Encourage corruption and more will come

  • By Larry Smith
  • Wednesday, July 31, 2013 6:32pm
  • News
Encourage corruption and more will come

We now face a great civic task: deciding the referendum on whether to  strike down Senate Bill 21, which slashes state revenues from the oil  industry by about a billion dollars a year. Which side do you believe? 

I go  with the leaders I have long observed to have state residents’ best  interests at heart and who have spent many years working on state oil  policy: founding father Vic Fischer, Sen. Gary Stevens, scholarly Jack  Roderick, and the honor roll of the dead — Jay Hammond, Wally Hickel, Don  Gilman and Hugh Malone, among them.

 Gov. Sean Parnell and Sen. Peter Micciche place their faith in the oil  culture from which they come. I don’t doubt their sincerity, just their  misplaced faith in the industry which the Alaska Supreme Court ruled guilty  of “deliberate falsification in computing the price paid to Alaska for its  royalty oil,” referring to billions of dollars giant oil corporations had  cheated out of Alaskans from 1977 to 1982 (Amerada-Hess case). 

Gov. Hickel warned us, “Meanwhile the oil industry and companies that  depend on them are flocking to support candidates for Governor and the  Legislature who will do their bidding.” 

And they succeeded. Sen. Micciche  and Gov. Parnell are two prime examples. SB 21 cuts oil severance taxes  and royalties, money that will come out of Alaska‘s schools, highway  maintenance and other general fund expenditures. The oil senator amended the  oil governor’s 33 percent clause to 35 percent in a deal which looked a lot like being  prearranged to make him look less like he was taking orders from his  career-long employer. That would be Alaska’s biggest resource exporter,  Conoco-Phillips, the giant oil corporation for which the senator manages  Cook Inlet natural gas. 

Gov. Parnell, as a corporate lawyer, found the oil industry the best  of clients. Right or wrong, he vigorously represented them. That’s the job  for a corporate mouthpiece. That’s not the job for our governor. 

Some  governors enjoyed the perks of industry friendship more than others: Gov.  Parnell is in the company of former Governors Knowles and Sheffield in that  regard. Governors Gruening, Egan, Hammond and Hickel all embraced the  interests of ordinary Alaskans, and believed in treating industry  respectfully but at arms length. 

Big oil has not treated us the same way. They removed the obstacles to  slashing what they pay for Alaska’s North Slope crude by paying for the  election of their own senators, who removed Gary Stevens, Burt Stedman and Lyman Hoffman from the leadership. Wired directly to lobbyists, the new guys  in charge — charged.

 Sen. Stevens spoke to Alaskans from the Senate floor: “Those who don’t  know history are doomed to repeat it. I don’t want to dwell on those abuses  but I ask you to remember just three events in our historic relationship  with the industry, so we won’t repeat them. Remember Amerada Hess. Remember  the Exxon Valdez. And remember Bill Allen. Those three events are not  the only abuses we have experienced. I was elected to the legislature in  2000 and was surprised to see Bill Allen and VECO employees so often in the  halls and offices of the Capitol. As we now know, some of our elected  officials were bribed yet still voted on oil tax bills and even went to  prison for their actions. 

“Those three events are not the only abuses — the wise person learns from history and remembers our past. We don’t want to  be accused again of inexcusable trustfulness when dealing with the oil  industry.”

The investment climate remains very friendly for oil development. There  has long been 60 percent in tax credits for exploration and development and a web of loopholes, netbacks, incentives, rebates and deductions. Congress has  eliminated much federal tax, no matter what our local state taxes may be at  the moment. 

As Gov. Hammond said: “It is the obligation of oil company CEOs  to maximize benefits for their shareholders. It is the obligation of the  state’s CEO to do the same for his.” 

Longtime Homer resident Larry Smith writes that he is  “interested in good goverrnment, honest politics and  fair dinkum for the permanent fund.”


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