Well, that didn’t take long. Less than a week after Robin Brena and his group of democrat malcontents announced their latest assault on the oil and natural gas producers here in Alaska, their Vote Yes for Alaska’s Fair Share ballot initiative, British Petroleum (BP), one of the three producers directly targeted by the initiative announced it was selling all its assets in Alaska to Hilcorp for $5.6 billion.
The move is the third oil and natural gas producer to quit business in Alaska following Bill Walker’s election as governor in 2014. Remember the group that put Walker and his democrat administration into office. They included Backbone, Alaska First, had significant union support, democrats, greens, Alaska Natives in the Bush, and most importantly Alice Rogoff’s Alaska Dispatch News which ran nonstop hit pieces on Sean Parnell’s lack of response to a sexual harassment scandal in the Alaska National Guard.
Robin Brena was Walker’s public face in the continuing assault on the producers, something he continues to do fronting this ballot initiative which is intended to run in concert with the Dunleavy recall.
Shell was the first major producer to leave the state when they announced in 2015 that they would halt their exploration effort in the Chukchi and Beaufort Seas. Greens and democrats were ecstatic. Shell spent over $4 billion in their effort, fighting greens, the O’Bama administration, and NIMBY Alaska Natives every step of the way. The newly ensconced Walker administration did not lift a finger to help, so Shell took their investment dollars to greener pastures.
Next up was Furie, a natural gas producer in Cook Inlet, which filed Chapter 11 in August. Reason? Walker’s veto of tax credits along with production challenges put them in a financial hole. The production tax credits have long been a sore point between Walker, his backers and the rest of us. We generally hear it in the form of a demand to repeal SB 21 which set up the current tax credit scheme, the scheme that Brena, his democrat and union backers want to repeal via their initiative.
Now we have BP leaving, which will also cost the state at least $30 million in taxes every year as BP is publicly held and Hilcorp is not.
What have we learned from this? We learned that greed and envy are really, really poor ways to establish and maintain a stable business environment, especially when there are many other parts of the US that have figured out how to be more friendly and stable on the long term to the producers. We learned that when targeted for economic destruction by idiotic political campaigns, the producers can and will pick up everything and leave. Finally, we are learning that Alaska does not currently have a business environment sufficiently stable to attract and most importantly keep major industry.
If you are going to deal with resource extraction industries, industries that invest on decades-long windows, you need to keep the tax and regulatory scheme in the state stable over that same time frame or they will go elsewhere, as they are doing today. When you are a bottom feeder, with a business model based on suing the producers, don’t be a bit surprised when the producers decide not to participate in the game anymore. This also applies to every single politician and citizen out there who wants to stick it to the resource extraction industries (this means you Bill Wielechowski, Joe Paskvan, Chris Tuck, and all of the ADN commenters slavering for a repeal of SB 21). Greed and envy are as always, poor lifestyle choices and rarely build lasting robust economic growth.
What is Alaska’s Fair Share of zero? That would be zero. Keep it up guys, and you will have killed of the golden goose. Congratulations are in order as you have made excellent progress so far. You must be very proud.
Alex Gimarc lives in Anchorage since retiring from the military in 1997. His interests include science and technology, environment, energy, economics, military affairs, fishing and disabilities policies. His weekly column “Interesting Items” is a summary of news stories with substantive Alaska-themed topics. He was a small business owner and Information Technology professional.
