As I reflect back on this class and our guest speakers, a common theme comes to mind, “Change”. As with anything, it’s going to occur. Change is inevitable. It can be beneficial or detrimental depending on the circumstances. As a child in the early 1920’s, my grandmother and her siblings witnessed the first airmail delivery to her hometown McGrath, Alaska. Ben Eielson represented change and a dream come true for this community. Little did she know that her siblings and eventually her own children, grandchildren, and many other relatives would become aviation pilots or employed in the aviation industry. Residents could look forward to fast, regular service in transportation of people, goods, and supplies in the interior. No longer did they have to wait 20-days for mail to be delivered by dog sled. Having items in a timely manner is a huge difference, but it comes at a cost. With fuel prices going sky high, passenger and freight costs have increased tremendously. Rural residents are caught in the middle trying to live a rural/subsistence lifestyle with today’s high prices of fuel. Energy alternatives need to be considered. Solar, wind, and water projects need to be brought in to the rural areas of our state. They may be costly projects to start up, but the pay offs in the long run would make it worthwhile. With rising costs in rural Alaska, people are abandoning this lifestyle to move to the city where there are jobs and reasonable costs of goods and services. The emotional and psychological toll this takes on a family can be excessive and evident in numerous ways in our community. Be pro-active and don’t wait to deal with the energy issues. By waiting to intervene, problems escalate. Let’s get the ball rolling and work from the preventive standpoint!
Deb Winkelman
Monday, April 25, 2011
Over a week ago I cam across this interesting article (below). Bolivia is passing the world's first law granting all nature equal rights to humans. As the debate over Pebble Mine continues here, perhaps we can gain a different perspective by seeing how Bolivia is handling the bane of encroaching global warming in their country. Something that if not addressed, will lead to desertification in their country. While global warming issues affect us all in some way, maybe we can look at Bolivia's proactive measures to take care of the health of its land and all the creatures that share it. Maybe threatening an entire wild salmon fishery will have greater consequences in our future than we realize- no matter how much money is involved. Maintaining a sustainable food source seems like a no brainer to me. Bolivia is seeing rising temperatures that will lead to crisis in farming and water shortages in two major Bolivian cities in the near future. It is predicted that in the next 100 years the rising temperatures would turn most of Bolivia into a desert. At the same time they are experiencing a resurgence of the indigenous Andean spiritual world view that "establishes a new relationship between man and nature, the harmony of which must be preserved as a guarantee of its regeneration". Rather than profit economically from the resources that lend to nearly one third of the country's foreign currency right now, they are turning back to Pachamama, or mother nature, in an attempt to slow things down. While we are not threatened with the same issues that Bolivia faces at the moment, it is worth thinking into the future about what would really be better for our environment- not just ourselves as humans, but about the biodiversity of the area with regard to all of the life that the Bristol bay areas sustains. Check out this article. I found it interesting!-
Sophie Littée
=-=-=-=-=-=-=Bolivia Set to Pass ‘Law of Mother Earth’
In a political move that would make John Locke’s head explode, Bolivia is poised to pass a law that would grant nature equal rights with those afforded humans. The Law of Mother Earth is expected to usher in a radical new conservation policy against pollution and exploitation.
http://www.truthdig.com/
Diversifying the Alaskan Economy….an Attempt
So…. the Alaska State House Finance Committee sits on a bill that would extend the Alaskan Film Production Tax Credit for three more years. Who cares…right?
Wrong!
The AK Film credit works like this. Production Companies apply for the credit…submitting a script….or scope of the project. The AK film office decides if this project will enhance the Alaskan economy. If it’s a go, upon completion an Alaskan accountant will audit the spending. The base tax credit is 30% but can go up to 44% if the production company pays Alaskan residents wages, makes expenditures in AK during the off season and pumps money into rural economies.
Based on their entitled percentage…production companies can sell their tax credit to Alaskan businesses that pay uber taxes…..LIKE OIL COMPANIES! Production companies usually sell their credits for 80-90% of their true value. However, those AK companies who buy the tax credits can write them off at their FACE VALUE when paying their AK taxes. What fun! It’s not a 2 billion dollar cut in taxes….but every little bit helps…doesn’t it?
OK…so “Everybody Loves Whales” wrapped up shooting and ….Voila! $16.5 million gets pumped into the AK economy! No drilling…no oozing black stuff pouring into the ocean or onto the tundra…no fish being annihilated …and spawning beds are still safe and fun to spawn in.
…but wait
Not only is there one movie….another movie starring John Voight was filming at the same time. Additionally several reality TV shows have found a home under the AK film credit: “Deadliest Catch” (although, this one was already underway before the tax credit)…”Ice Road Truckers”….”Sarah Palin’s Alaska” (God, help us)….”Alaska State Troopers” and “Cowboys of the Sea”….ALL SINKING THEIR MONEY INTO THE ALASKAN ECONOMY.
An unexpected outcome of all this Alaskan Hollywood business is the insatiable interest in Alaska. Who needs the Las Vegas Alaskan Tourism shrine when you have hours of free advertising!!
In a discussion with Representative Pete Petersen I discovered that because of the “Alaska State Troopers” reality program, this is the first time they have been able to fill all their positions. Calls are coming in from those asking how they can become a Trooper in AK.
Though Alaska has had a fledgling film industry there is now a potential solid market for those trying to forge a career in film. The University of Alaska in Fairbanks has just approved a Bachelor of Arts in Film. A few days ago, I opened my classes to two forward thinking teachers who are offering film classes during the ASD summer school in Chugiak and Dimond. Not only does that mean we can grow our own film talent and we can keep them working in AK….but perhaps we won’t see as many horrid local commercials and PSAs!
We’ve been listening to the cries for economic diversification. This is a no brainer!!! And yet….the House Finance Committee sits on it after it was passed unanimously in the Senate…it won’t move out of finance until session begins again in January next year. After all….it’s Johnny Ellis’ bill….he didn’t allow for the oil company $2 billion tax cut that was passed by the House. That’s it….hold the prosperity of Alaska hostage while the House plays it’s little vindictive games. “The smelly kitchen of politics…” -Creon , Antigone
Andrea Lang
HOW WE MIGHT CREATE OUR OWN YELLOW BRICK ROAD
Possibly, a better use of our state electoralʼs time would be spent looking into how we
take the wealth created by this finite oil resource and put it to work creating renewable
industries. Greater support to a stateʼs university system can achieve these goals. State
and municipal governments have strengthened their university systems, creating
thriving industries that provide significant economic and social value to their
communities.
When companies consider where to locate, they are looking for a variety of attributes;
one being access to innovative thinkers, or more precisely, an environment that
provides the tools and infrastructure to nurture these groups; The ConocoPhillips
Integrated Science Building is an example of this kind of investment. The building has
state-of-the-art laboratories and research facilities and serves as an excellent recruiting
vehicle attracting high-caliber professionals and students. Another example is the
partnership between the University and Providence Hospital, providing the professional
support and learning environment to students while lessening the financial burden of
tuition and training.
Down the road, if the recruiting and retention of the medical graduates mirrors what
researchers see in the education sector, teachers educated in Alaskaʼs universities
remain employed in Alaskaʼs schools longer, then these future medical students will be
the doctors and nurses that care for Alaskans.
Linda Biddle
take the wealth created by this finite oil resource and put it to work creating renewable
industries. Greater support to a stateʼs university system can achieve these goals. State
and municipal governments have strengthened their university systems, creating
thriving industries that provide significant economic and social value to their
communities.
When companies consider where to locate, they are looking for a variety of attributes;
one being access to innovative thinkers, or more precisely, an environment that
provides the tools and infrastructure to nurture these groups; The ConocoPhillips
Integrated Science Building is an example of this kind of investment. The building has
state-of-the-art laboratories and research facilities and serves as an excellent recruiting
vehicle attracting high-caliber professionals and students. Another example is the
partnership between the University and Providence Hospital, providing the professional
support and learning environment to students while lessening the financial burden of
tuition and training.
Down the road, if the recruiting and retention of the medical graduates mirrors what
researchers see in the education sector, teachers educated in Alaskaʼs universities
remain employed in Alaskaʼs schools longer, then these future medical students will be
the doctors and nurses that care for Alaskans.
Linda Biddle
YOU CAN STOP REINVENTING THE WHEEL, THE HAMSTERʼS DEAD
In the midst of our current political environment, one would assume we have an army of
tax analysts and petroleum engineers in our Capitol. As it turns out, we do; but none of
them are elected officials. In fact, even our most seasoned lawmakers seem to have
forgotten their role. In the last decade, our stateʼs tax structure (the terms we hold to oil
companies for harvesting our resources) has been altered multiple times. While this
seems reasonable to a profession that meets each year to revise capital and operating
budgets, it is baffling to those that make investment decisions on a horizon that spans
decades.
While I am no fan of “Big Oil,” I recognize that whether the terms of the deal are
perceived as ʻgoodʼ or ʻbad,ʼ a qualitative measure to be sure, there is nothing
qualitatively good about the term ʻunpredictable.ʼ
When a decision to invest in exploration is made, close to a decade will pass before oil
reaches a refinery. And while it is important for our state government to strike a fine line
to ensure that each side gets its “fair share,” a willingness to stick to the agreement,
whatever the negotiated terms, is a necessary prerequisite to sound policy.
And herein lies the problem. The Legislature appears to be going about its business (a
term applied loosely here) without regard to long-term investment. They are elected to
pass legislation on behalf of their constituents and appropriate funds through the
budget. Period.
The necessary preoccupation with reelection can account for a portion of this myopic
perspective, but doesnʼt fully account for their responsibility to plan for the Stateʼs long-
term health. In the current session, less than ten bills passed the House and Senate,
the majority of which do nothing to facilitate job growth, community safety, or any of the
many problems facing our stateʼs future (i.e. substantive legislation).
Whether it is health care or education, transportation or social services, the
preoccupation with how much to give oil companies in exchange for our resources have
pushed everything else off the agenda. Compounding this legislative ineptitude is the
the realization that this conversation - oil royalties - has been held multiple times in the
last decade.
So, while many speeches and proclamations have been made on behalf of our stateʼs
future, little has been done in terms of legislation; the actual product our lawmakers are
hired to create. While no one would argue the terms of this elusive tax structure are
inconsequential, one would hope our elected officials possess the courage and self-
confidence to stick with whatever plan is reached, so that upon passage, those that
must create wealth can go about their business.
Linda Biddle
tax analysts and petroleum engineers in our Capitol. As it turns out, we do; but none of
them are elected officials. In fact, even our most seasoned lawmakers seem to have
forgotten their role. In the last decade, our stateʼs tax structure (the terms we hold to oil
companies for harvesting our resources) has been altered multiple times. While this
seems reasonable to a profession that meets each year to revise capital and operating
budgets, it is baffling to those that make investment decisions on a horizon that spans
decades.
While I am no fan of “Big Oil,” I recognize that whether the terms of the deal are
perceived as ʻgoodʼ or ʻbad,ʼ a qualitative measure to be sure, there is nothing
qualitatively good about the term ʻunpredictable.ʼ
When a decision to invest in exploration is made, close to a decade will pass before oil
reaches a refinery. And while it is important for our state government to strike a fine line
to ensure that each side gets its “fair share,” a willingness to stick to the agreement,
whatever the negotiated terms, is a necessary prerequisite to sound policy.
And herein lies the problem. The Legislature appears to be going about its business (a
term applied loosely here) without regard to long-term investment. They are elected to
pass legislation on behalf of their constituents and appropriate funds through the
budget. Period.
The necessary preoccupation with reelection can account for a portion of this myopic
perspective, but doesnʼt fully account for their responsibility to plan for the Stateʼs long-
term health. In the current session, less than ten bills passed the House and Senate,
the majority of which do nothing to facilitate job growth, community safety, or any of the
many problems facing our stateʼs future (i.e. substantive legislation).
Whether it is health care or education, transportation or social services, the
preoccupation with how much to give oil companies in exchange for our resources have
pushed everything else off the agenda. Compounding this legislative ineptitude is the
the realization that this conversation - oil royalties - has been held multiple times in the
last decade.
So, while many speeches and proclamations have been made on behalf of our stateʼs
future, little has been done in terms of legislation; the actual product our lawmakers are
hired to create. While no one would argue the terms of this elusive tax structure are
inconsequential, one would hope our elected officials possess the courage and self-
confidence to stick with whatever plan is reached, so that upon passage, those that
must create wealth can go about their business.
Linda Biddle
Concerning Logistics and Alaska's Location on the planet.
I remember as a kid here in Anchorage back in the early 1970's when the first 747 came to town. Now this had been an Anchorage where all TV shows were two weeks behind the rest of the United States. It seemed like weeks before the great latest Hollywood movies would meander their way up here. Package deliveries typically seem to take 4-6 weeks.
Never the less, the Anchorage International Airport was growing as just that, International, with Anchorage as an important hub. My Uncle flew for Pan American Airlines as they were opening doors of connection to the orient (China and Russia was still uniquely closed at the time.) The polar route to Europe was just opening up or being loudly touted and advertised for everyone to get on board. My youthful fascination with ideas about England, Germany, France opened. We wouldn't have to fly all the way south to Seattle, across to New York, then across the path that Lindbergh took so long ago in his historic journey. We had our own short direct route, we would now be the adventurers. Advertising popularized the possibilities of Anchorage's location. I new nothing then of cabotage laws of embarking and debarking, but tourists from all over were making their way here unlike before. Scores of Japanese, Swiss, Germans would come here, sometimes making this their final destination, at other times they would go on to other adventures.
But then in the 1980's and 1990's the sensationalism went silent. The hype and advertising stopped. Anchorage once again seemed to be just a hub at the end of the road for local concerns, the big fish in a small pond. I didn't track this or study this. It was just my perspective of growing up here.
Darren Prokop suggested that the "Lower '48" and other places around the Pacific Rim, Europe, and Canada have a mentality that this is true, Alaska is the frontier, the wilderness, at the end of the road. He furthered the idea that we need to change this perspective, both within ourselves and with others.
I have become concerned that Alaska is more of a place of consumption than production. Ships and trucks come up full and leave less so (except of course the oil tankers...which leave quickly with the resource extracted here). Same old story for Alaska. Quick extraction of fur, fish, gold, coal, copper, zinc has been our history. Little added value. The baseline for Alaska's economy rests on oil. How can we develop to diversify our economy? How can we change people's thinking that we are a hub to stop at? We are a place that is productive. We are a crossroads.
I am pleased to hear all the statistics of logistics Dr. Prokop presented that thinking is advancing. Some businesses got in early like Fed Ex, who know the logistics of transportation of trade through this area, who know our cabotage laws are favorable for trade. I am pleased to hear that the State, the Cities, and business leaders are thinking about the hub that Anchorage and Fairbanks represents in this world. Solutions? I wonder if it goes back to awakening the minds of the Alaska children to see the possibilities and that they have access to their dreams. For in many of their minds, we are at the end of the road.
I look at the sky now and watch the planes fly way over head at 30,000 feet. From Seattle or Vancouver to Seoul, Beijing, and Narita (Tokyo). I know from what Dr. Prokop said, many them land here and our airport is real busy, and our port is real busy, and our roads are real busy. But what do my students see and think about the possibilities here?
Kevin Brownsberger
Never the less, the Anchorage International Airport was growing as just that, International, with Anchorage as an important hub. My Uncle flew for Pan American Airlines as they were opening doors of connection to the orient (China and Russia was still uniquely closed at the time.) The polar route to Europe was just opening up or being loudly touted and advertised for everyone to get on board. My youthful fascination with ideas about England, Germany, France opened. We wouldn't have to fly all the way south to Seattle, across to New York, then across the path that Lindbergh took so long ago in his historic journey. We had our own short direct route, we would now be the adventurers. Advertising popularized the possibilities of Anchorage's location. I new nothing then of cabotage laws of embarking and debarking, but tourists from all over were making their way here unlike before. Scores of Japanese, Swiss, Germans would come here, sometimes making this their final destination, at other times they would go on to other adventures.
But then in the 1980's and 1990's the sensationalism went silent. The hype and advertising stopped. Anchorage once again seemed to be just a hub at the end of the road for local concerns, the big fish in a small pond. I didn't track this or study this. It was just my perspective of growing up here.
Darren Prokop suggested that the "Lower '48" and other places around the Pacific Rim, Europe, and Canada have a mentality that this is true, Alaska is the frontier, the wilderness, at the end of the road. He furthered the idea that we need to change this perspective, both within ourselves and with others.
I have become concerned that Alaska is more of a place of consumption than production. Ships and trucks come up full and leave less so (except of course the oil tankers...which leave quickly with the resource extracted here). Same old story for Alaska. Quick extraction of fur, fish, gold, coal, copper, zinc has been our history. Little added value. The baseline for Alaska's economy rests on oil. How can we develop to diversify our economy? How can we change people's thinking that we are a hub to stop at? We are a place that is productive. We are a crossroads.
I am pleased to hear all the statistics of logistics Dr. Prokop presented that thinking is advancing. Some businesses got in early like Fed Ex, who know the logistics of transportation of trade through this area, who know our cabotage laws are favorable for trade. I am pleased to hear that the State, the Cities, and business leaders are thinking about the hub that Anchorage and Fairbanks represents in this world. Solutions? I wonder if it goes back to awakening the minds of the Alaska children to see the possibilities and that they have access to their dreams. For in many of their minds, we are at the end of the road.
I look at the sky now and watch the planes fly way over head at 30,000 feet. From Seattle or Vancouver to Seoul, Beijing, and Narita (Tokyo). I know from what Dr. Prokop said, many them land here and our airport is real busy, and our port is real busy, and our roads are real busy. But what do my students see and think about the possibilities here?
Kevin Brownsberger
The Pebble Mine- A case of negative externalities
I have been impressed and mesmerized by the quantity and value of the metal resources discovered in the Pebble Mine project. When one thinks of the entire world and the search for metal it is incredible to have this bonanza right here in Alaska. And when one thinks of the potential money to made, by the mining company, the state, and the individual investor it is easy to get caught up in the fervor and excitement that this mine project represents. Even if the bubble that currently exits with the price of gold were to pop, I think Northern Dynasty would weather the storm considering the discovery they have made at Pebble. Following are a few quotes from the Northern Dynasty fact sheet listed on their website.
“......The U.S. Geological Survey lists the Pebble resource lands as the most extensive mineralized system in the world.”
“...... a resource estimate includes 5.94 billion tonnes in the measured and indicated category containing 55 billion lb copper, 66.9 million oz gold and 3.3 billion lb molybdenum;and 4.84 billion tonnes in the inferred category, containing 25.6 billion lb copper, 40.4 million oz gold and 2.3 billion lb molybdenum.”
In 2010 Northern Dynasty estimated the value of these resources to be 300 billion dollars. At todays prices the value of these resources is even greater, somewhere between 500-800 billion dollars. A mind numbing figure.
Northern Dynasty Stock is considered to be undervalued. ....Seering succinctly summed up the Northern Dynasty bull case: "Value of minerals in the ground, priced even conservatively, makes this stock a bargain."
I mean who wouldn’t want to plink down $15,000 today and buy Northern Dynasty Stock at 14.55 per share only to double or triple their money in a handful of years. I certainly could use an extra $30,000!
When thinking in only monetary terms it seems like a reasonable gamble.
However.........
In looking at mining history and all of the potential and actual environmental damages that mines have caused and that have to be dealt with for generations to come it is clear why there is so much opposition to this proposed development. From acid mine water and block caving leading to subsidence, along with the seismic risks posed to the tailing dams, it is clear that the risks to the Bristol Bay Watershed are very real if not likely. Please see... www.pebblescience.org/ and http://www.
The toxic tailings produced from the mine would have to be held in perpetuity, long after our lives are over. The real question then becomes what legacy do we want to leave our children and people of future generations. It is my belief that the negative consequences that can stem from mine development at the Pebble Project far outweigh the positives not only for Alaskans but for people worldwide.
Keith Harjehausen
“......The U.S. Geological Survey lists the Pebble resource lands as the most extensive mineralized system in the world.”
“...... a resource estimate includes 5.94 billion tonnes in the measured and indicated category containing 55 billion lb copper, 66.9 million oz gold and 3.3 billion lb molybdenum;and 4.84 billion tonnes in the inferred category, containing 25.6 billion lb copper, 40.4 million oz gold and 2.3 billion lb molybdenum.”
In 2010 Northern Dynasty estimated the value of these resources to be 300 billion dollars. At todays prices the value of these resources is even greater, somewhere between 500-800 billion dollars. A mind numbing figure.
Northern Dynasty Stock is considered to be undervalued. ....Seering succinctly summed up the Northern Dynasty bull case: "Value of minerals in the ground, priced even conservatively, makes this stock a bargain."
I mean who wouldn’t want to plink down $15,000 today and buy Northern Dynasty Stock at 14.55 per share only to double or triple their money in a handful of years. I certainly could use an extra $30,000!
When thinking in only monetary terms it seems like a reasonable gamble.
However.........
In looking at mining history and all of the potential and actual environmental damages that mines have caused and that have to be dealt with for generations to come it is clear why there is so much opposition to this proposed development. From acid mine water and block caving leading to subsidence, along with the seismic risks posed to the tailing dams, it is clear that the risks to the Bristol Bay Watershed are very real if not likely. Please see... www.pebblescience.org/ and http://www.
The toxic tailings produced from the mine would have to be held in perpetuity, long after our lives are over. The real question then becomes what legacy do we want to leave our children and people of future generations. It is my belief that the negative consequences that can stem from mine development at the Pebble Project far outweigh the positives not only for Alaskans but for people worldwide.
Keith Harjehausen
Gas Pipeline
I think Alaska should stop waiting for the oil companies to agree to build a gas pipeline and we should just do it ourselves. That probably cannot be done through Canada, so the state should build a pipeline to Anchorage or Valdez and send its natural gas to Asia or California. Canada and Australia are going to export gas to Asia and we should too. As a result, we wouldn’t have to wait around for Canada to get its act together on Native land claims and permitting issues.
Many people think the government cannot possibly build a multi-billion dollar pipeline. However, to me a pipeline is not much different than a road, railroad of aquifer, and providing transportation infrastructure is in keeping with traditional governmental functions. The state would hire the same pipeline contractors to build it that the oil companies would, the difference would just be the timing. Governor Egan wanted the state to build the oil pipeline, and the state would have made a lot more money and the North Slope would be more competitive if we had.
The main issue really is not who builds the pipeline, which is just an expensive road, it is how to get the gas commitments necessary to finance the construction. It is clear BP, Conoco, and Exxon are refusing to commit gas to any pipeline until we agree to alter our taxes on both oil and gas. I think if the current leaseholders continue to refuse to sell our gas from state owned lands we should do like any royalty owner in Texas would do if a producer refused to market, we should take our leases back and give them to oil companies that want to develop our resources. It’s simply ridiculous that Alaskans have to pay some of the world’s highest oil prices because a few oil companies on the North Slope are holding up a pipeline to extract a better deal on taxes from the state.
Alyson South
Many people think the government cannot possibly build a multi-billion dollar pipeline. However, to me a pipeline is not much different than a road, railroad of aquifer, and providing transportation infrastructure is in keeping with traditional governmental functions. The state would hire the same pipeline contractors to build it that the oil companies would, the difference would just be the timing. Governor Egan wanted the state to build the oil pipeline, and the state would have made a lot more money and the North Slope would be more competitive if we had.
The main issue really is not who builds the pipeline, which is just an expensive road, it is how to get the gas commitments necessary to finance the construction. It is clear BP, Conoco, and Exxon are refusing to commit gas to any pipeline until we agree to alter our taxes on both oil and gas. I think if the current leaseholders continue to refuse to sell our gas from state owned lands we should do like any royalty owner in Texas would do if a producer refused to market, we should take our leases back and give them to oil companies that want to develop our resources. It’s simply ridiculous that Alaskans have to pay some of the world’s highest oil prices because a few oil companies on the North Slope are holding up a pipeline to extract a better deal on taxes from the state.
Alyson South
Corporate Taxes in Alaska
I was talking to a friend about the Pebble Mine and some of the things we've
discussed about the topic. It was pointed out that mining companies are only taxed at
3% and it actually ends up being less than that because the tax is based on an adjusted
income after expenses are deducted. Why it is that the oil and gas companies are taxed
many times more than that? How could one nonrenewable resource be taxed at such a
higher rate than another and why wouldn’t the oil and gas companies balk at that? I
understand that the oil/gas companies don’t like the present tax rate, but how did the
state actually make it happen? Maybe the profits from the oil/gas are just so huge that
the companies have decided it’s worth it in spite of the higher tax rate. And how did the
mining industry get such a break compared to oil and gas corporations? It sure seems
like there are significant profits that are being made by large mining corporations, such
as the owners of Red Dog mine. Obviously, if the Pebble mine is developed, the profits
are going to be staggering. So why the discrepancy in the rates of taxation? And is
there any chance that the mining tax would be increased? Don’t the minerals in the
ground belong to all the citizens of Alaska, just like the oil and gas deposits? I would
appreciate it if some of our more enlightened classmates could share some answers to
these questions.
Then I got to thinking about renewable resources and how they are taxed. What about
fisheries? I know they pay taxes on their income but not like oil and gas companies.
One source that I looked up online said that the fisheries business tax is 1 to 5 percent
of the value of fish or seafood processed in Alaska. This is a similar rate to the mining
industry. That made me wonder about the timber, tourism and other similar industries.
They all pay income tax but nothing like the oil/gas companies.
I am concerned about the high tax rates for the oil/gas companies. Their profits are
declining and are expected to continue to do so. They fuel the economy (I think there is
a pun in there somewhere) in so many different ways because they bolster all facets of
the economy, including many types of businesses. That being said, I have to disclose
my biases (which some people seem reluctant to do). I have a son and a daughter that
work for a large oil company and I want their company to do well and continue to do
business in Alaska so that their jobs and future are secure. My husband works in a
construction related field, and that business is fed by the healthy economy that we
enjoy due to oil/gas royalties in the State of Alaska. That said, in the US of A, we take
pride in fairness and equity, and I don’t know why the oil/gas companies have been
singled out for a tax penalty for their success. I’m not sure that we’re going to be able
to continue to squeeze the oil/gas companies as we have without a turndown in
exploration, production and state revenues.
Dawn Hibbert
discussed about the topic. It was pointed out that mining companies are only taxed at
3% and it actually ends up being less than that because the tax is based on an adjusted
income after expenses are deducted. Why it is that the oil and gas companies are taxed
many times more than that? How could one nonrenewable resource be taxed at such a
higher rate than another and why wouldn’t the oil and gas companies balk at that? I
understand that the oil/gas companies don’t like the present tax rate, but how did the
state actually make it happen? Maybe the profits from the oil/gas are just so huge that
the companies have decided it’s worth it in spite of the higher tax rate. And how did the
mining industry get such a break compared to oil and gas corporations? It sure seems
like there are significant profits that are being made by large mining corporations, such
as the owners of Red Dog mine. Obviously, if the Pebble mine is developed, the profits
are going to be staggering. So why the discrepancy in the rates of taxation? And is
there any chance that the mining tax would be increased? Don’t the minerals in the
ground belong to all the citizens of Alaska, just like the oil and gas deposits? I would
appreciate it if some of our more enlightened classmates could share some answers to
these questions.
Then I got to thinking about renewable resources and how they are taxed. What about
fisheries? I know they pay taxes on their income but not like oil and gas companies.
One source that I looked up online said that the fisheries business tax is 1 to 5 percent
of the value of fish or seafood processed in Alaska. This is a similar rate to the mining
industry. That made me wonder about the timber, tourism and other similar industries.
They all pay income tax but nothing like the oil/gas companies.
I am concerned about the high tax rates for the oil/gas companies. Their profits are
declining and are expected to continue to do so. They fuel the economy (I think there is
a pun in there somewhere) in so many different ways because they bolster all facets of
the economy, including many types of businesses. That being said, I have to disclose
my biases (which some people seem reluctant to do). I have a son and a daughter that
work for a large oil company and I want their company to do well and continue to do
business in Alaska so that their jobs and future are secure. My husband works in a
construction related field, and that business is fed by the healthy economy that we
enjoy due to oil/gas royalties in the State of Alaska. That said, in the US of A, we take
pride in fairness and equity, and I don’t know why the oil/gas companies have been
singled out for a tax penalty for their success. I’m not sure that we’re going to be able
to continue to squeeze the oil/gas companies as we have without a turndown in
exploration, production and state revenues.
Dawn Hibbert
A few weeks ago I walked away from class with high hopes of strong
economic gains from the Pebble Mine. Dollar signs ran through my mind as I
saw the numbers being presented on the screen. I shared my excitement for
probable economic benefit of this project with anyone who would listen.
After our last class my view has completely turned away to the stance that
this project should not happen. I now understand the dangers of both the
extraction process and storage of the hazardous waste materials that will
remain forever. In my mind, no dollar amount could ever pay for the
potential effects on the future of Alaska¹s salmon industries and the
overall well-being of many Alaskans.
Alaska¹s economy has been fed by the exploitation of the land and
animals since the late 1700¹s. This started with the fur trade and now
continues today through oil production. The people of Alaska have gained
greatly from our abundance of natural resources. These resources have put
this state in the position enjoy a budget surplus while most other states
are suffering through crippling budget shortfalls. On a personal level, I
understand that I would not be living in this state without oil supplying
90% of the funding to our state budget and basically paying my salary.
Alaska¹s economy has depended on these resources since before statehood and
will, without a doubt, continue to for the foreseeable future.
There are increasing worries that oil production is fading and will
eventually get to the point where it will not be able to sustain Alaska¹s
revenue needs. Pebble Mine would fill the void created by this decline.
While I understand that Alaska¹s economy stands to gain greatly if /when
this project comes to fruition, I personally feel that the environmental
costs outweigh these potential monetary gains.
Rick Sandhoefner
economic gains from the Pebble Mine. Dollar signs ran through my mind as I
saw the numbers being presented on the screen. I shared my excitement for
probable economic benefit of this project with anyone who would listen.
After our last class my view has completely turned away to the stance that
this project should not happen. I now understand the dangers of both the
extraction process and storage of the hazardous waste materials that will
remain forever. In my mind, no dollar amount could ever pay for the
potential effects on the future of Alaska¹s salmon industries and the
overall well-being of many Alaskans.
Alaska¹s economy has been fed by the exploitation of the land and
animals since the late 1700¹s. This started with the fur trade and now
continues today through oil production. The people of Alaska have gained
greatly from our abundance of natural resources. These resources have put
this state in the position enjoy a budget surplus while most other states
are suffering through crippling budget shortfalls. On a personal level, I
understand that I would not be living in this state without oil supplying
90% of the funding to our state budget and basically paying my salary.
Alaska¹s economy has depended on these resources since before statehood and
will, without a doubt, continue to for the foreseeable future.
There are increasing worries that oil production is fading and will
eventually get to the point where it will not be able to sustain Alaska¹s
revenue needs. Pebble Mine would fill the void created by this decline.
While I understand that Alaska¹s economy stands to gain greatly if /when
this project comes to fruition, I personally feel that the environmental
costs outweigh these potential monetary gains.
Rick Sandhoefner
Tariffs or Taxes –
Here I sit, trying to conjure up some economic wisdom, stressing over all my deadlines coming due: alternative evaluation write-up, progress reports, this blog, an economic test, and chaperoning senior fun day while dealing with sun-seeking senioritis suffering students. Throw a Praxis 2 test in the mix as a decision made by my wise administration now forces me to get highly qualified in another area. Holy wow, besides my son’s 4th birthday coming up, I wish I could wake up and the next couple weeks would be in the past.
Times like these are when I tell myself I really love my job. Actually, I am very grateful that I have a good job. I personally know a number of people, as I’m sure we all do, that have been adversely affected by our recent recession. There are many different and valid opinions about the role of government in times like these, but one thing is for sure, government’s actions affect our lives.
I am reminded about a discussion we had earlier this semester about international trade and the effects of government imposed tariffs. While the cause of layoffs from this most recent and persistent recession are different than layoffs due to jobs moving to other countries with competitive advantage, either case gives me pause to consider the value of retained employment.
We discussed how government tariffs are a bad thing, by increasing the cost of products to domestic consumers and causing an inefficient use of resources; namely the human capital that continues to produce the taxed products instead of being allocated to areas that better serve the free market system. While I completely agree with this position, I can’t help but wonder how a worker, a family, or a community go about this reallocation process while they are out of work and can’t pay their bills. Where do they turn? To the government; which, under the stress of an overburdened unemployment system, must in turn increase taxes on the rest of the countries citizens.
So I can see the social argument for imposing tariffs on foreign produced goods if it means not taxing ourselves even more. But the idea of growing our human capital which will expand our production possibility curve sounds like a better option. I wonder though, is there a point where much of our human capital reaches the limit of their potential expansion? Much of our culture is so infatuated with instant gratification, material fashion, and the easy life that there are precious few left with the dedication, willingness, and mental capacity to effectively reallocate to new markets.
So what is the best course of action; is there a happy medium? I don’t know. These are questions for those smarter than I. In the meantime, I’ve got trees to cut and stumps to dig so I can assemble a playground for my son’s birthday surprise. I’ll have to squeeze that into my spare time.
Doug Wall
One Pebble Just NOT Worth the Risk
I have been closely following the controversy surrounding the development of the Pebble prospect for some time. I have been flying hunting and fishing clients into the area, and I own property in Pedro Bay, so I have a personal stake in what happens if this mine is pushed forward into production. To tell the truth, I had been leaning towards supporting developing the Pebble mine. The NIMBY argument used by the Renewable Resources Foundation is NOT justification for stopping development. It simply shifts the potential environmental harm from our back yard into somebody else’s, and that is not an ethical thing to do.
I hate to say it, but Anders Gustafson may have persuaded me to switch horses. While his presentation tends to use emotion more than economics as persuasive tactics, I think it’s the economics of the prospect that is the best argument against it. Here’s why.
At today’s prices the total value of the minerals in the Pebble prospect is estimated at $400 billion, a stupendous bounty. Of course, it’s hard to estimate how much profit the developers would realize in the venture, but let’s be generous and say it’s 10% of the take ($40 billion). At the current state tax rate on minerals of 3% of the adjusted gross profit, the people of Alaska’s share of the booty would be $1.2 billion. Not per year, but for the projected life of the mine.
Sure, the mine would directly employ a lot of Alaskans that would contribute to the economy, and indirectly many more would benefit. Compared to the fishing industry, though, the employment benefits of the mine are peanuts, so if it’s a matter of one or the other (not both) the fishing industry is the clear winner here. Of course, when the mine pulls the last profitable ore out of the ground, those jobs disappear while the fishermen keep on fishing. If there are any fish left.
The metals in the Pebble prospect aren’t going anywhere, and perhaps in the future extracting them will be worth the risk. Maybe new technology will allow us to ensure no ill effects to the salmon, or maybe climate change or some other change will remove the salmon so they are no longer a factor. However, with today’s mining technology, and the poor track record of all large sulfide mines that have preceded Pebble, the potential risk of proceeding with development of the Pebble Mine is simply not worth the negligible benefit to the people of Alaska, from a purely economic standpoint.
Dave Oberg
The study of Economics was always a chore for me. My high school economics teacher (mandatory class) strolled around the room, hands in his pockets, stared out the window, and bored us to tears. What I mostly remember from that class was trying to find ways to stay awake. My lowest score in college was the economics class I took. I just could not care less about economics so why did I take this course?
Almost every year since I began teaching I would hear about the fabulous economics course that fellow teachers took. There were tests but you could get together with others to do them plus people seemed to have fun while they learned. As I got older I also realized I needed to know more about how the economy works, especially so that I could carry on a fairly intelligent conversation with a spouse who spouts off about how “the hard times are coming” and why “we have to get the house paid off” or why we gotta “lower the thermostat” to one degree above freezing (slight exaggeration) so I took the class.
I discovered that I do know something about economics - $200 and 3 credits! Yeah! I couldn’t pass it up. Would that be my Equilibrium price? In our first lesson Kyle mentioned the Diamond vs Water paradox and I immediately thought of a time Mr. Spouse and I were in Hawaii planning a hike over a lava field. We didn’t have much water and no way was he going to pay the ridiculously inflated price that was being charged at the entrance to the field so we didn’t buy more water. The sun was hot, the black lava even hotter. The molten lava that Mr. “Geologist” Spouse wanted to see was much, much further away than what we anticipated. On our return trip all our parched minds could think about was that water and we were willing to pay 4 times as much, maybe more, for that very valuable water at that little shop that was now CLOSED!
When Lee Huskey brought up the housing bubble of the ‘80s I again recalled my personal experience. We were upside down in our mortgage on a house that was too small for us however the banks were willing to lend us money for a new place as long as we had renters who could make our mortgage payments for the old house. Thinking about it now I don’t believe that was good business practice. It was just like the latest lending practices that caused so many homeowners to not be able to make their mortgage payments because they never should have been approved for a loan in the first place, as Vernon Smith pointed out.
I believe I am gaining an understanding of how this economics thing works. Now I question “What to do? What to do? What to do? Everyone wants their “stuff” but no one seems to want to deal with the reality of what the consequences of having that stuff means. Do we mess up our own backyards or do we do it overseas for cheaper costs? If it goes overseas it doesn’t mean that we in the U.S. will be protected from polluting factors because the earth is dynamic and the pollution will eventually make its way here. The environmental regulations in other countries may be less stringent than ours are so the pollution they pump into the air or dump into the water will eventually get to us. “The solution to pollution is dilution” only works for so long. With regards to the Pebble project, the gas pipeline, renewable energy, what is best for Alaska, etc. what are we to do? For example, lots of copper is used in windmills that could pump out electricity (when the wind blows). Electricity flows through copper wire and is used in all those electronic gadgets people want to have. A 3 Mw windmill typically incorporates between 4 and 4.5 metric tons of copper, worth about $40,000 at current copper prices ($4.30/pound, $9.50/kg). Where does the copper come from? Ethan Berkowitz kept referring to Pebble as a gold mine, but it is mostly a copper mine. Pebble would be an excellent source – $247,000,000,000 worth according to my notes at today’s prices, which are rising. But we all know that with mining comes the chance of a major pollution incident. Do we possibly contaminate a pristine fishing area and ruin the fishery there or go for the copper and other necessary metals used for human’s stuff? If we didn’t demand so much, there wouldn’t be a need to supply so much.
Shari Durocher
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