Originally published in the Sitka News
National columnist Thomas Friedman recently observed, "Countries that get addicted to selling their natural resources rarely develop their human resources and educational institutions. ... So after the ore has been mined, the trees cut and the oil pumped, their people are even more behind."
It's a warning Alaskans should heed.
Recalling the old bumper sticker that prayed for another oil boom and promised not to waste it away, it seems that prayer has been answered. Now let's fulfill that promise. This time let's show our strength by insisting on our fair share of the resources and investing the vast additional revenues in education.
The new era of extraordinarily high energy prices calls on Alaskans to assert our state's sovereignty. Our bargaining position is strong. We can demand a natural gas line on our terms and negotiate fair and just compensation for developing our oil and gas resources. Multibillion-dollar surpluses for decades to come should be Alaskans' reward.
Yet, after more than two years of negotiations, we have neither a fair share of revenues nor a gas line contract on Alaska's terms.
There are straightforward ways to get back on the right track and out of the current stalemate. Regarding oil taxes, former Gov. Jay Hammond was known to say the people of Alaska should get financial benefits from publicly owned resources at least equal to the oil companies.
With prices exceeding $70 a barrel, the revenue split is out of balance in favor of the companies.
The tax currently proposed to the Legislature to correct this imbalance does increase state revenues but would trigger endless litigation in trying to determine the net profits of the companies. An easily verifiable approach would be to use the well-tested production tax procedure adjusted to a more equitable balance. Using the Hammond yardstick, this would result in a revenue increase of about $2 billion a year.
A commitment to build the gas line on the terms required by Alaska calls for a different strategy than the current exclusive negotiations with the oil companies. Of course, we should negotiate with the producers. But that is only a first step. Others are anxious to offer competitive proposals. In choosing what is best for Alaska, we have a responsibility to invite all interested parties to submit proposals that would meet Alaska's requirements -- very few of which are met in the current proposal before the Legislature.
These requirements must include:
- Firm commitments to spend specific amounts of money and to achieve specified tasks against time deadlines. The state should be able to cancel the contract if these requirements are not met.