Lawmakers weigh surplus to offset heating bills

Posted: Monday, March 03, 2008

It seems like a contradiction: oil rich Alaska is suffering from an energy crisis. But while the state is awash in oil wealth, many residents of remote villages are struggling to heat their homes because of fuel bills that are two or three times the national average.

Chris Miller / The Associated Press
Chris Miller / The Associated Press

With a multibillion dollar budget surplus fed by dizzyingly high oil prices and a recent oil tax hike, state lawmakers are discussing everything from building hydroelectric dams to fattening up state savings accounts to dispersing hundreds of dollars in rebates to help residents offset the cost of fuel - one idea that's captured the rapt attention of many Alaskans.

As lawmakers ponder the options at a cozy Capitol in Juneau, a few hundred miles to the south, partially blind Vietnam veteran Ed Littlefield chops wood to heat his home after he couldn't afford to refill his fuel tank.

It's a contradiction that continues to grow with record oil prices, now hovering near $100 a barrel. High prices mean more money for the state's coffers. It also means many rural Alaskans living in towns inaccessible by road are continually squeezed by escalating fuel costs.

Now lawmakers have less than two months in this year's session to come up with a solution or risk further embarrassment by Venezuelan leader Hugo Chavez who has been quicker to come to the aid of Alaskans than their own Legislature.

Last year Venezuelan oil company Citgo donated $5 million to distribute free heating fuel to Alaska's poorest communities. A similar program this year is getting a late start.

"Everybody hates Hugo Chavez but I want to thank him for the fuel he got me. That lasted me about three or four months last year," said Littlefield, who lives in the village of Metlakatla.

While Alaskans experience some of the most frigid temperatures in the nation, they also pay among the highest prices for fuel, especially in rural areas where federal energy assistance has not kept pace with needs.

It's a cruel irony in a state with abundant oil resources. The high cost is a result of shipping charges: most of the crude oil pumped from the North Slope must be shipped to West Coast refineries before it comes back as fuel.

Home heating fuel, which averages $3.30 a gallon nationwide, averages $4.30 a gallon statewide, peaking at $9 a gallon in ArcticVillage, aremote community hundreds of miles off the road system where fuel is flown in because the village can't be reached by barge.

Gasoline, averaging just over $3 a gallon nationally, averages $4.54 a gallon in Alaska, $7 a gallon in Arctic Village.

The high cost is particularly harsh in cash strapped villages where residents depend on fuel so they can travel by snowmachine, ATV or boat to subsistence hunt and fish.

"It's gotten pretty tough. People don't have the money to go out hunting, they aren't moving around as much by outboard or by snowmachine," said Doug Carney, a trapper and former hunting guide in the western Alaska river village of Sleetmute, where gas is about $6.35 a gallon.

Two proposals for energy assistance have been floated in the Legislature but they may have trouble gaining traction among lawmakers.

Rep. Bill Thomas, who represents nearly 50 small mostly fishing communities in Southeast Alaska, suggests a $500 payout to state residents, at a cost of about $360 million. It would be paid, not from the surplus as he first imagined, but from the profits of the state's rainy day oil wealth savings account, the $38 billion Alaska Permanent Fund.

But many lawmakers are loathe to touch the earnings for fear Alaskans would perceive it as a raid on the fund that pays them an annual dividend - $1,654 for nearly every man, woman and child last year.

Thomas shrugs off those concerns. "We'll see what the impacts might be (to the Permanent Fund Dividend checks). It might be a few dollars," he said.

Sen. Tom Wagoner, a Republican from Kenai, believes he has a better idea. He is proposing a $750 credit per household to be applied to utility bills from a state payment to local power companies.

It's more direct, he says.

"It's fair and equitable and it doesn't give out a cash payment that can be turned into bottles of whisky, tobacco, bingo parlors or whatever," said Wagoner.

But Wagoner is a member of the small Senate minority, a group that failed to push through a single piece of legislation last year.

Many lawmakers appear less excited about funneling money back to residents than hoarding the windfall as a cushion for hard times ahead.

The surge in state revenues is likely to result in a $3 billion to $4 billion budget surplus this year. But North Slope oil production is steadily dropping by about 6 percent a year.

Lawmakers agree that socking away some of the surplus would help tide the state over until construction of a much-desired natural gas pipeline from the North Slope ushers in the state's next boom. That project - if it ever comes to fruition - is at least 10 years away under the most optimistic of scenarios.

Anchorage Republican Rep. Ralph Samuels warns against putting money into assistance programs that will just have to be cut in the lean years.

Furthermore, he warns a cash giveaway could feed into a perception of Alaska as a free loader state, especially after national media attention focused on federal earmarks to pay for Alaska's notorious "Bridges to Nowhere."

As the rest of the country sees it, "we've got $40 billion in the bank, we're giving everybody free money, we don't pay taxes, we want bridges, we want this, we want that," said Samuels. "Heating oil, in particular in rural Alaska, is a huge problem but people in the rest of the U.S. don't understand the problem."

Bethel Democrat Mary Nelson said Alaska lawmakers need to stop worrying and step up to the plate.

She has been trying to push through a state match to federal energy assistance, but now she's open to whatever will get money quickly to the state's neediest.

"Hugo Chavez, all the way in Venezuela, understands our needs, but our own policy makers are not paying attention to those needs," said Nelson. "We all know there's a crisis but we need to see evidence of that concern in the budget."

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