."

Stevens said he found being Senate president a bit like being father of a large family. He noted the unusual bipartisan majority coalition of 10 Democrats and six Republicans the first ever since statehood, he said. That has led to a centrist focus in legislation.

"You can't deal with far left issues. You can't deal with far right issues," Stevens said. "You have to deal with those things in the middle."

A voter-supported initiative set a 90-day limit to the legislative session. While he accepts the will of the people, Stevens said he thinks a 120-day session works better.

"Ninety days is rushed," he said. "You don't want fast decisions that's not good politics.

Another voter initiative, a $50 a person tax on cruise ship passengers, should continue, Stevens said but it should be spent on port cities and projects. He criticized using cruise tax money on a Fairbanks fish hatchery project as being outside the scope of the tax.

"We have to be careful how we spend that money," Stevens said. "We should be using it on the ports of call."

Although long-term revenue prospects are cloudy, the immediate future looks good. Stevens said in the next session the Legislature should be able to fund capital projects. He had met on Tuesday with city officials to hear capital project priorities. Also looking good for funding is continuation of revenue sharing and the area cost differential funding for school districts.

"As long as we can afford it, we'll do it," Stevens said. "I think those are safe for the time being."

Michael Armstrong can be reached at michael.armstrong.@homernews.com.