Special Session: Looking Back May 2, 2012

Another special session in the can, and there are two very different ways to look at it.

The first: The special session was an abject failure by all parties involved, and Alaska will suffer for it.

• The Governor pushed a new, ill-conceived and very poorly researched oil tax bill that wasted everyone’s time. Then, just as abruptly, he pulled it from consideration, killing the subject of 80 percent of the legislature’s efforts this session. Not exactly a strong move, politically or otherwise.
• Once the oil tax issue was off the table, the Senate took their toys and went home. This is a little more understandable, since realistically it was very unlikely that they could make any progress on either a) a new oil tax bill that they drafted themselves in the remainder of the special session, or b) House Speaker Chenault’s HB 9 bullet line bill, which was DOA in the Senate. That’s because, as a large-diameter gas line proponent said to me earlier this year, it would have been fantastically expensive, the gas wouldn’t have been any cheaper than existing options, it wouldn’t have spur lines to the communities (Fairbanks, interior villages) that need energy relief most, and it would take gas from a place that has gas to another place that has gas. Maybe that makes sense if you’re Mike Chenault and you want to insure against the possibility that the USGS, Buccaneer Energy, and Furie are all wrong about there being massive gas reserves in the Inlet, but it’s a hard sell to most other people, especially ones outside the Anchorage bowl who would see very little benefit. But back to the Senate – even if it was the right call to close up shop early, was there any good reason not to at least have a conversation beforehand with House leadership, just so they wouldn’t complain about you blindsiding them?
• The House, after the Senate left them with nothing on the agenda, pouted for a few days and then decided to end the session, call a press conference where they trashed the Senate, then went home. Seems like they could have done that last Thursday without the five-day wait and the associated (estimated) $200,000 cost to taxpayers.

All right, so that’s the glass-half-empty perspective. Here’s the glass-half-full: All things considered, having come out of the session with the oil tax structure unchanged and no concrete gas line plans isn’t nearly the worst thing that could have happened. The oil tax cut that Gov. Parnell pushed, if passed, would have put the state deep into the red with no guarantee that production would ever pick up enough that we would enjoy the same kind of state revenues that we do now. I don’t think anyone’s really heartbroken it didn’t pass. And as to the gas line, what if the legislature had passed HB 9 (or something like it, any kind of North Slope to Cook Inlet bullet line bill) and then this summer Buccaneer’s and Furie’s estimates of at least a few trillion feet of gas in Cook Inlet are borne out? That doesn’t seem unlikely, and then we’ve potentially dumped a lot of money into something that is now completely purposeless and economically irrelevant.

I’m somewhere in between those two positions. I think everyone involved could have done their jobs better, but given the other possible scenarios, status quo seems okay – for now. Over the next several months we’ll get more data on the state of Alaska’s gas supply, world gas demand, and the nature of the Point Thomson settlement and whether a large-diameter gas line is really in the offing. That should do a lot to add clarity to the picture when things get rolling again in January.