Kyle Hampton is teaching us that Alaska's economic outlook is bleak. An invisible hand is at work on the products of Alaska trying to create an equilibrium between supply and demand until a competitive equilibrium is reached. Our supply (of oil) does not seem to be keeping up with the demand. Lee Huskey defines our economy as remote. Our geography and institutions have created this. Huskey's Iron Law Of Resource Development says that the price received for our oil and other resources must exceed the opportunity costs of their production. As the bonanza of Prudhoe Bay fizzles it seems that the oil industry is reassessing their opportunity costs. Ethan Berkowitz sees wind and geothermal energy as the wave of the future and if houses in Anchorage just would have been built to look like mountains, everything would be better. However, Alaska can't implement these alternative sources of energy because he thinks the rules in setting up these industries are unclear. Diane Hirshberg believes education can be the salvation of a struggling economy. It has immediate, long term, and non-quantifying benefits. Yet communities must have a feeling of ownership in their school for the school to be successful and funding must be increased. Finally, Conoco Phillips had profits of $1.54 billion in 2010 in Alaska (which makes up 30% of its world wide profits), however its new low tax sweetheart is North Dakota. The lifeline of Alaska (T.A.P.S.) is at less than half its capacity of 1988. At a continued 6% decrease each year, the pipeline will have a flow problem within five years further increasing transportation costs.
So, I want one of you Bloggers out there to prove Kyle wrong. Write a response that solves all of these problems. Write a Cinderella ending for the tale of The Last Frontier. If you don't, all will be lost. Oil production will cease, the pipeline will sit idle, government spending will decrease, in-state energy costs will soar, the PFD will be spent subsidizing the state for a few years, the population will decrease, and the equity and value of my home will evaporate. What should I do?
While the outlooks of the experts may be bleak, that’s because they are linear thinkers. If we are to escape these damning scenarios, it’s time for some true geometric change. Cinderella needed magic to achieve her goals. While magic seems to be at the fore front of many Alaskan economic plans, if Alaska really wants to be independent and solvent we need to look at each of the negatives you sighted and find a way to incorporate them into a positive. That’s why I am advocating that Alaska become the first green-socialist state.
ReplyDeleteWhile a myopic view point of the future is to entice the oil companies with lower taxes, drilling in wildlife refuges or building them a pipe line to profit from gas, we should forget about oil and gas. There is no future in those limited resources. Therefore, our objective should not be to keep big oil as 80%-90% of our economy, but to replace it with something else. We are one of the few states in the union running a profit. We should invest that profit not for our own current economic gain (the PFD), but for the gain of our posterity. Here’s how it works. Don’t wait for the state to go broke to start using the PFD. Invest all of our profits into the education of the next generation. Have the state fully subsidize the education of Alaska’s youth with the specific goal of developing state owned renewable energy companies. Students will be schooled in the engineering, construction and administrtion of wind, tidal, geothermal and hydro power generators. Individual communities will back the program because these kids will be coming back to help the energy woes of those very same communities. The first lot of graduates can deal with the legislative concerns while their brethren start with designs for plants and power stations. As Alaskan oil production slows, we can integrate workers who get layed off with the incoming talent from the state education program to establish individual corporations that specialize in the different renewable fields but still report to and profit share with the state. As the renewables come on line, our in-state energy costs will plummet while still allowing the state to benefit from the profit margin in its entirety. As the state becomes less dependent on oil for daily operations and on oil companies for revenue, we’ll start to see our initial investment in our children turn a profit. As Alaska becomes the renewable Silicon Valley, we’ll attract new highly skilled employees, institutions and support companies via the Jack London Hypothesis. All this will help Alaska become less remote and less dependent on bonanza markets while once again establishing us as the preeminent energy player in the US.
So what happens to the oil fields? Either oil prices go up so much that the big conglomerates come back begging to restart exploration or we sell the infrastructure to a small Alaskan company, complete with corporate tax breaks that will benefit Alaska and not the international community.
As for the house; sell it or give it to your kids. This plan requires current sacrifices (no more PFD) to help reconfigure our entire state economy. It won’t happen quickly enough for you to reap the benefits you seek, but your kids will make a mint when they are your age.
Mike,
ReplyDeleteWhen Alaska becomes totally green and independent of BIG OIL, and we have reached the point where we have unlimited and virtually free renewable energy sources, how will we make a profit? Will we have some sort of GREEN ACES tax system to generate revenue for the social state? If we can create all this green energy, what will prevent all the other countries from copying us? Then who will buy all our surplus wind energy; geothermal energy; solar energy? How will we get these energies to the markets? Put them on a Green Peace boat powered by moose nuggets? Come back down to Earth and smell the manure. Alaska = Oil, Gas, Gold, Zinc, Copper, etc. That's the way it is right now, and that's the way it'll be for my kid. She is not going to "make a mint" unless she becomes an engineer and gets hired by BP!
Tom T.