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Tony Knowles
Anchorage, AK
Jul. 19, 2006

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:

  1. 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.

  2. Provisions for constructing a gas line to Southcentral Alaska and making affordable gas available to urban and rural Alaskans.

  3. Alaska hire through a project labor agreement and requirement for in-state hiring locations. Resources must be committed to vocational schools and apprenticeship programs with guarantees to hire graduates.

  4. No concessions on oil taxes can be part of a gas line contract.

The time is right for a gas pipeline to be built with the potential to generate annual state revenues of at least $2 billion for more than 30 years.

The cornerstone of our success with this new prosperity will be the fiscal discipline to invest these surpluses in education. The need is urgent. Current studies show only 60 percent of our high school students graduate and only 27 percent of those graduates are academically prepared for college.

Alaska can have the finest education in America. An important part of this goal is using our new surpluses to increase yearly funding and creating a permanent trust account for education excellence. Earnings from this fund would be dedicated to K-12 schools, the university, vocational training and ensuring that Alaska's children are prepared and healthy to learn from the earliest years.

This is the promise of our generations to the future. My goal is to bring Alaskans together to fight for and achieve this birthright. There is no more worthy calling and our children deserve nothing less.

Tony Knowles served as governor of Alaska from 1994 to 2002. He is running for the Democratic nomination as governor in the Aug. 22, 2006 primary election.

(Enhanced for Netscape)

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